HSA | Dispute Resolution & Arbitration Monthly Update | April 2025

Before the Hon'ble High Court of Judicature at Bombay Fab Tech Works & Constructions Pvt. Ltd. (Applicant) Vs. Savvology Games Pvt. Ltd. & Ors. (Respondents)

Commercial Arbitration Petition No. 790 of 2024

Background facts

• In the present case, Fab Tech Works & Constructions Pvt. Ltd. (Applicant) and Savvology Games Pvt. Ltd. & Ors. (Respondent) entered into an Investment Agreement dated March 30th , 2021 (Agreement). Thereafter, owing to certain disputes and differences between the parties, the Applicant lodged a Commercial Arbitration Petition under Section 9 of the Arbitration and Conciliation Act, 1996 (Act) before the Hon'ble Bombay High Court (Hon'ble Court).
• Thereafter, the Ld. Judge of the Hon'ble Court had granted certain interim reliefs under Section 9 of the Act, vide an order dated July 22^nd , 2024. Further, the Applicant had already invoked arbitration under the Agreement on 28 June 2024, to which the Respondent had replied on July 8^th, 2024, and the Applicant also filed a Commercial Arbitration Application before the Hon'ble Court under Section 11 of the Act, seeking for the appointment of an arbitrator.
• However, the Respondent resisted the invocation of arbitration on the ground that the same was not maintainable owing to two parallel proceedings, being the petition under the Section 9 of the Act seeking interim reliefs and an application under Section 11 of the Act seeking appointment of an arbitrator.

Issue(s) at hand

• The following issue was before the Hon'ble Court:
  • Whether invocation of Section 9 & Section 11 of the Act constitute as parallel proceedings?

Findings of the Court

• At the outset, the Hon'ble Court noted that whether there are disputes and differences between the parties as set out in the invocation notice, and whether such disputes deserve to be dealt with one way or the other, would fall in the domain of the arbitral tribunal, which is required to be appointed pursuant to Section 11 of the Act.
• The Hon'ble Court also opined that the Respondent had erred in terming the invocation of proceedings under Section 9 and Section 11 of the Act as 'parallel proceedings'. The Hon'ble Court differentiated that while Section 9 provides interim measures to protect the subject matter of arbitration, ensuring no party undermines the arbitral process, whereas the non-compliance with the agreement to refer disputes to arbitration is the basis of filing a Section 11 application, which is a limited judicial intervention mechanism solely to examine the existence of an arbitration agreement.
• Furthermore, the Hon'ble Court also noted that the objections raised by the Respondent, in so far as it was contended that there exists no disputes and differences between the parties, could not be considered by the Hon'ble Court and the Respondent would be within its right to raise the said objection in an application under Section 16 of the Act, before the arbitrator.
• Therefore, finding no merit in the objections raised by the Respondent, the Hon'ble Court disposed off the Section 9 Petition and the Section 11 Application, thereby appointing a sole arbitrator to adjudicate upon the disputes and differences between the parties arising from the agreement.

In the High Court of Karnataka at Bengaluru The Union of India and Anr. (Appellants) Vs. Sri. Kothari Subbaraju and Ors. (Respondents)

Miscellaneous First Appeal No. 6525 of 2016

Background facts

• In the instant case, the Union of India through the south western railway ("Appellant"), and Sri Kothari Subbaraju, a railway contractor ("Respondent"), entered into a contract for execution of certain railway-related works.
• However, certain disputes arose between the Appellant and Respondent in respect to the contract, and accordingly the dispute was referred to arbitration. The Arbitral Tribunal passed an award in favour of the Respondent, allowing several monetary claims raised under the contract.
• Aggrieved by certain portions of the award, the Respondent challenged the award before the Hon'ble City Civil Court, under Section 34 of the Arbitration and Conciliation Act, 1996 ("Act"). The Ld. District Judge, vide order dated March 31^st, 2016, partly allowed the application filed under Section 34 of the Act and modified the arbitral award by enhancing the amounts awarded under the claims.
• Being aggrieved by the order dated March 31^st, 2016 passed by the Ld. District Judge, the Appellant filed the present appeal under Section 37(1)(c) of the Act before the Hon'ble High Court of Karnataka at Bengaluru ("Hon'ble Court").

Issue(s) at hand?

• Whether the Ld. District was correct in enhancing the amounts awarded in arbitral award, thereby modifying the arbitral award?

Findings of the Court

• At the outset, the Hon'ble Court relied on the judgment in the case of S.V. Samudram vs. State of Karnataka¹, and held that a Civil Court, while exercising powers under Section 34 of the Act, does not have the authority to modify an arbitral award, as the powers under Section 34 are limited only to setting aside an award on the grounds explicitly provided in the statute and do not include the power of modification.
• The Hon'ble Court further noted that the Ld. District Judge, while deciding the application filed under Section 34 of the Act, had modified the arbitral award in respect of the claims by enhancing the amount, thereby acting beyond the jurisdiction vested by the Act.
• The Hon'ble Court further held that no power is vested with the Court of learned District Judge to modify or alter an arbitral award as it could be done in an appeal. The District Judge ought to have limited their inquiry to the grounds under Section 34 and not re-appreciated or altered the merits of the arbitral findings.
• In view of the above, the Hon'ble Court allowed the appeal, and thereby set aside the order dated March 31^st, 2016 passed by the Ld. District Judge.

