ADR notes for Prof. Tamvada's class. JGU Student

7/24/2019 ADR notes for Prof. Tamvada's class. JGU Student.

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ADR Lectures

Lecture-1 Outline

- Brief overview of the course- Start Discussions with the Article Would ADR have Saved Romeo

and Juliet- Discuss the dierence !etween ar!itration" mediation" conciliationand ne#otiation

- $istor% of Ar!itration in &ndia includin# Ar!itration and 'onciliationAct 1(()

- What is Ar!itration- Le* Ar!itri" Seat of Ar!itration+ , inds of laws of a..lication

What is ADR/

Would ADR have saved Romeo and Juliet/

from forth the fatal loins of these two foes, A pair of star crossed loverstake their life

While Romeo and Juliet was .ortra%ed as a romantic love stor% the centraltheme of the stor% is con0ict and failed resolution Discuss the story ofRomeo and Juliet

On the issue of dis.utes 2 Why, thou wilt quarrel with a man that hajth ahair more or a hair less in his beard than thou hast3

Dis.utes are the inevita!le outcome of human interaction &t is true thatthese dis.utes can !e e*tremel% tedious and stressful 4urther"

.redominantl%" the adversarial s%stem and its functionin# e*acer!ates thesituation rather than .rovide a fair solution $owever" ADR is not a.anacea to all that ails the adversar% s%stem 5erfect .rocesses toresolvin# dis.utes can6t !e found $owever" the !ene7t of ADR is that it isnot .rolon#ed !% the .rocedural hassles that the adversarial s%stementails ADR involves com.le* strate#i8in# on .art of the law%ers to #etthe .arties to reach a settlement 9uch as dis.utes are the outcome ofhuman interaction" ADR .resents the solutions to such dis.utes usin# thesame method

& have !een mentionin# dis.ute as an outcome of human interaction-however can an%one e*.lain to the class what a dis.ute in this conte*tmeans/ 4or there to !e a dis.ute" there needs to !e a consensus !etween!oth .arties that a disa#reement:dis.ute e*ists and a !elief that the% areentitled to some ind of resolution or solution to the dis.ute


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;*am.le< =here is a discussion amon# si* .eo.le a!out an event in ano>ce" where John Doe threatens to sue the com.an% =he cause of#rievance was not !ein# .rovided a .ro.er wors.ace =he .ro!lem hasoccurred !ecause of lac of o>ce s.ace in the com.an% and there areman% more em.lo%ees a##rieved !% the same situation &n this re#ard

John Doe6s .osition a..ears to !e unreasona!le however if not dealt with.ro.erl% it mi#ht escalate =he si* .eo.le involved in tain# the decisionon what to do a!out the issue must .ro.ose a solution or means ofresolvin# the .ro!lem $ow would the si* of %ou 2si* students from theclass3 decide the dis.ute/ ;*.lain wh% %our method of resolution ori#norin# the .ro!lem is the correct a..roach Do %ou thin there is anactual dis.ute here/

5oint of the e*am.le- dis.utes e*ist in the minds of the !eholder-it e*istswhen someone la!els them as such =he form of resolution ado.ted !%Romeo and Juliet was violence" which did not end well- in fact it escalatedthe matter" main# it worse

What do we mean !% resolution/ Resolution includes three cate#ories- Ras outcome" R as .rocess" R as s%m!olism 2'onstanc% of .ur.ose instrivin# to resolve3- there can6t !e outcome without havin# .ro#ressedthrou#h resolution as a .rocess and there is s%m!olic si#ni7cance in the.rocess and outcome- hence the three cate#ories overla.

Dis.utes e*ist in the world as a form on social construct- it is an oshootof our e*.ectations and desires when con0icted with someone else6se*.ectations and desires

Law%er6s Role in Dis.ute Resolution< 2As students3

- 'om.licit% in identif%in# .ro!lems as le#itimate- =heir le#al acumen in convertin# .ro!lems into dis.utes and turnin#

dis.utes into claims for redress- 5rovide with accurate" reasona!le and useful information in order to

mae an informed decision a!out the .rocess the% choose

But &s ADR the .anacea to all that .la#ues the adversarial s%stem/?alanter !elieves that the idea that there is one ri#ht wa% of mana#in#dis.utes is drained of credi!ilit%- le#al institutions should remain a .art ofthe dis.ute resolution .rocess Writin# on ADR tends to !e written as if itwas one .rocess rather than reco#ni8in# that there are man% diverse@ualities within the dierent forms


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What6s wron# with adversar% s%stem/ &t would tae , %ears to clear the!aclo# of ,1C million cases .endin# in various courts includin# $i#hcourts in the countr%" Andhra 5radesh $i#h 'ourt ud#e Justice E E Raosaid

F&f one considers the total .endenc% of cases in the &ndian udicial s%stem"

ever% ud#e in the countr% will have an avera#e load of a!out "1GHcases"F

Senior counsel Adi Shirodar added" =he num!er of liti#ations reachin#courts have increased tremendousl%" !ut the udiciar% stren#th has notincreased .ro.ortionatel% =he iron% is that the #overnment doesn6t wanta stron# udiciar%" !ecause that mi#ht create .ro!lems" he added

=he current court s%stem is uni@uel% ade.t at .roducin# unreasona!ledela%" e*or!itant cost" unha..% disaected .artici.ants" uneven and oftenunfair results =he onl% .eo.le who seem to !e .ro7tin# are the law%ersand ud#es resultin# from dissatisfaction and disma% of liti#ants $owever"

demoni8in# the adversarial s%stem shouldn6t !e the usti7cation for thedesire to see out alternatives =he usti7cation should !e to .rovideclients with satisfactor% and s.eed% results

What is the wa% out of this .revailin# s%stem/ Some scholars have claimedthat there should !e a multi doored court house- the% call for alternativesand reservin# courts for those activities for which the% are !est suited andto avoid swam.in# and .aral%8in# them with cases that do not re@uiretheir uni@ue ca.a!ilities

Dierences !etween Ar!itration" 'onciliation" 9ediation and Ie#otiation2htt.


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$owever" the de7nition in section 2132a3 of the said act is merel% aclari7cation that the act covers institutional and ad hoc ar!itration =hisde7nition is !ased on the de7nition mentioned in clause 2a3 of article of MI'&=RAL model law Accordin# to that .rovision thee*.ressionKar!itration is de7ned as under


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.rocess ma% have to .ass throu#h several sta#es lie .re.aration" ointsessions" .rivate meetin#s and 7nal result

9eanin# of Ie#otiation

1 &t is the sim.lest means for redressal of dis.utes &n thismode the .arties !e#in their tal without interference of an% third.erson =he aim of ne#otiation is the settlement of dis.utes !%e*chan#e views and issues concernin# the .arties =here is anam.le o..ortunit% for .resentation of case in this mode of redressal&f there is understandin# and element of .atience !etween the.arties this mode of redressal of dis.ute is the sim.lest and mosteconomical

Ie#otiation is a communication .rocess used to .ut deals to#etheror resolve con0icts &t is a voluntar%" non-!indin# .rocess inwhich the .arties control the outcome as well as the .rocedures !%which the% will mae an a#reement Because most .arties .lace ver%few limitations on the ne#otiation .rocess" it allows for a wide ran#eof .ossi!le solutions ma*imi8in#

Dierence !etween conciliation and Ar!itration1 =hou#h lie ar!itration" conciliation is also another means of settlin#

dis.utes" the% two dier in man% vital as.ects =he onl% similarit%that a..ears !etween the two is that a third .erson is chosen ornominated !% the .arties to resolve their dis.utes

=he method of conciliation is #enerall% a..lica!le to e*istin#dis.utes" while the mode of ar!itration is availa!le for e*istin# aswell as for the future dis.utes

, 4or ado.tin# the method of conciliation" there is no need for a .riora#reement for resortin# to this method" !ut in ar!itration a .riora#reement for ar!itration !etween the .arties is re@uired

G =he .re-a#reement in ar!itration must !e in writin# !ut since no.re-a#reements are re@uired in conciliation" there is no such !indin#in the case of conciliation


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=he conciliation .roceedin#s start !% sendin# a written invitationand a written acce.tance thereof in !etween the .arties =heinvitation ma% !e acce.ted or reected !% the other .art% as it hasno !indin# eect" !ein# an invitation onl% =he .rior written

a#reement in ar!itration commands a !indin# eect u.on the.arties and its !reach !% resortin# to court" com.els court to referthe matter to the ar!itration and .arties are !ound !% the ar!itrala#reement

) While conciliation .roceedin#s are in .ro#ress" there is a !ar on.arties from initiatin# ar!itral or udicial .roceedin#s as .er sectionHH of the new act 1(() &n ar!itration" the ar!itral a#reement itselfsu##est for redressal of dis.utes throu#h ar!itration and if an%.art% a..roaches court" the other .art% ma% re@uest the court to

refer the matter to ar!itration and court is !ound to refer suchmatter to the ar!itral =ri!unal

H Where .arties fail to determine the num!erof ar!itrators:conciliators" the act envisa#es odd num!er ofar!itrators or sole ar!itrators:conciliators 5arties ma% a#ree for twoor three conciliators and ma*imum num!er of conciliators cannote*ceed three Where the num!er of conciliators is more than one"the% as a matter of #eneral rule should act ointl% 5arties ma% seeassistance in a..ointment of conciliators" the assistance of an%

suita!le institution or .erson &n case of ar!itrators there is no !aron their ma*imum num!er !ut the total should not !e even num!erWhen .arties a#ree for three ar!itrators" each .art% shall a..ointone and these two shall a..oint the third ar!itrator who shall !e.residin# ar!itrator

C A settlement a#reement ma% !e made !% the .arties themselves andthe conciliator shall authenticate the same An ar!itration award onother hand" is not merel% a settlement a#reement !ut it is ud#mentdul% si#ned !% the ar!itrator

( =he conciliation .roceedin#s ma% !e unilaterall% terminated !% awritten declaration !% a .art% to the other .art% and the conciliator"!ut ar!itration .roceedin#s cannot !e so terminated


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1 =he ar!itration .roceedin#s or awards ma% !e used asevidence in an% udicial .roceedin#s !ut the conciliation .roceedin#scannot !e used as evidence in an% ar!itral or udicial .roceedin#s

11 Last !ut not the least" an ar!itrator has to decide accordin# tolaw" !ut a conciliator can conciliate irres.ective of law

Dierence !etween conciliation and 9ediation

1 =hou#h conciliation and mediation a..ear to !e similar ininterchan#ea!le terms" there is su!tle dierence !etween the two&/ 0td. v. Ispiration 'lothes ? @;/ 9 S'' 9C

Mhene#er a "atter under Section G arises there are certain issues that are

to 'e decided ' a courtB >Boo+e Allen ? Hailton v. SBI Hoe Finance 0td,>@99/ 1 S'' 1D@ /

Mhether there is an ar'itration a$ree"ent 'etween the arties Mhether all the arties to the suit are arties to the ar'itration

a$ree"ent. Mhether the disutes which are the su'%ect "atter of the suit fall

within the scoe of the ar'itration a$ree"ent. Mhether the defendant had alied under Section G of the Act for

reference 'efore su'"ittin$ his !rst state"ent on the su'stance of

the disute and Mhether the reliefs sou$ht in the suit are such as can 'e ad%udicated

and $ranted in an ar'itration.

