10 JUDGMENTS BY THE SUPREME COURT WHICH CHANGED THE COURSE OF ARBITRATION LAW IN INDIA IN 2021


Arbitration law in India has been witnessing substantial developments, and the Courts have been pro-active in reiterating the pro-enforceability, narrow judicial intervention mantra, so as to encourage arbitration as a speedy, cost-effective and a preferred mode of settlement of disputes in India. Whether it was upholding the enforceability of an emergency arbitral award or it was upholding the freedom of choice of two Indian parties to have a foreign seated arbitration, all these judgments have paved way for India becoming a favored destination for arbitration. In this article, I will be tracing ten such landmark judgments rendered by the Supreme Court of India in 2021, which in my opinion clarified and developed the law of arbitration in India.


i. NHAI v. M. Hakeem, (2021) 9 SCC 1


Section 34 of the Arbitration and Conciliation Act, 1996 does not include within itself, the power to modify an award. Under the scheme of the old 1940 Act, an arbitral award could be remitted, modified or otherwise set aside on the grounds contained in Section 30 of the 1940 Act, which were wider than the grounds contained in Section 34 of the 1996 Act. However, the Supreme Court noted that it could modify arbitral awards, under its powers contained in Article 142.


ii. Amazon.com NV Investment Holdings LLC v. Future Retail Limited and Others 2021 SCCOnline SC 557


The Supreme Court held that an emergency arbitration award was enforceable under Indian law. It was held that the Arbitration and Conciliation Act , 1996 contained no bar, express or implied, against emergency arbitration. Section 17(1) uses the expression “during the arbitral proceedings”, this expression when read with Section 21 was wide enough to include emergency arbitration proceedings. Given that the definition of “arbitration” in Section 2(1)(a) means any arbitration, whether or not administered by a permanent arbitral institution, when read with Sections 2(6) and 2(8), would make it clear that even interim orders that are passed by Emergency Arbitrators under the rules of a permanent arbitral institution would, on a proper reading of Section 17(1), be included within its ambit. It is significant to note that the words “arbitral proceedings” are not limited by any definition and thus encompass proceedings before an Emergency Arbitrator. It was further held that the order passed under Section 17(2) of the Act, enforcing the emergency arbitrator’s award was not appealable under section 37.

iii. N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd., (2021) 4 SCC 379


The arbitration agreement would not be rendered invalid, unenforceable or non-existent, even if the substantive contract is not admissible in evidence, or cannot be acted upon on account of non-payment of stamp duty. The arbitration agreement contained is independent and distinct from the underlying commercial contract. The arbitration agreement is an agreement which provides the mode of dispute resolution.


Stamp Act does not subject an arbitration agreement to payment of stamp duty, unlike various other agreements enlisted in the Schedule to the Act. This is for the obvious reason that an arbitration agreement is an agreement to resolve disputes arising out of a commercial agreement, through the mode of arbitration. On the basis of the doctrine of separability, the arbitration agreement being a separate and distinct agreement from the underlying commercial contract, would survive independent of the substantive contract.


iv. Pasl Wind Solutions (P) Ltd. v. GE Power Conversion (India) (P) Ltd., (2021) 7 SCC 1


Foreign seated international commercial arbitration between two Indians/Indian entities, was held to be permissible. It was further held that for an award to be designated as a foreign award under Section 44 the following ingredients must be present:

(i) the dispute must be considered to be a commercial dispute under the law in force in India,

(ii) it must be made in pursuance of an agreement in writing for arbitration,

(iii) it must be disputes that arise between “persons” (without regard to their nationality, residence, or domicile), and

(iv) the arbitration must be conducted in a country which is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958.


v. State of Chhattisgarh & Anr. v. Sal Udyog Private Limited 2021 SCC Online SC 1027


It was held that the plea that a party did not raise a ground in its Section 34 petition, and would therefore be estopped from taking a fresh ground in appeal under Section 37, cannot be sustained as under Section 34(2A) of the 1996, the Court was empowered to set aside an award if it found that the same was vitiated by patent illegality on the face of it. Thus, if a fresh ground is taken under an appeal filed under Section 37, then the Court could always interfere by resorting Section 34(2A) of the 1996 Act.


vi. UNITECH Limited v. Telangana State Industrial Infrastructure 2021 SCC Online SC 99


The presence of an arbitration clause does not oust the jurisdiction under Article 226, though it still needs to be decided on a case to case basis, as to whether recourse to a public law remedy can be justifiably be invoked.


vii. Gemini Bay Transcription Pvt. Ltd. v. Integrated Sales Service Ltd. & Anr. 2021 SCC Online SC 572


In a case involving a foreign arbitral award, it was held that such an award could bind a non-signatory to the arbitral agreement and could be enforced against them. The non-signatory in the said case was an ‘alter ego’ of a party signatory to the arbitration agreement. The Supreme Court held that when the foreign award gave reasons for application of the alter ego doctrine, it was not possible for the Court to re-appreciate the facts and conduct a review on merits, when the burden fell on the party challenging the award to establish the grounds stipulated under Section 48 (1), none of which go into the merits of the case.


viii. Government of Maharashtra v. Borse Brothers Engineers and Contractors Pvt. Ltd. 2021 SCC Online SC 233


Appeals under Section 37 of the arbitration Act which are governed by Articles 116 and 117 of the Limitation Act or Section 13(1A) of the Commercial Courts Act, delay beyond 90 days, 30 days or 60 days respectively can be condoned, only under exceptional circumstances and not by way of rule. The Court overruled its previous judgment in the case of N.V. International v. State of Assam (2020) 2 SCC 109, wherein it was held that any delay beyond 120 days in filing of an appeal under Section 37 (from an application being either dismissed or allowed under Section 34) cannot be allowed.


ix. Indus Biotech Private Limited v. Kotak India Venture (Offshore) Fund (2021) 6 SCC 436


Arbitration reference was held to be not maintainable, if it was filed after the admission of an insolvency resolution petition under Section 7 of the Insolvency and Bankruptcy Code, 2016. The proceedings under Section 7 of IBC have primacy over the proceedings under Arbitration and Conciliation Act, 1996 in view of Section 238 of IBC. If upon due application of mind by the adjudicating authority, it is determined that default has been committed and Section 7 IBC petition stands admitted, then subject-matter would become non-arbitrable as the Section 7 proceedings would become non-arbitrable , being in rem and having primacy over any putative arbitration proceedings. On the other hand, if it is determined that there is no default, then there would be no bar to reference to arbitration and for appointment of arbitrator in accordance with law.


x. Sanjiv Prakash v. Seema Kukreja and Ors. (2021) 9 SCC 732


The question of novation of an agreement containing an arbitration clause, cannot be determined by the Court at the stage of Section 11 as it would result in a mini trial and an elaborate review of fact and law, which falls within the jurisdiction of the arbitral tribunal.

 

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