NOTABLE JUDGEMENTS MARCH 2025
ARBITRATION LAW
I. Case Title: Batliboi Environmental Engineering Ltd. v. Hindustan Petroleum Corporation Ltd.
Citation: 2025 SCC OnLine Bom 580
Court: Bombay High Court
Decided on: 11 March 2025
Brief Facts:
Batliboi Environmental Engineering Ltd. ("Batliboi") was awarded a contract by Hindustan Petroleum Corporation Ltd. ("HPCL") for the construction of a sewage treatment reclamation plant. A dispute arose regarding payment claims amounting to ₹3.41 crores by Batliboi. HPCL also raised counterclaims. An arbitral tribunal passed an award on March 23, 1999, which was upheld by a Single Judge under Section 34 of the Arbitration and Conciliation Act, 1996. HPCL appealed under Section 37, and a Division Bench set aside the arbitral award. Batliboi challenged this decision in the Supreme Court, which upheld the Division Bench's order on 21.09.2023. Batliboi then re-invoked arbitration on 12.10.2023, arguing that since the award was set aside, the claims had not been adjudicated on merits. HPCL opposed this, stating that the Supreme Court had already decided the issue, making the dispute non-arbitrable.
Issue: Whether the Supreme Court's judgment setting aside the arbitral award amounts to a final adjudication on merits, thereby barring fresh arbitration under the principle of res judicata.
Judgment:
The Bombay High Court held that setting aside the arbitral award does not preclude the parties from initiating fresh arbitration. It ruled that the Supreme Court's decision only found the arbitral award to be flawed due to lack of reasoning and improper computation, but it did not decide the merits of the claims. The Court emphasized that under Section 34 and Section 37 of the Act, courts have limited jurisdiction and cannot conduct a full appellate review of arbitral awards. Since the claims were not conclusively adjudicated, Batliboi was entitled to reinitiate arbitration. It clarified that the tribunal would independently adjudicate the disputes without being influenced by prior court rulings.
II. Case Title: Disortho S.A.S. v. Meril Life Sciences Pvt. Ltd
Citation:2025 SCC OnLine SC 570
Court:Supreme Court
Decided on: 18 March 2025 Brief Facts:
Disortho S.A.S., a Colombian company, entered into an International Exclusive Distributor Agreement with Meril Life Sciences Pvt. Ltd., an Indian company, on May 16, 2016, for distributing medical products in Colombia. The agreement contained two key clauses: Clause 16.5 stated that the agreement is governed by Indian law, and disputes would be under the jurisdiction of courts in Gujarat, India. Clause 18: Provided for conciliation and arbitration under the Arbitration and Conciliation Centre of the Chamber of Commerce of Bogotá, Colombia. The arbitration was to take place in Bogotá, following Colombian law. A dispute arose, leading Disortho to file a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking the appointment of an arbitral panel. Meril opposed the petition, arguing that Indian courts had no jurisdiction since the agreement specified arbitration under Colombian law in Bogotá.
Issue: Which law governs the arbitration agreement? Whether Indian courts have jurisdiction to appoint an arbitrator despite arbitration being designated in Bogotá under Colombian law.
Judgment:
The Supreme Court analyzed the principles of lex contractus (governing law of the contract), lex arbitri (law governing arbitration), and lex fori (law governing court jurisdiction). Applying the three-step test from Sulamérica Cia (UK case law), the Court ruled: There was no express choice of law governing the arbitration agreement. The implied choice was Indian law, as Clause 16.5 explicitly made Indian law applicable to the entire agreement. Bogotá was only a venue, and Indian courts retained supervisory jurisdiction. Since both parties consented during hearings to conduct arbitration in India, the Court appointed Justice S.P. Garg (Retd.) as the Sole Arbitrator. The arbitration would proceed under the Delhi International Arbitration Centre (DIAC) Rules, with the venue to be decided mutually by the parties. The Supreme Court clarified that Indian courts can exercise jurisdiction over arbitration, even if the agreement mentions a foreign venue, provided Indian law governs the contract.
III. Case Title: Airports Authority of India v. Delhi International Airport Ltd.
Citation: 2025 SCC OnLine Del 1431
Court: Delhi High Court Decided on: 07 March 2025
Brief Facts:
The Airports Authority of India (AAI) and Delhi International Airport Ltd. (DIAL) entered into an Operation, Management, and Development Agreement (OMDA) on April 4, 2006, for the management of Indira Gandhi International Airport (IGI). Under the OMDA, DIAL was required to pay a Monthly Annual Fee (MAF) to AAI, which was based on a percentage of revenue. Due to the COVID-19 pandemic, DIAL invoked the Force Majeure clause under Article 16 of OMDA, requesting a waiver or deferment of MAF payments for April–June 2020. AAI conditionally deferred payments for three months but did not grant a full waiver. DIAL later sought further excusal from MAF payments beyond the three-month period, arguing that its revenue was severely impacted by the pandemic. The Arbitral Tribunal ruled in favor of DIAL, granting excusal from MAF payments for March 2020 – February 2022 and also extended the OMDA term accordingly. AAI challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996, arguing that the Tribunal rewrote the contract and that DIAL failed to prove its inability to pay.