Section G() ro#ides that if an art to an ar'itration a$ree"ent

'rin$s 'efore a %udicial authorit the "atter co#ered ' the

a$ree"ent, the other art "a al for sta of the suit and for order


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of reference to ar'itration. H under the E49 Act the court could sta

such roceedin$s if it found there was no su>icient reason wh the

"atter should not 'e referred to ar'itration 'ut now u/s.G the court

has no choice 'ut to refer the arties to ar'itration.

Derel ha#in$ an ar'itration a$ree"ent is not $ood enou$h. This is 'ecause

the e#en if ou ha#e a #alid a$ree"ent, the "o"ent ou "a*e a re6uest, the

art "a withdraw consent and sa see ou in court. n that case, the

oint of ha#in$ a #alid ar'itration a$ree"ent is futile. Therefore, S. G

i"oses an e"'ar$o on the arties to necessarily $o to ar', ' $i#in$ the

ower to the Courts8eference to ar'itration. This is in toto with S. G of the

D; = 2(2) of the 5KC.I ut S. G uses the word %udicial authorit instead of

Court. The le$islati#e intent is that e#en if a "atter $ets raised anwhere

other that Court, that 3A would still 'e dut 'ound to "a*e a referenceJPAG Raju v. PVG Raju (!!!" # S$$ %&' $ase This case "a*es it

clear that e#en the SC actin$ under SG is a %udicial authorit, and it is

"andatoril 'ound to refer the arties to ar'itration if an alication is

"ade. n this case, the ar' a$ree"ent was si$ned durin$ the endenc of

the aeal. The Court states the re6uire"ents under S G , as follows

(F


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t should 'e noted that u/s G, onl a art to the ar' a$ree"ent can "a*e an

alication. ut the idea of art is associated with onl the alication and

not the action. s it a art to a suit or the art to an ar'itration

a$ree"ent. t is a art to an ar'itration a$ree"ent. This section en#isa$es

a situation where a party 'rin$s the action, and another party "o#es the

alication.

n case of a art who has 'rou$ht the action to a ci#il suit, he has wai#ed

his ri$ht to al. n case of the other art, if he has su'"itted !rst

state"ent of disute, that leads to 'ilateral a#oidance of contract. 5o

ower of the Court to "a*es a suo "oto reference, there "ust 'e an

alication.IAlthou$h inHardy Mills Int5l case the SC see"s to su$$est a

suo "oto ower, 'ut thats "erel o'iterJ

0ne of the primar* re1uirements un)er S.8 is that the matter in the

2action3 shou+) be a 2subject matter of the arb agreemnt3. 4n essence,whatever the matter is- it shou+) be encapsu+ate) within the arb

agreement. 56g A c+ause +i7e a++ )isputes regar)ing this matter

shou+) be subject to arb

Su7an*a 9o+)ings case n this case, it was rea>ir"ed that whate#er "a

'e the "atter ou are referrin$, it "ust fall s6uarel within the ar'itration

a$ree"ent. Mhen the whole disute is co#ered ' the ar'itration

a$ree"ent, that is erfectl !ne. ut the ro'le" arises when onl so"e of

the arts of so"e arties are su'%ect "atter of the ar'itration a$ree"ent,

then there arises a ro'le". The Court sas that allowin$ so"e arties toroceed to the ci#il court, 'ut restrictin$ the other to ar'itration would

dela the whole rocess, and "oreo#er, there is no ro#ision in the Act

allowin$ such 'ifurcation. So in such a case, where onl so"e of the arties

and so"e of the arts are su'%ect "atter, then there can 'e no reference to

ar'itration. ut as )iscusse) inA! this )oes not impose an embargo

on entering into an arbitration agreement after the matter is in

$ourt.

The i"ortant asect of S.G is that the alication should 'e "ade 'efore

su'"ittin$ the !rst state"ent on the su'stance of the disute. S4 of the Act

tal*s a'out wai#er, which denotes that the failure to as* for ar'itration is an

wai#er of the ri$ht to ar'itrate. So the 1uestion that nee)s to be

e:amine) is what e:act+* is 2/rst statement on the substance of the

)ispute3. 5ow in the E49 Act, it was stated that it should 'e 'efore the

written state"ent. The usa$e of the ter" !rst state"ent of disute "a*es

it wider. ut )oes that mean submission of )ocuments in inci)enta+


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procee)ings, +i7e a counter to an app+ication see7ing temporar*

injunction be a+so /rst statement of )isputeN

TheRashtriya Ispat 'ase tells us a'out this.

Rashtriya Ispat3 n this case, there was a rel to a raer for an interi"

order, wherein the art!lin$ rel had to di#ul$e his defence which couldha#e 'een ta*en as the written state"ent, i.e., that there is an ar'

a$ree"ent existin$. After that it !led an alication. This oosed ' the

oosite art who clai"ed that while !lin$ a rel to the raer for the

interi" order, the ha#e !led their !rst state"ent on the su'stance of the

disute. Accordin$ to the Court, !rst state"ent can 'e !led e#en 'efore

written state"ent. Althou$h it does not exactl denote what a !rst

state"ent is, it states that the !rst state"ent re$ers to a suission o$ the

party aEing the application under section o$ the Act, to the jurisdiction

o$ the judicial authorityG and (hat should e decided y the court is(hether the party seeEing re$erence to aritration has (aived his right to

invoEe the aritration clause.

(F22). ased on this, the Court held that a rel to a counter a>ida#it

cannot 'e held 'e a su'"ission of the !rst state"ent of disute.

The Court further sas that isclosure of a defence for the urose of

oosin$ a raer for in%unction would not necessaril "ean that su'stance

of the disute has alread 'een disclosed in the "ain roceedin$.

Sule"ental and incidental roceedin$ are not art of the "ain

roceedin$, and therefore, a counter !led in a sule"ental roceedin$,

which in this case the were 'ound to !le, cannot 'e e6uated with a wai#er

of their ri$ht to ar'itrate.

This was followed in toto in theBoo+e Allen case.

S.8(" is a negative connotation, which suggests that the app+ication

un)er S.8(;" sha++ not be entertaine), un+ess it is accompanied b*

the origina+ arbitration agreement. he precise connotation of2accompan*3 was )ea+t with in Southern "ailway case, Giving a

purposive interpretation to this, the $ourt he+) that what the $ourt

nee)s is an arbitration agreement to be in p+ace, i.e, if the

agreement is a+rea)* before the $ourt or if it is a c+aims of )efence

an) other part* )oes not )ispute it, then it can be sai) to

accompan*.


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he most important aspect of S.8 is if it is open to the $ourt to chec7

the e:istence or va+i)it* of the arb agreement< 4f it is, then what is

the status an) va+i)it* of such /n)ing< =ow, S 8(&" te++s *ou that *ou

can start arbitration without a ju)icia+ authorit*. =ow what if, in

these para++e+ procee)ing, the tribuna+ )eci)es that there is no arb

agreement whi+e the $ourt )eci)es there is" % S$$ %;!n this case, there was an ar'itration

a$ree"ent in the "ain contract, 'ut the "ain contract was alle$ed to 'e

#itiated ' "assi#e fraud, and the arties reresentin$ the co"an were

con#icted ' a Lorean Court. Doreo#er, the Dadras &C had assed a

te"orar in%unction a$ainst ndia &ousehold restrainin$ the" fro" doin$certain thin$s under the a$ree"ent as a resonse to the alle$ation that the

a$ree"ent was fraudulent. t was ar$ued that the ar'itration a$ree"ent is

a di>erent a$ree"ent alto$ether and e#en if the "ain contract is #itiated '

fraud, the sanctit of the ar'itration a$ree"ent should 'e uheld. The court

o'ser#ed that althou$h nor"all, where e$istence of an arbitration

agreement can be found, apart from the e$istence of the original

agreement, the Courts would construe the agreement in such a

manner so as to uphold the arbitration agreement, however, when a

%uestion of fraud is raised, the same has to be considered

di&erently. A fraud, the Court held, vitiates all solemn acts.

elin$ on the -atel n$ineerin$ case, the Court held that it is "andator

for the 3A u/s G to satisf itself a'out the #alidit of the ar'itration

a$ree"ent. Since in this case, the "ain contract, and conse6uentiall the

ar'itration a$ree"ent is #itiated ' the fraud, there can 'e no reference to

ar'itration. n addition the Court also held that the Dadras &C order,

restrainin$ the arties fro" actin$ under the a$ree"ent would also include

actin$ under the ar'itration clause. The SC, would therefore, not $i#e a

direction which would 'e contrar to another lawful order.

I&owe#er, one 6uestion that arise is, in this case, the alle$ation of frauds

was su' %udice. Mhat if the Court decidin$ that issue later co"es in and

sas no fraudN n case that is the onl decision ' the Court, lo$icall, the

ar'itration a$ree"ent still ersists, and a reference to ar'itration can 'e

sou$ht. ut in "ost cases, the Court, after decidin$ no fraud, $oes ahead

and decides all the su'stanti#e ri$hts and o'li$ations. n that case, the


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"atter ha#in$ alread 'een sol#ed ' the Court, it "a*es no sense to allow

a reference to ar'itration a$ain. J

The %urisrudence on fraud was further re!ned '%. RadhaErishnan case.

%.RadhaErishnan3 n this Court there was an alle$ation of fraud, 'ut it

was contended ' the other art that the sa"e should 'e referred to

ar'itration in #iew of the ar'itration clause, as cases of fraud clearl fall

within the ur#iew of the ar'itration clause. &owe#er, the Court in this

case, stated that the "atter should 'e tried in a court of law which would

'e "ore co"etent and ha#e the "eans to decide such a co"licated

"atter in#ol#in$ #arious 6uestions and issues raised in the resent

disute. (F2).

elin$ on the case of oar Sait H, the 'ourt opined that the ci#il

court is not re#ented fro" roceedin$ with the suit desite an

ar'itration clause if disute in#ol#es serious 6uestions of law or

co"licated 6uestions of fact ad%udication of which would deend uon

detailed oral and docu"entar e#idence.