In The Supreme Court of India M/S R.K. Transport Company (Appellant) Vs. M/s Bharat Aluminum Company Ltd. (Respondent)

Civil Appeal No. 4763 of 2025

Background facts

• M/S R.K. Transport Company ("Appellant") and M/S Bharat Aluminum Company Ltd. ("Respondent") entered into a contract on April 1^st, 2002 ("contract"), for bauxite mining and delivery.
• Dispute arose between the Appellant and Respondent under the contract relating to payment. In view of the same, the dispute was referred to arbitration.
• An arbitral award dated April 9th, 2022 was passed in favour of the Appellant for Rs 51,33,40,100/. The signed copy of the arbitral award was delivered to the Respondent on April 9th, 2022.
• The Respondent filed an application under Section 34 of the Arbitration and Conciliation Act, 1996 ("Act"), for setting aside of the arbitral award on July 11^th, 2022.
• The Trial Court passed an ex-parte order dated July 13th, 2022, stating that the Application filed by the Respondent under Section 34 of the Act was within the limitation period. The Trial vide the said order dated July 13^th, 2022, also directed the Respondent to deposit 50% of the amount granted in favour of the Appellant in the arbitral award.
• The Appellant challenged the order of the Trial Court dated July 13^th, 2022, by filing a Writ Petition. The High Court, while hearing the Writ Petition, granted liberty to the Appellant to file a recall application as the Trial Court had passed an ex-parte order.
• In view of the above, the Appellant filed a recall application before the Trial Court. The recall application was allowed vide order dated April 25^th, 2023.
• In the order dated April 25^th, 2023, the Trial Court also held that the Application filed by the Respondent under Section 34 of the Act is barred by limitation.
• Being aggrieved by the order dated April 25^th, 2023, the Respondent filed an appeal under Section 37 of the Act.
• The Appeal filed by the Respondent was allowed by the High Court. The High Court also remanded the parties to appear before the Trial Court.
• Being aggrieved by the order of the High Court, the Appellant filed the present Appeal.

Issue(s) at hand?

• Whether the 3-month limitation period under Section 34(3) of the Act excludes the day on which the award was received as per Article 12 of the Limitation Act 1963 and extends to the next working day if the deadline falls on a court holiday as per Section 4 of the Limitation Act 1963?

Findings of the Court

• At the outset, the Hon'ble Court relied on the judgement in the case of State of Himachal Pradesh v. Himachal Techno Engineers¹ and State of West Bengal v. Rajpath Contractors and Engineers Ltd² and held that Section 12(1) of the Limitation Act, 1963 applies to applications filed under Section 34(3) of the Act. Accordingly, the date on which the arbitral award is received by the party must be excluded while computing the limitation period for challenging the arbitral award.
• The Court further relied on the judgement in the case of My Preferred Transformation & Hospitality Pvt Ltd v.Faridabad Implements Pvt Ltd³ and held that when the last day for filing an application under Section 34(3) of the Act falls on a court holiday, then Section 4 of the Limitation Act 1963 becomes applicable and thereby allowing application to be filed on the next working day.
• Applying the above principles to the facts of the present case, the Hon'ble Court observed that the arbitral award was received by the respondent on April 9^th,2022. Therefore, excluding that day, the limitation period for filing an application under Section 34(3) of the Act commenced on April 10^th,2022.
• The Hon'ble Court further observed that the limitation period for filing an application to set aside an arbitral award is three calendar months from the date of receipt of the award. Additionally, the Hon'ble Court observed that in the present case, the three-month period ended on July 9^th, 2022, which fell on a Second Saturday, a court holiday. Therefore, by virtue of Section 4 of the Limitation Act, 1963, which provides that if the prescribed period for any legal proceeding expires on a day when the court is closed, the proceeding may be instituted on the next working day. In view of the same, the Hon'ble Court held that the application filed on July 11^th, 2022 (Monday) was valid and within the prescribed limitation period.
• The Hon'ble Court held that since there was no delay in filing the application under Section 34 of the Act, the proviso to Section 34(3) of the Act, which allows for an additional 30 days in filing such application upon showing sufficient cause, was not applicable to the present case.
• On the issue of deposit of the awarded amount, the Hon'ble Court found no infirmity in the direction of the High Court requiring the respondent to deposit 50% of the award amount, with liberty given to the appellant to withdraw the same upon furnishing a bank guarantee.
• Accordingly, the Hon'ble Court upheld the judgment of the High Court and disposed of the appeal.

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Footnotes

1. (2010) 12 SCC 210

2. (2024) 7 SCC 257

3. 2025 INSC 56

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