Issue:
- Whether the COVID-19 pandemic qualified as a Force Majeure event under OMDA, excusing DIAL from making MAF payments.
- Whether the Arbitral Tribunal exceeded its jurisdiction by rewriting the contract and extending the term of OMDA. Whether the arbitral award was patently illegal or against public policy.
Judgment:
The Delhi High Court upheld the arbitral award, finding that the COVID-19 pandemic was an unforeseeable Force Majeure event that severely affected DIAL's revenue. The Tribunal's interpretation of OMDA was reasonable and based on evidence, including financial statements showing cash flow issues. AAI had, in effect, acknowledged the impact of the pandemic by granting deferrals and relief to other concessionaires. The Court rejected AAI's argument that DIAL was required to prove its complete inability to pay, stating that the contract allowed for both suspension and excusal of obligations under Force Majeure. The Court ruled that no interference was warranted under Section 34, as the award was not perverse or against public policy. The judgment reaffirms the principle of minimal judicial interference in arbitral awards and clarifies that Force Majeure clauses must be interpreted based on commercial realities, especially in unprecedented circumstances like COVID-19.
IV. Case Title: Faith Constructions v. N.W.G.E.L Church
Citation: 2025 SCC OnLine Del 1746
Court: Delhi High Court
Decided on: 20 March 2025
Brief Facts:
Faith Constructions (Petitioner) and N.W.G.E.L Church (Respondent) entered into an agreement on 06.07.2022 for construction work at Bishop's Residence Ground Floor Building in Odisha. Clause 9 of the agreement contained an arbitration clause for dispute resolution. The Petitioner alleged a breach of the agreement by the Respondent due to delay in completion and non-payment. Consequently, the Petitioner issued an arbitration notice on 08.07.2024 under Section 21 of the Arbitration and Conciliation Act, 1996 ("A&C Act"). The Respondent objected to the jurisdiction of the Delhi High Court, arguing that the agreement was executed and notarized in Rajgangpur, Odisha. The construction work took place in Odisha. Payments were made from Odisha. The arbitration clause did not specify the seat/venue of arbitration. The Sole Arbitrator was already appointed in Odisha by the Respondent. The Petitioner argued that part of the cause of action arose in Delhi since the Petitioner's business was in Delhi. Payments were received in a Delhi-based bank account. Bills and invoices were generated in Delhi. The Respondent's unilateral appointment of an arbitrator was invalid.
Issues: Legal Updates by Hammurabi & Solomon Partners
- Whether the Delhi High Court had territorial jurisdiction to entertain the petition under Section 11 of the A&C Act.
- Whether the unilateral appointment of the arbitrator by the Respondent was valid.
Judgment:
The Delhi High Court dismissed the petition, holding that it lacked territorial jurisdiction. The arbitration agreement did not specify the seat/venue of arbitration. The cause of action substantially arose in Odisha, as the agreement was executed, work was performed, and payments were issued from there. The fact that part payments were received in a Delhi bank account was not sufficient to establish jurisdiction. The unilateral appointment of an arbitrator was indeed impermissible, but that issue could only be considered by a court having proper territorial jurisdiction. The Court emphasized that jurisdiction under Section 11 must be determined based on where the respondent resides or the cause of action arises. Since the material cause of action arose in Odisha, the Delhi High Court had no jurisdiction to entertain the petition. The Petitioner must approach the competent court in Odisha for arbitration-related reliefs.
V. Case Title: Sunehri Bagh Builders Pvt. Ltd. v. Delhi Tourism and Transportation Development Corporation Ltd.
Citation:2025 SCC OnLine Del 1752
Court: Delhi High Court
Decided on: 20 March 2025
Brief Facts:
Sunehri Bagh Builders Pvt. Ltd. ("the Petitioner") has a claim pending adjudication before a Sole Arbitrator. The arbitration proceedings were at the stage of final arguments. The Petitioner challenged an order dated 15.02.2025 passed by the Sole Arbitrator, which dismissed the Petitioner's application seeking the production of certain documents. The Sole Arbitrator had previously granted the Claimant an opportunity to inspect records on 07.09.2024, but the Claimant did not avail of this opportunity.
Issue:Legal Updates by Hammurabi & Solomon Partners Whether the High Court should intervene in the Sole Arbitrator's order dismissing the Petitioner's application for document production, particularly when the arbitration is at the final argument stage and a prior opportunity for inspection was provided but not utilized.
Judgment:
The Delhi High Court (Justice Manoj Jain) dismissed the petition and refused to interfere with the arbitrator's order. The Court noted that the arbitrator had already allowed the claimant to inspect the documents, which the claimant did not use. The Court emphasized that the scope of interference in arbitral proceedings is very limited, especially at the stage of final arguments. The Court referred to its earlier decision in Kelvin Air Conditioning & Ventilation System (P) Ltd. v. Triumph Reality (P) Ltd., reiterating that judicial interference under Article 227 of the Constitution should be minimal and only in exceptional circumstances where the order is "absolutely perverse." The Court concluded that there was no reason to invoke its supervisory power in the present matter, as the claimant had been given a prior opportunity and the proceedings were at a late stage.
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