Alle$ations re$ardin$ clandestine oeration of 'usiness under so"e

other na"e, issue of 'o$us 'ills, "aniulation of accounts, carrin$ on

si"ilar 'usiness without consent of other artner are serious alle$ations

of fraud, "isreresentations etc., and therefore alication for referenceto Ar'itrator is lia'le to 'e re%ected.(F)

Therefore, the %urisrudence e#ol#in$ fro" these cases are, where#er there

is e#en a "ere alle$ation of fraud with re$ard to the "ain contract, that

cannot 'e as*ed for reference to ar'itration under S.G. IChea Tric*B f ou

want to 'ass an ar'itration a$ree"ent , raise an alle$ation of the "ain

contract 'ein$ fraudulent. Dere alle$ation is enou$h@

0ne of the primar* cha++enges to inc+usion of the power to )e+ve into

the issues of e:istence of va+i)it* b* the ?A is the scheme of the Act

itse+f. @hereas S. 8 of the L e:press+* states that the court shou+)


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refer un+ess it /n)s it to be nu++ an) voi), inoperab+e or incapab+e of

being performe)B. S.8 does not contain an* such stipu+ation. A++ the

cases above have treate) this as a causus ommisus. ut if we +oo7 at

S. #%, that provision, whi+e )ea+ing with the reference in the

internationa+ conte:t, e$pressly uses the words underlined above. 4n

that case, is it correct to sa* that it is caussus ommisus, which essentiall i"lies that the

Court has to loo* at the 6uestion of #alidit. Doreo#er, se#eral cases ost

S- has held it to 'e %udicial authorit on the oint of deter"ination of

existence and #alidit. his ma7es the power of the arbitra+ tribuna+ to

)etermine on its own juris)iction an) the e:istence an) va+i)it* of

the arbitration agreement uCs ;D subject to the )etermination b* the?A uCs 8- which is c+ear+* unwarrante) in the scheme of the Act.


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he +ast 1uestion that arises in this regar) is that, as has been he+),

arbitration is a consensua+ process. $an a non- part*, therefore be

referre) to arbitration;, C:/


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Section '- 4nterim easure

The interi" "easures are in#o*ed ' the court under this section to rotect

the ri$ht under ad%udication 'efore the ar'itral tri'unal fro" 'ein$

frustrated. The section conte"lates issuance of interi" "easures ' a

court onl at the instance of a art to an ar'itration a$ree"ent with re$ard

to the su'%ect "atter of the ar'itration a$ree"ent.

The urose of S.E is to ensure that the roert which is the su'%ect "atterof ar'itration is not di#erted or destroed and also to ensure that the

arties are a'le to full exloit the e#identiar #alue of the roert in

disute. The court has the sa"e ower for "a*in$ an interi" order under

Section E of the Act, for the urose of aointin$ a $uardian or for

reser#ation, interi" custod etc. of $oods, as it has for the urose of and

in relation to an roceedin$s 'efore it. &ence the court will act accordin$

to the owers #ested in it ' the rocedural laws such as the C-C and A.

These orders are ai"ed atB- -reser#in$ the assets- -rotectin$ the osition of the arties- Daintainin$ status 6uo- -rocurin$ e#idence


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5rinci.les ?overnin# ?rant of an &nunction

The rinciles $o#ernin$ $rant of an ad interi injunctionare the sa"e asin other ci#il "atters. t is on the lainti> to show there is a ri"a faciecase and that the 'alance of con#enience lies in his fa#or and if the

in%unction is not $ranted he is li*el to su>er irreara'le in%ur. &ence thefollowin$ factors "ust 'e considered while $rantin$ interi" in%unctionB

- Mhether the erson see*in$ in%unction has "ade out a ri"a faciecase

- Mhether the 'alance of con#enience is in his fa#or, that is, whether itcould cause $reater incon#enience to hi" if the in%unction is not$ranted that the incon#enience that would 'e caused to the otherart if the in%unction is $ranted.

- Mhether the erson see*in$ te"orar in%unction would su>erirreara'le in%ur. ('( )abrics v, Sand last #ndia *td., +--5 +

Arb *" /0/.4t is not necessar* that a++ the con)itions state) above must be

presente) for obtaining an or)er of temporar* injunction. $on)ition

; must be present, which is a sine %ua non, a+ong with at +east an*

one of the other two con)itions must be present.

emporar* 4njunctions are regu+ate) b* 0r)er &' of the $P$. Ru+e ;

states that such an injunction can be grante) if the p+aintiE provesb* aEi)avit or otherwise-

- An* propert* in )anger of being waste), )amage) or a+ienate)b* an* part* to the suit, or wrongfu++* so+) in e:ecution of a

)ecreeF or- he )efen)ant threatens or inten)s to remove or )ispose of his

propert* with a view to )efrau)ing his cre)itorsF or- he )efen)ant threatens to )ispossess, the p+aintiE or

otherwise cause injur* to the p+aintiE in re+ation to an*

propert* in )ispute in the suit.

n the case of#nHouse roductionthere was an interi" order sou$ht withre$ard to the stoa$e of airin$ of a TQ show called PQi*ra"adita@. Theetitioner clai"ed an interi" in%unction t9 sto the other art fro"assi$nin$ the "ar*et ri$ht of this articular serial to another and to stoairin$ of the show. The Court, in this context , discussin$ the #arious issuesfurther clari!ed that a'o#e osition, wherein it held that ordinar rocedure


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while oeratin$ u/ E "ust "ean that P while considerin$ the 6uestion of$rant of an interi" relief in the nature of in%unction, underlin$ rincilesfor $rant of in%unction as alica'le in roceedin$s under ?rder E ules and 2 of the Code of Ci#il -rocedure would 'e alica'le.

t further held that Pthe court is re6uired to satisf itself that there is ari"a facie case in fa#our of the art as*in$ for in%unction and irreara'lein%ur or da"a$e would 'e caused if in%unction is not $ranted and 'alanceof con#enience lies in fa#our of the alicant@(FE).

=ow. ' speci/ca++* )enotes that an interim measure ma* be as7e) for

on+* b* a 2a part*B. he 1uestion arose in the NHA# 1 China Coalcase, if a non-part* can be a))e) as a part* to the arbitration

agreement b* the $ourt.

=9A4 V $hina $oa+ n this case there was a contract 'etween 5ational&i$hwa Authorit of ndia and China Coal for the construction of ahi$hwa. This contained an ar' a$ree"ent. 5ow, CC entered into anotherhire urchase contract with S, which also had an ar'itration a$ree"ent.5ow, when a disute 'etween 5&A and CC arose, 5&A aroached theel &C as*in$ for an interi" order see*in$ that the "achiner of CC wouldnot 'e "o#ed fro" the site. This was $ranted. 5ow S, on the other hand,aroached the Cal &C, see*in$ an aoint"ent of recei#er for the"achiner of CC. The Cal &C, without considerin$ the el &C %ud$e"ent,also $ranted the sa"e. #identl, these two %ud$e"ents were in con:ict.

Therefore, S, aroached the elhi &C, durin$ the S.E roceedin$,clai"in$ that the %ud$e"ent a>ected his ri$ht and he 'e also treated asart to the S.E roceedin$s.

The Court, howe#er, re%ected this re6uest held that , Pthe nter#enor has nori#it of contract with 5&A. t is also clear that the nter#enor is not aart to the ar'itration roceedin$s@ Therefore, Pnter#enor cannot s 'e aart in the ar'itral roceedin$s endin$ 'etween 5&A and China Coal, ithas no locus standi in the resent roceedin$s. The interi" orders that "a'e assed under Section Eor Section 0are with resect to the arties tothe ar'itration and in connection with the su'%ect "atter thereof.@ (F


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to of forming part of the land which are agreed to be severed beforesale of under the contract of sale. This de!nition is rele#ant for S.E ofthe Act as it confers owers on the court for reser#ation, interi" custodor sale of an $oods, which are the su'%ect "atter of the ar'itrationa$ree"ent. The court can rotect the Su'%ect8"atter fro" da"a$e,

deterioration or destruction and also fro" 'ein$ "isaroriated ' theart who has control or custod of the". Under this clause it is notnecessar for the court to !nd out whether the resondent is see*in$ todisose of the roert or ta*in$ the roert outside the %urisdiction of thecourt.

Section '(ii"(b" Securing the amount in )ispute in the arbitration

This ro#ision is not attracted unless the a"ount sou$ht to 'e secured isactuall disute in the ar'itration. ach case under this section has to 'econsidered in its own facts and circu"stances and on the rinciles ofe6uit, fair la and $ood conscience.


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when re6uired, the said roert or the #alue of the sa"e, or such ortionthereof as "a 'e su>icient to satisf the decree, or to aear and showcause wh he should not furnish securit.

(2) The lainti> shall, unless the court otherwise directs, secif the

roert re6uired to 'e attached and the esti"ated #alue thereof.() The court "a also in the order direct the conditional attach"ent of thewhole or an ortion of the roert so seci!ed.

(4) f an order of attach"ent is "ade without co"lin$ with the ro#isionsof su'8rule () of this rule, such attach"ent shall 'e #oid.

=ationa+ Shipping $ompan* of Sau)i Arabia v. Sentrans 4n)ustries

Limite) A4R !!# om ;&D

Iacts The Aellant sou$ht an order directin$ the resondent to deosit asu" of 2.G Dillion ollars in order to secure the clai" of the etitioner inthe Ar'itration roceedin$s. The aellant contends that the resondent(hisa$ent) has 'reached the o'li$ations relatin$ to accountin$ and !nancialreortin$ contained in the a$ree"ent. The aellant contends that theresondent had recei#ed and collected frei$ht in the su" of s. ,0


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indeendent ro#isions dealin$ with that. &owe#er where the act is silenton rocedural issues, recourse "a 'e ta*en to the ro#isions under C-C.he e:ercise of power un)er Section '(ii" (b" can3t be restricte) b*

importing the provisions of 0r)er &8 Ru+e %. he gui)ing factor for

e:ercise of court power un)er this c+ause has to be whether the

or)er )eserves to be passe) for justice to the cause. The alicationfor interi" in%unction under Section E(ii)(') is $uided ' e6uita'leconsideration and each case has to 'e considered in li$ht of its facts andcircu"stances.

Section '(iii"(c" etention, preservation or inspection of an*

propert*

The urose of such interi" "easures is to re#ent the roert or thin$fro" 'ein$ altered, destroed or disosed of, 'efore the e#idence of existin$state can 'e secured for the urose of ar'itration. An interi" "easure canalso 'e ordered ' the court in relation to roert or thin$ re$ardin$which an 6uestion "a arise in the ar'itral roceedin$s. Under this clausethe court is within its owers to authoriOe an erson to enter uon anland or 'uildin$, which is in ossession of an art to the ar'itrationroceedin$ with the o'%ecti#e of o'tainin$ full infor"ation or e#idence.

Section '(ii"()"- 4nterim injunction or the appointment of a receiver

-endin$ disosal of disutes ' the ar'itrators, the resondents "o#ed analication u/s. E(d) for an ad8interi" in%unction restrainin$ the aellantfro" transferrin$ or alienatin$ the alu"ina lin$ in the aellants silos.9e+) that in or)er to protect the interests of the parties on groun)s

of e1uit* an) ba+ance of convenience, the respon)ent were a++owe)

to ta7e the goo)s whi+e the appe++ant wou+) be pai), as an interim

measure, the va+ue of the goo)s. he respon)ent was a+so as7e) to

furnish a ban7 guarantee for the )iEerence in va+ue as c+aime) b*

the appe++ant an) va+ue /:e) b* the court. he appe++ant in turn ha)

to give an un)erta7ing to pa* a++ sums which ma* become pa*ab+e

un)er the awar) within D wee7s from the same becoming pa*ab+e. .8NA*C4 v. !erald (etalsA4R !!# S$ ;#&&.

@hether 4nterim easures can be invo7e) before the

commencement of arbitra+ procee)ings


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Sun)aram Iinance v. =6P$ 4n)ia (;'''" S$$ #>'

Iacts esondent entered into a hire urchase a$ree"ent with aellantfor sul to 2 wind tur'ine $enerators alon$ with all accessories. -a"entsto 'e "ade ' the resondent in 7 install"ents. After a"ent of the !rst

< install"ents the resondent co""itted default.The a$ree"ent contained an ar'itration clause. The aellant found outthat liti$ation was endin$ a$ainst the resondent and 'rou$ht analication under section E rain$ the aoint"ent of an Ad#ocateCo""issioner to ta*e custod of the hire8urchase "achiner and restorethe interi" custod of the aellant. The trial court assed an interi" orderto ta*e ossession of the tur'ines with the hel of the olice. esondents!led a etition U/A. 220 'efore the Dadras &i$h Court.

$ontention of the respon)entsB There were no ar'itration roceedin$sendin$ and e#en the ar'itrator had not 'een aointed, hence analication u/s.E is not "aintaina'le.

9igh $ourt3s 9o+)ingB An art, who has an a$ree"ent for ar'itrationwith another can rush to Ci#il Court and strai$ht awa $et an order underSection E and thereafter *ee 6uiet without referrin$ the "atter toAr'itration. The #er fact that Section G co"es after Section E , the onlinterretation that could 'e $i#en to Section E is that it could 'e a#ailed ofwhen an ar'itration roceedin$ is endin$ 'efore the ar'itral tri'unal.&ence S.E can onl 'e a#ailed of when an ar'itration roceedin$ is endin$'efore the ar'itral tri'unal or is at the reference sta$e 'efore the court or

after the Ar'itral award has 'een "ade.9o+)ing of the Supreme $ourt EE7 Act is #er di>erent fro" the E49Act and the ro#ision ha#e 'e interreted and construed indeendentl.Section 2 states that ar'itration roceedin$s are said ha#e co""enced onthe date of which a re6uest for the disute to 'e referred to ar'itration isrecei#ed ' the resondent. t is in this context that the court "ust exa"ineand interret the exression P'efore or durin$ ar'itral roceedin$s@"entioned under Section E of the Act. Deanin$ has to 'e $i#en to the wordP'efore@, an interretation li*e the one $i#en ' the &i$h Court wouldha#e the e>ect of renderin$ the ter" u/s.E redundant. Rea)ing the

section as a who+e it appears to us that the court has juris)iction toentertain an app+ication un)er Section ' either before arbitra+

procee)ings or )uring arbitra+ procee)ings or after ma7ing of the

awar) but before it is enforce) in accor)ance with Section &D of the

Act.+urther Article E of the D; see*s to clarif that aroachin$ the courtfor interi" "easures would not 'e re$arded as 'ein$ inco"ati'le with anar'itration a$ree"ent. Under the n$lish Ar'itration Act a roosed art


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has 'een $i#en the ri$ht to aroach the court. @hen an app+ication is/+e) un)er Section ' there must be a manifest intention on the part

of the app+icant to ta7e recourse to the arbitra+ procee)ings. Mhileassin$ an interi" order the Court "ust ensure that e>ecti#e stes areta*en ' the alicant for co""encin$ the ar'itral roceedin$s.

The issue of "anifest intention was addressed in the case of)irm Asho2raders v. !urumu2h 'as SalujaA4R !!# S$ ;#&&.n that case, therewas a artnershi a$ree"ent, which was not co""unicated to the ?C, 'utthe !r" entered into a contract anwa. The artnershi a$ree"ent had anar' clause. 5ow disutes arose 'etween the artners, and a $rou ofartners !led an interi" alication under S. E see*in$ for aoint"ent of arecei#er. The Court dealt with two issues in that case

- s an alication under S.E 'arred ' S. 7 of the A=C Act, and- Can S.E 'e e#o*ed 'efore co""ence"entN

The 6uestion re$ardin$ S. 7 is not rele#ant for our urose. Mith re$ard tothe interi" alication 'efore the start of the roceedin$s, the Court notedthat the word 'efore co"es 'efore the word ar'itration roceedin$swhich "ust i"l that the two e#ents sou$ht to 'e interconnected ' use ofthe ter" 'efore "ust ha#e roxi"it of relationshi ' reference tooccurrence the later e#ent pro*iatelyfollowin$ the recedin$ e#ent as aforeseea'le or within si$ht certaint. Therefore, u/s E, the initation ofar'itration "ust 'e within a reasonale ti"e fro" "a*in$ the alication.The distance of ti"e "ust not 'e such as would destro the roxi"it ofrelationshi of the two e#ents 'etween which it exists and elases.(F0)

The Court o'ser#ed that PThe art ha#in$ succeeded in securin$ aninteri" "easure of rotection 'efore ar'itral roceedin$s cannot a>ord tosit and slee o#er the relief, con#enientl for$ettin$ the roxi"atelconte"lated or "anifestl ntended ar'itral roceedin$s itself. P t isi"ortant to note that the Court also held that Pf ar'itral roceedin$s arenot co""enced within a reasona'le ti"e of an order under Section E, the

relationshi 'etween the order under Section Eand the ar'itralroceedin$s would stand snaed@. Therefore, the Court is o'li$ed to as*the arties as to when and how it intends to start ar'itration roceedin$swhile issuin$ an order u/s E, and it "a ut in actual conditions to the artand can recall the order if that is not followed.

An alication for interi" "easure can 'e "ade either 'efore or durin$ar'itral roceedin$s or at the ti"e after "a*in$ ar'itral award. t was held
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that when at the ost reference sta$e an alication for interi" "easurecan 'e entertained ' the court *eein$ the 6uestion of %urisdiction or#alidit of ar'itration a$ree"ent oen for the ar'itral tri'unal then thesa"e can also 'e "ade at a re8reference sta$e on a pria $acie #iew.86ohli 7ros. v. Atlantis (ultiple$ vt. *td.A4R !!8 A++ #&

Princip+es governing appointment of Receivers

The Court, u/s E, can aoint a recei#er. &owe#er, it should 'e noted thataoint"ent of recei#er is an extre"e "easure, to 'e ta*en onl when theinterest of the other art or creditors are se#erel threatened and there inthe . 6rishnaswamy case, the Court noted down the condition foraoint"ent of recei#er. t noted that P. The !#e rinciles which can hedescri'ed as the Vanch sadachar of our Courts exercisin$ e6uit%urisdiction in aointin$ recei#ers are as follows(F)B

>9/ !he appointent o$ a receiver pending a suit is a atter resting in the

discretion o$ the 'ourt.The discretion is not ar'itrar or a'soluteB it is asound and judicial discretion,ta*in$ into account all the circu"stances ofthe case, exercised8for the urose of er"ittin$ the ends of %ustice, androtectin$ the ri$hts of all arties interested in the contro#ers and thesu'%ect8"atter and 'ased uon the fact that there is no other ade6uatere"ed or "eans of acco"lishin$ the desired o'%ects of the %udicialroceedin$

(2) The Court should not aoint a recei#er excet uon roof ' the

lainti> that ri"a facie he has #er excellent chance of succeedin$ in thesuit.

() 5ot onl "ust the lainti> show a case of ad#erse and con:ictin$ clai"sto roert, 'ut, he "ust show soe eergency or danger or lossdeanding iediate action and o$ his o(n right, he ust e reasonaly

clear and $ree $ro dout. The ele"ent of dan$er is an i"ortantconsideration. A Court will not act on ossi'le dan$er onl the danger uste great and iinent deanding iediate relie$. t has 'een trul saidthat a Court will ne#er aoint a recei#er "erel on the $round that it will

do no har".(4) An order aointin$ a recei#er (ill not e. ade (here it has the eecto$ depriving a de$endant o$ a Kde $actoK possession since that ight cause

irreparale (rong. f the disute is as to title onl, the Court #erreluctantl distur's ossession ' recei#er, 'ut i$ the property is e*posed todanger and loss and the person in possession has otained it through, $raud

or $orce the 'ourt (ill interpose y receiver $or the security o$ the property.


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t would 'e di>erent where the roert is shown to 'e in "edio, that is tosa, in the en%o"ent of no one, as the Court can hardl do wron$ in ta*in$ossessionB it will then 'e the co""on interest of all the arties that theCourt should re#ent a scra"'le as no one see"s to 'e in actual lawfulen%o"ent of the roert and no har" can 'e done to anone ' ta*in$ it

and reser#in$ it for the 'ene!t of the le$iti"ate who "a ro#e successful.Therefore, e#en if there is no alle$ation of waste and "is"ana$e"ent thefact that the roert is "ore or less in "edio is su>icient to #est a Courtwith %urisdiction to aoint a recei#er.

ther(ise a receiver should not e appointed in supersession o$ a one Lde

possessor o$ property in controversy and 'ona !des ha#e to 'e resu"eduntil the contrar is esta'lished or can 'e indu'ita'l inferred.

(


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the side of one or the other art, was i$nored. This was challen$ed 'Asho* and Dan"ohan 'efore the istict %ud$e who ut a sta on the order.

$ontention of the Petitionern the etition 'efore the &C, eea* Ditra

challen$ed that the i"u$ned order could not 'e "ade the su'%ect "atterof challen$e as the said order cant 'e ter"ed to 'e an award and since theorder dated /4/EEG had 'eco"e !nal, it could not 'e reoened andchallen$ed ' the 3 who has ille$all assu"ed the %urisdiction not #estedin hi" ' assin$ the interi" order stain$ the result on 'asis of the #otin$in the extraordinar "eetin$.

$ontention of the Respon)ent The order followin$ the #otin$ is aninteri" award $ranted ' the tri'unal and can 'e challen$ed under Section

4 'efore the 3. Under Section E(ii)(d) the 3 has the ower to ass interi"orders indeendent of the roceedin$s under Section 4 of the Act.

Mhether order followin$ the #otin$ falls within the a"'it of de!nition

of awardN f the order is an interi" award, is the 3 a roer court to entertain

an alication under Section 4 of the Act and has a ower underSection E(ii)(d) to ass an interi" orderN

9o+)ing of 9igh $ourtThe ar'itral tri'unal can "a*e an interi" awardon an "atter it "a "a*e a !nal award uon as er Section (7) of theAct. Under Section 2()(c) an interi" award is also an award and has to 'e"ade in the sa"e wa as an award after hearin$ the arties, and onconsideration of the e#idence adduced. n order to 'e an interi" award thear'itrator "ust deter"ine so"e art of the disutes referred to it. nteri"award is #irtuall intended to 'e in the nature of a decree and thus is lia'leto set aside as the !nal ar'itral award and the ro#isions of Section 4 ofthe Act "a 'e in#o*ed for the urose. The order followin$ the #otin$ onlstates that the exlorator "ission with re$ard to the di#ision of roertfailed. &ence it is not an interi" award as it doesnt decide ri$hts of the

arties or deter"ines their lia'ilit. n rincile, an interi" award for that"atter is a !nal deter"ination of a articular issue or clai" in thear'itration. &ence, since there is no interi" award here the 3 exceeded his%urisdiction to entertain an alication which otherwise is not le$all"aintaina'le. Power un)er Section ' is not unbri)+e). here arecertain restrictions attache). Iirst+*, it ma* be e:ercise) b* the court

to the same e:tent an) in the same manner as it cou+) for the


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purpose of or in re+ation to an* procee)ing before it an) secon)+*

the e:ercise of the power to ma7e interim arrangements shou+) not

mi+itate against an* power which might be veste) in the Arbitra+

ribuna+. 9ence, the power un)er Section ' is to be e:ercise) b* the

court on+* in sparing circumstances.

?JK State Iorest $orporation v. Ab)u+ Karim @a+i(EGE (2) SC G9)Bnterest to 'e aid ' U?8"atter referred to ar'itration8 held that the courtcould not direct U? ' "andator in%unction to a the a"ounts due underthe contracts to the co"an. Instance that Section : is not intended tocon$er on the 'ourt a lanEet po(er to pass any interi easure during the

pendency o$ the proceedings.

+ilin$ for an interi" "easure u/s E "eans an undisuted existence withre$ard to the #alidit and existence of the ar'itration a$ree"ent, howe#er,

it is oen for the Court ot suo "oto chec* the #alidit and declare it in#alid.

The instance of chec*in$ the #alidit while $rantin$ interi" "easure u/s E

is in addition to the in6uir into the existence and #alidit u.s E an . The

6uestion of con:ict 'etween these decisions ha#e not 'een addressed et.

&owe#er, the 6uestion of a con:ict 'etween S. 0 and S. E has 'een

addressed in the 'hina 'oal case. n that case, the Court holds that P

?'#iousl, the court 'ein$ hi$her in the hierarch and 'ein$ a %udicial

foru", would ha#e ri"ac insofar as o#erlain$ orders are concerned.Another reason for this is that the orders assed ' an Ar'itral Tri'unal

$rantin$ or refusin$ to $rant an interi" "easure under Section 0are

aeala'le under Section 0(2)(')of the said Act. So, an order that "a 'e

assed ' an Ar'itral Tri'unal is alwas su'%ect to orders that "a 'e

assed ' a Court in an aeal referred there a$ainst.@(F4).

t "ust also 'e noted that the issue of (non) enforce"ent of the order of the

tri'unal under S. 0 was also addressed in the(.'. Army case. n that

case the Court held that the ower in toothless in as "uch as ther is no

"eans for enforce"ent.

PA 'are erusal of the afore"entioned ro#isions would clearl

show that e#en under Section 0of the EE7 Act the ower of the

ar'itrator is a li"ited one. &e cannot issue an direction which

would $o 'eond the reference or the ar'itration a$ree"ent.

+urther"ore, an award of the ar'itrator under the EE7 Act is not
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re6uired to 'e "ade a rule of court the sa"e is enforcea'le on its

own force. #en under Section 0of the EE7 Act, an interi" order

"ust relate to the rotection of the su'%ect8"atter of disute and

the order "a 'e addressed onl to a art to the ar'itration. t

cannot 'e addressed to other arties. #en under Section 0of the

EE7 Act, no ower is conferred uon the Ar'itral Tri'unal to

enforce its order nor does it ro#ide for %udicial enforce"ent

thereof.@(Fice of the consultants 'ein$ in elhi and sta"aers ha#in$ 'een urchased fro" elhi, elhi Courts had%urisdiction. HAnsal Build(ell 0td. v. %"I&DS 299


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Section ;!, ;; $omposition an) ?uris)iction of Arbitra+ ribuna+s

t is oen to the arties to confer uon an ar'itral tri'unal such owers andrescri'e such rocedure for it to follow as the thin* !t, so lon$ as theare not oosed to the law. This is also found under S.2G of the Act and thetri'unal can deart fro" it onl under an exress a$ree"ent 'etweenarties in which case the disute "a 'e decided accordin$ to %ustice andfairness or what is $ood accordin$ to e6uit and conscience and not

necessaril accordin$ to technical le$al re6uire"ents.

5ow, the 6uestion is, is this ro#ision, which sas shall not 'e an e#en

nu"'er director or "andatorN This 6uestion arose in the case of*ohia v

*ohia +/88/ 9 SCC 5:/.

n this case there was a fa"il disute which was sou$ht to 'e sol#ed ' the

aoint"ent of t(o ar'itrators. The disute was sol#ed, and an award was

rendered ' the tri'unal. The arties a$$rie#ed ' the award, #er cle#erl

challen$ed the award, and as*ed to Court of set it aside on the $round of

#iolation of S.9. Cal &C acceted this challen$e and set it aside. Aeal

also dis"issed, and "atter reaches SC.

The esondents ar$u"ents were as followsB

. The ro#ision under S.9 is a "andator ro#ision as shall not has 'een

used. Therefore, an a$ree"ent which er"its the arties to aoint an

e#en nu"'er of ar'itrators would 'e contrar to this "andator ro#ision of

the said Act.I...J Such an a$ree"ent would 'e in#alid and #oid as the

Ar'itral Tri'unal would not ha#e 'een #alidl constituted.

. Mith re$ard to wai#er, it was ar$ued that wai#er can onl 'e allowed for

dero$a'le ro#isions as er S. 4 (a). n this case, the odd nu"'er 'ein$ a"andator re6uire"ent, this cannot 'e wai#ed u/s 4.

. Section 9co"ulsoril recludes aoint"ent of an e#en nu"'er of

Ar'itrators in u'lic interest and as a "atter of u'lic olic. f there are an

e#en nu"'er of Ar'itrators there is a hi$h ossi'ilit that, at the end of the

ar'itration, the "a di>er. n that case, arties would 'e left re"ediless
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and would ha#e to start liti$ation or afresh ar'itration all o#er a$ain.I This

$oes on to e"hasise its non8dero$a'le natureJ

Q.Mith re$ard to *o"eeteO8 *o"etenO (tri'unals ower to rule on its

own %urisdiction), it was ar$ued that S. 7, where the ar'itral tri'unal canrule on its own %urisdiction has no ro#ision dealin$ with the co"osition of

the ar'itral tri'unal. &owe#er, S.4, which allows the 'ourt to set aside an

award, has co"osition of the tri'unal as a $round. Therefore, this

su$$ests, that a Court and not the tri'unal can, u/s 7 loo* into the issue of

fault co"osition of the tri'unal, and therefore, it is not oen to sa that in

case of fault co"osition8 aroach tri'unal u//s7. This is 'ecause a

co"osition 'ein$ fault, the tri'unal is not #alidl constituted, and an

inherent assu"tion under for S.7 to co"e into force is that the tri'unal

"ust 'e #alidl constituted in the !rst laceJ.

The Aellants resonded in the followin$ "annerB

. S. 9 starts with arties are free to deter"ine. Since ar'itration is a

"atter of a$ree"ent 'etween the arties. &e su'"its that $enerall, in an

ar'itration, the arties are free to deter"ine the nu"'er of ar'itrators and

the rocedure. Therefore, e#en after the arties ha#e deter"ined to aoint

an e#en nu"'er, under S.7, Iarties are free to o'%ect. Under

Section 7(2)such an o'%ection can 'e ta*en e#en thou$h the arties had

aointed or articiated in the aoint"ent of the ar'itrator. Therefore, an

o'%ection to the nu"'er can 'e raised under S.7 and since it has not 'een

raised in this case, it has to 'e considered to 'e wai#ed.

. Section 4(2)(a)(#)does not er"it the settin$ aside of an award on the

$round of co"osition of the ar'itral tri'unal if the co"osition was in

accordance with the a$ree"ent of the arties. Section 4(2)(a)(#)would

co"e into la onl if the co"osition was not in accordance with the

a$ree"ent of the arties. n this case the co"osition is in accordance with

the a$ree"ent of the arties and, therefore, the award cannot 'e set aside

on this $round.

. #en if it is faultil constituted, under S.4, the Court ay set aside the

award. The usa$e of the word "a su$$ests that it is at the direction of the

Court, and hence cannot 'e said to 'e a "andator ro#ision.

Q. The raised a counter u'lic olic ar$u"ent statin$ that there could 'e

no law which er"its a art who has so aointed and articiated to then
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resile and see* to ha#e the award set aside. t would 'e a$ainst u'lic

olic to er"it waste of ti"e, "one and ener$ sent in the ar'itration '

ha#in$ the award set aside. t would also 'e ine6uita'le to er"it such a

art to challen$e the award on this $round.

The SC !nall sas thatBThe answer to this 6uestion would deend on 6uestion as to whether, under

the said Act, a art has a ri$ht to o'%ect to the co"osition of the ar'itral

tri'unal, if such co"osition is not in accordance with the said Act and if so

at what sta$e. t therefore e"hasise on the idea of a wai#er, i.e., if ou

ha#e a ri$ht to o'%ect then ou "a choose not to oject and therefore, it id

director.(F


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The E49 Act ro#ided for the aoint"ent of an u"ire, 'ut the E7 act

"a*es no "ention of an u"ire. +or the urose of ad%udication all

ar'itrators on the sa"e le#el.

5ow, this case sas that if the aoint"ent is "ade at the 'e$innin$, and

the third disa$rees with the !ndin$s of the other two (chosen ' the arties)his disa$ree"ent is inconse6uential. This is not ossi'le if it was an u"ire.

So, if it is a$reed that it does tal* a'out an ar'itrator, that lea#es us with

the ro'le" of restartin$ e#erthin$ all o#er a$ain.

+urther this Act is the third case afterBhatia and Balco which rewrites the

law, in so far as it holds that S.9 is not "andator, and the ar'itrators can,

in case of a disa$ree"ent aoint a third ar'. t renders the words Pshall

not@ totall nu$ator.

The Court also see"d to ha#e confused 'etween the choice of the arties to

choose the nuer and the choice to choose e#en and odd. Mhereas thearties ha#e the choice to choose nuer, the ro#ision pria $acie

"andates odd and not e#en.

YThis art was not done in class, 'ut see"s i"ortant. n the later -art,

Qenu$oal see"ed to ar$ue that the u/s 4, the arties can challen$e an

award, e#en if it is accordance with the a$ree"ent of the arties, if such an

a$ree"ent is in con:ict with the non8dero$a'le ro#isions of the Act. 5ow,

he interrets failin$ such an a$ree"ent as an a$ree"ent which is not in

consonance with -art , and therefore, an a$ree"ent not in consonance

with art needs to 'e set aside. IThis ar$u"ent "a*es #er little sense to"e, as it sees" he was confused 'etween the !rst art which said if

a$ree"ent8then it "ust 'e in contra#ention to non derogale provisions5

and the second art, which sas only i$ agreeent not there, then against

any provision o$ the (hole Act5.This intrerretation renders nu$ator the

fact that in so"e situations it is onl de#iation fro" the non8dero$ator

clause on which it can e' struc* downJ

The Court co"es in and clari!es and sas that Section 4(2)(a)(#)onl

alies if Vthe co"osition of the ar'itral tri'unal or the ar'itral rocedure

was not in accordance with the a$ree"ent of the artiesV. These oenin$words "a*e it #er clear that if the co"osition of the ar'itral tri'unal or

the ar'itral rocedure is in accordance with the a$ree"ent of the arties,

as in this case, then there can 'e no challen$e under this ro#ision.

The 6uestion of Vunless such a$ree"ent as in con:ict with the ro#isionsof this ActV would onl arise i$ the coposition o$ the aritral triunal or


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the aritral procedure is not in accordance (ith the agreeent o$ theparties. Mhen the co"osition or the rocedure is not in accordance withthe a$ree"ent of the arties , 'ut e#en in such a case the ri$ht tochallen$e the award is restricted.

Therefore, e#en if the co"osition of the ar'itral tri'unal or the ar'itralrocedure is not in accordance with the a$ree"ent of the arties 'ut ifsuch co"osition or rocedure is in accordance with the ro#isions of thesaid Act, then the art cannot challen$e the award.

The words failin$ i"l a'sence of an a$ree"ent, and in that case,#iolation of any provision of the Act would ne enou$h to set aisde.

atioB S.9 is a dero$a'le ro#ision. The arties "ust raise an o'%ection

a'out nu"'er 'efore the tri'unal us/7. f not, it is considered as wai#er u/s

4.

Section 8 Aoint"ent of Ar'itrators

$an the $ourt create its own proce)ure when a proce)ure for

appointment has been agree) upon between the partiesC/on the aritral triunal constituted y an order under Section 99>;/.

In 2onEan Rail(ays, (hile deciding on the nature o$ po(er us.99>;/6 the

court stated that although the po(er has een vested (ith a 'J or his

noinee us.996 it (as iperative $or the 'hie$ Justice to ear in ind the

legislative intent that the aritral process should e set in otion (ithout

any delay (hatsoever and all contentious issues to e raised e$ore the

aritral triunal itsel$. Further in vie( o$ S.9; it (ould e appropriate $or

the 'hie$ Justice to appoint an aritrator (ithout (asting any tie or

(ithout entertaining any contentious issue y a party ojecting to the

appointent o$ an aritrator. Hence the order passed should e purelyadinistrative, therey $acilitating the achieving o$ the oject o$ the Act,

i.e. speedy disposal o$ coercial disputes and that such an order could

not e sujected to judicial revie(. Ho(ever an order re$using to appoint an

aritrator ade y the 'hie$ Justice could e challenged under Article @@;

o$ the 'onstitution.

&owe#er the court in this case o'ser#ed certain ro'le"s with thisaroach8 !rstl what if a lea for non8existence of ar'itration a$ree"ent israised ' a art in suit u/s.8 is the court suosed to co"e to aconclusion without followin$ the ad%udicator rocessN f so, wh has thisower 'een conferred on the hi$hest %udicial authoritN ra$$in$ a art toar'itration, when there is no ar'itration a$ree"ent or when there existedno ar'itra'le disute can certainl a>ect the ri$ht of that art and e#en in"onetar ter"s, i"ose a serious lia'ilit on hi" for "eetin$ the exensesof the ar'itration. the ti"e an a$$rie#ed art can challen$e the awardunder Section 4, it would ha#e sent a considera'le a"ount on the ar'itralroceedin$s. +urther decidin$ on such issues in the initial sta$e would ta*e


75/169

care of a host of issues, lea#in$ the art a$$rie#ed with a re"ed ofaroachin$ this court under Article 7 of the Constitution. ?nce the"atter is decided on its "erits8the ar'itral tri'unal would 'e a'le to decidethe disute on "erits unha"ered ' reli"inar and technical o'%ections.n the lon$ run this would 'e "ore conduci#e to "ini"iOin$ %udicial

inter#ention in "atters co"in$ under the Act.

+urther the order of Chief 3ustice u/s.(7) of the Act su'%ected to thescrutin under Article 227 at the hands of another %ud$e of the &C see"sincon$ruous. +urther it was noticed in other countries where U5CTA;"odel was 'ein$ followed that the court could decide such issues %udiciall8if the order of C3 or his no"inee were to 'e treated as ad"inistrati#e order8it could 'e challen$ed 'efore the Sin$le 3ud$e 'ench or a i#ision ench ofthe &i$h Court and then the SC under Article 7, which would causefurther dela in ar'itral roceedin$s.

t is funda"ental to the rocedural %urisrudence that ri$ht of no ersonshall 'e a>ected without $i#en the chance to 'e heard. The 'asicre6uire"ent for exercisin$ the ower "entioned under/s. (7) is theexistence of an ar'itration a$ree"ent8 hence he "ust consider certainissues 'efore roceedin$ with the aoint"ent.

@hether the $? of 9$ or $?4 can )esignate a non-ju)icia+ bo)* or

authorit* to e:ercise power un)er S.;;(D" of the Acticient and are notreu$nant to the rocedural law and ractice of the seat of ar'itration. t

was further o'ser#ed that the concet of art autono" in internationalcontracts is resected ' all sste"s of law so far as it is not inco"ati'lewith the roer law of the contract or the "andator rocedural rules of thelace where the ar'itration is a$reed to 'e conducted or an o#erridin$u'lic olic.

$ontention of the Respon)entst was ur$ed that an alication underSection of the Ar'itration and Conciliation Act, EE7, is nothin$ 'ut a

ste in erfor"ance of the ar'itration clause and since the erfor"ance ofthe De"orandu" is to 'e $o#erned ' the laws of n$land and Males,accordin$ to the choice of the arties, it is the rocedural law of n$landand Males which has to 'e alied to the erfor"ance of the ar'itrationa$ree"ent as well. eferrin$ to the decision in the 5ational Ther"al -owerCororation case (sura), which had also 'een referred to ' Dr. 1uta, Dr.Triathi su'"itted that in the said decision the #iews of %urists such asice, Dustill and od and ussel had 'een reiterated in suort of thecontention that the o#erridin$ rincile is that the courts of the countr,whose su'stanti#e laws $o#ern the ar'itration a$ree"ent, are co"etent

courts in resect of all "atters arisin$ under the ar'itration a$ree"ent, andthe %urisdiction exercised ' the courts of the seat of ar'itration is "erelconcurrent and not exclusi#e and strictl li"ited to the "atter of rocedure.

Mhen the arties exressl choose the roer law of the contract, as in theinstant case, in the a'sence of a clear intention such law "ust $o#ern thear'itration a$ree"ent also thou$h it is collateral and ancillar to the "aincontract.


83/169

Dr. Triathi ur$ed that si"ilarl where the seat of ar'itration is indicated,then, unless there is an indication to the contrar, it will 'e dee"ed that thelace where the roer law $o#ernin$ the ar'itration roceedin$s is inforce is the lace chosen ' the arties to 'e the seat of ar'itration as well.;earned Counsel referred to the decision of the Court of Aeal in 5a#iera

A"aOonica -eruana S.A. #. Co"ania internacional e Se$uros el -eru,reorted in ;lods ;aw eorts EGG (Qol.) 7, wherein it was held thatwhile interretin$ an ar'itration clause the use of the hrase Var'itrationa$reein$ to the conditions of laws of ;ondonV "eans that the ar'itrationwas to 'e held in ;ondon, not ' the i"lication of so"e additional ter",'ut ' $i#in$ to those words their ordinar co""ercial "eanin$.

Dr. Triathi su'"itted that in this case also since the arties had stiulatedthe law which was to $o#ern the De"orandu", 'ut had not indicated theseat of ar'itration, in *eein$ with the consistent #iews exressed ' theCourts and %urists, it "ust 'e held that the seat of ar'itration "ustnecessaril 'e the Courts of n$land and Males. Dr. Triath su'"itted thatconse6uentl this Court has no %urisdiction to entertain the alicantsetition under Section (E)of the Ar'itration and Conciliation Act, EE7,and the sa"e was lia'le to 'e dis"issed.

Dr. Triath also ur$ed that the exression V"a 'e referred to ar'itrationVor Vcan 'e referred to ar'itrationV ha#e consistentl 'een held ' the ndianCourts to 'e antithetical to the concet of ar'itration. eference was "adeto #arious decisions on this count as well. e$ardin$ use of the exressionVad%udicationV, Dr. Triath su'"itted that a !nal decision arri#ed in such

ad%udication roceedin$s would not "a*e it a #alid ar'itration a$ree"ent.&e ur$ed that unless it is the clear intention of the arties that ar'itration isto 'e the onl foru" for ad%udication of disutes, the re6uire"ent of a #alidar'itration clause is not ful!lled.

9o+)ing of the $ourt The decision in the hatia nternational case(sura) has 'een rendered ' a ench of Three 3ud$es and $o#erns thescoe of the alication under consideration, as it clearl las down that the

ro#isions of -art8 of the Ar'itration and Conciliation Act, EE7, would 'ee6uall alica'le to nternational Co""ercial ar'itrations held outsidendia, unless an of the said ro#isions are excluded ' a$ree"ent 'etweenthe arties exressl or ' i"lication, which is not so in the instant case.

+urther"ore, fro" the wordin$ of Clause .2 and Clause . a"con#inced, for the urose of this alication, that the arties to the


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De"orandu" intended to ha#e their disutes resol#ed ' ar'itration and inthe facts of this case the etition has to 'e allowed.

$itation 4nfowares v. 61uino: $orporation ((!!'">S$$!"

Iacts The alicant D/s Citation nfowares ;td. is a co"an re$isteredunder the Co"anies Act carrin$ on 'usiness in United States of A"ericaas also in 1ur$aon, ndia throu$h its esta'lish"ent/su'sidiar. Theresondent 6uinox Cororation is also a co"an re$istered within thearoriate laws of United States of A"erica, ha#in$ its o>ice at 9,Cororate -ar*, Suit 5o. 9, r#ine, CA8 E2797, USA. The 6uinoxCororation has 'een carrin$ on 'usiness in ndia throu$h outsourcin$. tis also carrin$ on 'usiness in ndia throu$h its own esta'lish"ent in ndia,6uinox 1lo'al Ser#ices -ri#ate ;i"ited (hereinafter called [1S-;). Thesaid 1S-; is a co"an re$istered under the Co"anies Act and has itso>ice in 1ur$aon. t is leaded in the alication that the resondentco"an 6uinox Cororation (hereinafter called [C) had entered into anoutsourcin$ a$ree"ent sin$ed in Lol*ata, ndia with the alicant Citationnfowares ;td (hereinafter called [C;) on 9E.92.2994 wherein thealicant was en$a$ed as a ser#ice ro#ider on ter"s and conditionscontained in the a$ree"ent. t was a$reed in this a$ree"ent dated9E.92.2994 that C; which had 'a$$ed orders fro" its client and since ithad su>icient funds, sace and existin$ infrastructure to execute thero%ects and since it re6uired exert "anower to ro#ide ser#ice to itsclient and further since C; had aroached C for ro#idin$ the re6uired

nu"'er of resources to C; as a$ainst the "onthl char$es at "utualla$reed consideration, C had a$reed to ro#ide resources and, hence, 'oththe arties had, in short, "utuall a$reed to do the 'usiness on certaina$reed ter"s.

t is the clai" of the alicant that it created infrastructure for seatin$caacit of 299 custo"iOed seats at 1ur$aon address of the resondents

and sa"e were 'ein$ utiliOed ' the resondent. All the three a$ree"entswere si$ned at Lol*ata, ndia and the ser#ices were 'ein$ ro#ided andrendered under the said a$ree"ent ' the alicant at 1ur$aon, ndia.

?n this 'ac*dro, ' a notice dated 9E.9.299G sent throu$h e8"ail, theresondent ter"inated the a$ree"ents dated 2


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co"ensated ' the resondent tentati#el at US \ 2,4E,G2. Thealicant also leads that the resondent had also failed to a theoutstandin$ a"ount of US \ 7,2,G2 aa'le to the alicant under thecontract a$ainst the in#oice raised ' the alicant for the eriod fro" 3ul,2990 to 3anuar, 299G. The alicant also clai"ed on this a"ount the

interest ] G Z er annu"

The a$ree"ent dated 2


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I2992J2SC4 (cited sura), arties had exressl excluded the ro#isionsof -art of the Ar'itration and Conciliation Act, EE7. The ;earned SeniorCounsel #er hea#il relied on the last art of -ara 2 of the %ud$"ent incase of7hatia #nternational(cited sura). The learned Senior Counsel,therefore, ur$ed that e#en if %ud$"ent in case of7hatia

#nternational(cited sura) was held alica'le, it was in fact, lia'le to 'eread in fa#or of the resondent and not the alicant. The ;earned SeniorCounsel also in#ited our attention to another %ud$"ent of this CourtinNational hermal ower Corporation v. Singer Company andAnr. reorted in DA5U/SC/947/EEB IEE2JSC97 and SumitomoHeavy #ndustries *imited v. 4N!C *imitedreorted in AEEGSCG2< .Aart fro" these %ud$"ents, the ;earned Senior Counsel relied on adecision of the &ouse of ;ords in case of;ames (iller < artners *td. v.=hitworth Street >states *td.in suort of the roosition that wherethe arties ha#e a$reed that the $o#ernin$ law would 'e a forei$n law,

nor"all the 6uestion relatin$ to Ar'itral Tri'unal would also 'e $o#erned' such forei$n law. The other decision relied uon ' the ;earned SeniorCounsel is the decision of -ri# Council in7ay Hotel and "esort ltd. v.Cavalier Construction Co. *td.reorted in 299 UL-C 4/299 M;G2


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a'out the countr where the ar'itration is a$reed to 'e held and reciselthis situation is a'sent in the resent case. &ere the su'stanti#e law ofcontract $o#ernin$ the contract is seci!call a$reed uon. &owe#er, thelace where ar'itration would 'e held is not to 'e found in the lan$ua$e ofClause 9.. Therefore, the situation inNational hermal ower

Corporation?s case(cited sura) was not alica'le to the resent case.

The Court undou'tedl further $oes on to sa that where the roer law ofcontract is exressl chosen ' the arties such a law "ust, in the a'senceof un"ista*a'le intention to the contrar, $o#ern the ar'itration a$ree"entwhich, thou$h collateral or ancillar to the contract, is ne#ertheless a artof the contract. t is this exression which has 'een hea#il relied uon 'the learned senior counsel for the resondent.

&owe#er, in7hatia #nternational(cited sura), dul considered in#ndtelechnical Services? case(cited sura) is aart fro" the fact that thero#isions of the Ar'itration and Conciliation Act, EE7 were not alica'leeither in Sin$ers case or e#en in Sumitomo Heavy #ndustries? case(citedsura). The issue re$ardin$ the alica'ilit of -art of the EE7 Act tointernational co""ercial ar'itration also did not fall for consideration inthese cases. t "a 'e that the Ar'itrator "i$ht 'e re6uired to ta*e intoaccount the alica'le laws which "a 'e the forei$n laws 'ut that does note>ect the %urisdiction under Section which falls in -art which has 'eenseci!call held alica'le in7hatia #nternational

Seen the stri*in$ si"ilarit 'etween Clause 9. and Clauses . and .2which ha#e 'een 6uoted a'o#e and further the #iew exressed ' learned3ud$e in#ndtel echnical Services? case(cited sura) re$ardin$ theexclusion, it is not ossi'le to read e#en distantl such an i"lied exclusionof -art . t cannot 'e for$otten that one of the contractin$ arties is thendian art. The o'li$ations under the contract were to 'e co"leted inndia. +urther considerin$ the nature of the contract, it is di>icult to readan such i"lied exclusion of -art in the lan$ua$e of Clause 9.. Thatar$u"ent of learned senior counsel for the resondent therefore "ust 'ere%ected.

This "eans that the contentions raised 'ased on the three forei$n cases 'Shri L.L. Qenu$oal;ames (iller < artners? case(cited sura),7ayHotel and "esort? case(cited sura) andA77 *ummus !lobal?scase(cited sura) need not 'e considered in #iew of the 'indin$ nature ofthe three afore"entioned decisions in7hatia #nternational(citedsura), 1enture !lobal >ngineering?s case(cited sura), and#ndtel


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echnical Services? case(cited sura). &owe#er, since those cases areacti#el relied uon the sa"e are considered as follows.

n the !rst "entioned case, the 6uestion was as to the alica'le law ofcontract and not the alica'le law of ar'itration where the arties had

seci!call a$reed on the law of contract. The factual situation was,therefore, di>erent. The relied on o'ser#ations at a$e 77 of the decisionare "ore in the nature of o'iter.

n so far as the7ay Hotel and "esort? case(cited sura) is concerned thereliance is laced on ara$rah < of the said decision to the followin$e>ectB

!(o points in the speech o$ 0ord 8iler$orce are notale here. First, he

said that in the noral case (here the contract itsel$ is governed y "nglish

la(, any aritration (ould e held under "nglish procedure. Secondly, he

said that the ere $act that the aritrator (as to set either partly or

e*clusively in another part o$ the


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Section 2 las down the $rounds for challen$in$ the ar'itrator with theintent of re#o*in$ his authorit.

The authorit "a 'e challen$ed onl if

i. Circu"stances exist that $i#e rise to %usti!a'le dou'ts as to hisindeendence or i"artialit

ii. &e doesnt ossess the 6uali!cations a$reed to ' the arties

iii. The challen$e "a 'e "ade ' a art onl for reasons of which he'eco"es aware after the aoint"ent has 'een "ade.

a) oubt as to in)epen)ence or impartia+it* at initia+ stageS. of

the E49 e"owered the court to re"o#e an ar'itrator on 2 $rounds

i. Ar'itrator failed to use all reasona'le disatch in enterin$ onand roceedin$ with the reference and "a*in$ the award

ii. The ar'itrator had "isconducted hi"self or the roceedin$s

The resent Act onl ro#ides for re"o#al of the ar'itrators either ' thearties the"sel#es or ' the Ar'itral Tri'unal.

harat $o7ing $oa+ Lt). V. L.K. Ahuja J $o. (!!;" # S$$ 8D

Iacts 2 wor*s were assi$ned ' the aellant for construction ursuant toa tender. The wor* was assi$ned to the resondent and the date forco"letion of the resecti#e wor*s were !xed as 24//EG and E//EG.The resondent sou$ht extension of ti"e which was $ranted ' theaellant8 disutes arose 'etween the arties and the "atter was referredto the sole ar'itrator. The ar'itrator "ade two awards in resect of the twocontracts, which were !led in the court of the Ci#il 3ud$e. The awards"ade were onl with reference to a"ent of "aterial escalation in the twoclai"s.

9o+)ing of the $ourtThe award rendered ' the ar'itrator is h'rid i.e.neither a sea*in$ award nor a non8sea*in$ award. f its a non8sea*in$award it cant 'e challen$ed unless it is ro#en that ar'itrator has wholl


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tra#elled outside the contract which $i#es hi" the %urisdiction. &owe#er inthe case of a sea*in$ award the court can interfere if there is an erroraarent on the face of the award H it "a also 'e shown that the ar'itratorhas "isconducted hi"self in arri#in$ at certain conclusions which are eitherlainl contrar to law or to the ter"s of the contract or i$nored the

ro#isions of contract or the e#idence on record and such other si"ilar"atters. After loo*in$ into the concerned clause relatin$ to ro#ision of"aterials, the court ca"e to the conclusion that the ar'itrator failed toal his "ind and the case will clearl disclose that there is an erroraarent on the face of the award. +urther the ar'itrator had dealt with the"atter hi"self as an o>icer who had corresondence with the contractor atthe ti"e when he was an o>icer of the aellant8 it would not 'e fair to thearties8 &ence the award was to 'e set aside and new ar'itrator had to 'eaointed.

') isc+osure of circumstances b* propose) arbitrator Thear'itrator "ust 'e, and "ust 'e seen to 'e disinterested andun'iased. The ar'itrator should ha#e no connection, direct orindirect, with a art such that it creates an aearance of artialit.t is easier to reco$niOe than to de!ne the 'oundar 'etween whatre#ious connections do and do not dis6ualif. est @hether areasonab+e person who was not a part* to the )ispute wou+)

thin7 it +i7e+* that the connection was c+ose enough to cause

the arbitrator to be biase).

Ranjit ha7ur v. O04 (A4R ;'8> S$ &8D"

4ssue Mhat is the test of P'ias@N (1enerall, and not seci!call #is8_8#isA=C Act)

Iacts The aellant, a Si$nal Dan in a Si$nal e$i"ent of the Ar"edSer#ices, while ser#in$ out a sentence of 2G das ri$orous i"rison"ent(;st punishment" i"osed on hi" ' the Co""andin$ o>icer of the

e$i"ent resondent 5o. 4, for #iolatin$ nor"s for resentin$reresentations to hi$her o>icers, was alle$ed to ha#e co""itted anothero>ence (n) punishment" ' refusin$ to eat his food on Darch 2E, EGered fro" an 'ias, it will alwas 'e oen to theart to "a*e an alication under section 4 of the Act to set aside the

award on the $round that ar'itrator acted with 'ias or "alice in law or fact.

4t is now we++ sett+e) b* a series of )ecisions of this $ourt that

arbitration agreements in government contracts provi)ing that an

emp+o*ee of the epartment (usua++* a high oEicia+ unconnecte)

with the wor7 or the contract" wi++ be the Arbitrator, are neither voi)

nor unenforceab+eQQQ =othing in sections ;;, ;, ;8 or other

provisions of the Act suggests that an* provision in an arbitration

agreement, naming the Arbitrator wi++ be inva+i) if such name)

arbitrator is an emp+o*ee of one of the parties to the arbitration

agreement.

he )ecisions un)er the o+) Act (;'#! Act" on this issue are not

irre+evant when consi)ering the provisions of the new ;''D Act

here can however be a justi/ab+e apprehension about the

in)epen)ence or impartia+it* of an 6mp+o*ee-Arbitrator, if such

person was the contro++ing or )ea+ing authorit* in regar) to the

subject contract or if he is a )irect subor)inate (as contraste) from

an oEicer of an inferior ran7 in some other )epartment" to the

oEicer whose )ecision is the subject matter of the )ispute. Mherehowe#er the na"ed ar'itrator thou$h a senior o>icer of the$o#ern"ent/statutor 'od/$o#ern"ent co"an, had nothin$ to do withexecution of the su'%ect contract, there can 'e no %usti!cation for anonedou'tin$ his indeendence or i"artialit, in the a'sence of an seci!ce#idence. Therefore, senior o>icer/s (usuall heads of deart"ent ore6ui#alent) of a $o#ern"ent/statutor cororation/ u'lic sectorunderta*in$, not associated with the contract, are considered to 'eindeendent and i"artial and are not 'arred fro" functionin$ asAr'itrators "erel 'ecause their e"loer is a art to the contract.

The osition "a 'e di>erent where the erson na"ed as the Ar'itrator is

an e"loee of a co"an or 'od or indi#idual other than the state and itsinstru"entalities. +or exa"le, if the irector of a ri#ate co"an (whichis a art to the Ar'itration a$ree"ent), is na"ed as the Ar'itrator, there"a 'e #alid and reasona'le arehension of 'ias in #iew of his osition andinterest, and he "a 'e unsuita'le to act as an Ar'itrator in an ar'itrationin#ol#in$ his co"an.


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c) oubts )eve+oping afterwar)sB t re6uires the ar'itrator to discloseto the arties in writin$ and without an dela an circu"stancesde#eloin$ after the ti"e of his aoint"ent and durin$ the course ofthe ar'itral roceedin$s which $i#e rise to a %usti!a'le dou't a'outhis indeendence of i"artialit.

Section ;&- Proce)ure for $ha++enge

The rocedure is so"ewhat li*e the rocedure under the recedin$ Act forsee*in$ the lea#e of the court for re#o*in$ the authorit of the ar'itrator.&ence certain rinciles laid down in earlier cases ha#e not lost theirsi$ni!cance.

Amar$han) La+it7umar v. Shree Ambi7a ?ute i+ss Lt). ( A4R ;'DD

S$ ;!&D"

Iacts Seller of raw %ute entered into an a$ree"ent to sul %ute to a "ill8the seller failed to sul8 disute arose8 "atter was referred to ar'itrationto the cha"'er of co""erce. Seller challen$ed the authorit of thecha"'er statin$ that due to the scarcit of %ute rice had shot u lacin$the seller and 'uer in two di>erent ca"s and the Cha"'er was art of

the 'uers ca"8 hence its decision wouldnt 'e i"artial.

9o+)ing of the $ourt efore the court e:ercises its )iscretion to give

+eave to revo7e an arbitrator3s authorit*, it shou+) be satis/e) that a

substantia+ miscarriage of justice wou+) ta7e p+ace in the event of its

refusa+- the groun)s on which +eave to revo7e cou+) be given were

put un)er /ve hea)s

;. 6:cess or refusa+ of juris)iction b* arbitrator

. iscon)uct of arbitrator

&. is1ua+i/cation of arbitrator

#. $harges of frau)

%. 6:ceptiona+ cases.

Section ;# Iai+ure or impossibi+it* to act


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Section 4() sets out certain $rounds on which the "andate or authorit ofan ar'itrator can 'e ter"inatedB

. Mhen the ar'itrator either in law or factuall 'eco"es una'le to

erfor" his functions or

2. +or so"e reason he fails to act without undue dela

. The arties a$ree to the ter"ination.

Sh*am e+ecom v. Arm Lt). (!!8(&"ARLRD;%(e+hi""

4ssue Mhether the "andate of an Ar'itrator ter"inates on the exir of

the stiulated eriod for "a*in$ the Award as ro#ided in the Ar'itrationA$ree"ent within the "eanin$ of Section 4 of the Ar'itration andConciliation Act, EE7N

IactsAr' a$ree"ent states that ar'itrator shall co"e out with an awardwithin 7 "onths H 7 "onths elase H Ar'. sas that since clai"ant hascontinued with the roceedin$s e#en after 7 "onths, he has wai#ed the P7"onth decision@ clause. Clai"ant "o#es to Court a$ainst this order.

9o+)ing of the $ourt n the oinion of this Court, the exression Vde %ureVis a"l wide so as to co#er a situation li*e the case in hand. This #iew is'ased on the settled le$al osition that ar'itration a$ree"ent is thefountain head of the Ar'itrators ower and authorit and the arties as wellas the Ar'itrator are $o#erned and controlled ' the ter"s of the saidAr'itration a$ree"ent. Unless arties a$ree to the contrar, the ter"s ofAr'itration a$ree"ent "ust oerate in full. The conse6uence of theAr'itrator not concludin$ the roceedin$s and renderin$ the Award withinthe eriod rescri'ed under the Ar'itration a$ree"ent as in the resentcase would uncloth the Ar'itrator of his le$al authorit to continue with theroceedin$s unless the arties a$ree to extend the eriod of "a*in$ theAward or a art wai#es his ri$ht to such an o'%ection. 4t must, therefore,be he+) that e:pir* of the prescribe) perio) for ma7ing the Awar),

wou+) ren)er the Arbitrator )e jure unab+e to continue with the

procee)ings an) has the eEect of termination of the man)ate of the

Arbitrator within the meaning of Section ;# of the Act


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t is true that EE7 Act does not rescri'e an ti"e li"it for "a*in$ andu'lishin$ the Award 'ut that does not "ean that arties cannot ' "utuala$ree"ent ro#ide for a ti"e li"it for "a*in$ the Award ' the Ar'itratorand if so rescri'ed it would run contra to the ro#isions of the Act. This#iew aears to 'e "ore lausi'le and acceta'le ha#in$ re$ard to the

o'%ect of ha#in$ Ar'itration as the alternate "ode for settle"ent ofdisutes/di>erences 'etween the arties. The "ethod of Ar'itration toresol#e the disutes/di>erences 'etween the arties certainl ai"s atexeditious resolution of/the disutes 'ecause it is considered that the ti"eta*en ' the Courts esta'lished ' the State for resolution of the disutes isundul lon$ and cu"'erso"e. t "ust, therefore, 'e held that the ro#isionof ti"e li"it for renderin$ Award ' the Ar'itrator in an Ar'itrationa$ree"ent is not hit ' the ro#isions of the Act and is to 'e $i#en e>ectunless the arties a$reed to "odif or extend the sa"e ' "utual consent.

9owever, no o'%ection was raised a'out the continuation of the Ar'itralroceedin$s 'ut the etitioner continued to articiate in su'stanti#eroceedin$s 'efore the Ar'itrator u till the !nal sta$e of the roceedin$s.n the oinion of this Court, these facts and circu"stances are so $larin$ soas to attract the doctrine of wai#er within the "eanin$ of Section 4 of theAct. t is a settled le$al osition that wai#er will 'e dee"ed to ha#e ta*enlace when a art *nowin$ that an irre$ularit has 'een co""itted, didnot o'%ect to the sa"e 'ut articiated in the Ar'itration roceedin$swithout rotest. Section 4 of the EE7 Act corresonds to Article Q ofU5CTA; Dodern ;aw. The rincile of wai#er is not new in theAr'itration law as it was so far contained in the case law and has 'een

codi!ed in the statute. esides, in the oinion of the Court the ri$ht too'%ect the continuance of the roceedin$s on the $round of exir of thestiulated eriod is one which falls in -art8 of the Act and which isdero$a'le. The o'%ect of ro#idin$ ti"e li"it for renderin$ an Award ' theAr'itrator is ai"ed at exeditious resolution of the disutes rather than tolea#e the disutes unsettled or inconclusi#e on the exir of the stiulatederiod. 8Thus, loo*in$ at the "atter fro" an an$le, this Court is of theoinion that ha#in$ re$ard to the entiret of the facts and circu"stances,the etitioner will 'e dee"ed to ha#e wai#ed its ri$ht to o'%ect a'out thecontinuation of the roceedin$s or alle$in$ the ter"ination of the "andate

of the Ar'itrator si"l on the $round that the ti"e rescri'ed underArticle Q() of the i#est"ent a$ree"ent for "a*in$ the Award hadexired.

ecision H wai#er, the Ar' Tri'unals "andate continues H Ar'.roceedin$s to 'e resu"ed.


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=9A4 v. K K Sarin

4ssues Mhether the aoint"ent of the ar'it

Documents

ADR notes for Prof. Tamvada's class. JGU Student