Litigation Arbitration



Vedanta filed an application for withdrawal of arbitration proceedings against the Government
Vedanta Resources Ltd. stated that it has filed an application seeking withdrawal of claim and termination of the arbitral proceedings pending before the Permanent Court for Arbitration in the International Court of Justice. The proceedings were regarding the settlement of a ₹20,495 crore retrospective tax dispute.

The Company stated that in view of the recent amendments to the Indian Income Tax Act, 1961 vide the Taxation Laws (Amendment) Act, 2021, which nullifies the retrospective tax imposed by Finance Act, 2012, Vedanta Ltd., and all its related group entities had taken steps to settle disputes.

Date– 13.12.2021

Prior agreement would not limit the power of the court to award costs
Recently, the Delhi High Court in Union of India v. Om Vajrakaya Construction Company while reiterating various judgments of the Supreme Court held that unlike the power of the tribunal to award interest, there is no fetter on its power to award costs within the meaning of Section 31A and any agreement of the parties prohibiting the awarding of cost would be inconsequential, unless the parties enter into an agreement after the disputes have arisen.

The provisions of the contract cannot be read to override the provisions of Section 31A of the A&C Act unless the parties enter into the contract after the disputes have arisen. The discretion of the Court or the Arbitral Tribunal to award costs is not subject to the agreement between the parties unless that agreement is entered after the disputes have arisen.

Date– 23.12.2021

Limitation Act cannot be invoked to condone delay beyond the period prescribed under Section 34
In the recent judgment of the Supreme Court in Mahindra and Mahindra Financial Services Ltd. v. Maheshbhai Tinabhai Rathod it was held that Section 5 of Limitation Act cannot be applied to condone the delay beyond the period prescribed under Section 34(3) of Arbitration and Conciliation Act, 1996.

It was observed that in appropriate cases the delay is to be condoned so as not to defeat the meritorious case. However, that would arise only when the power under Section 5 of Limitation Act is available to be exercised. In case where the limitation is prescribed and the extent to which it can be condoned is circumscribed, the delay beyond the prescribed period cannot be condoned.

Link –
Date – 16.12.2021

Arbitration Agreement cannot allow retrospective application of 2015 Amendment Act
In the case of Ratnam Sudesh Iyer v. Jackie Kakubhai Shroff the Supreme Court reiterated the retrospective applicability of the Arbitration and Conciliation Amendment Act, 2015 and held that an arbitration clause could not constitute an agreement to allow retrospective application of the 2015 Amendment Act.

Where the Section 34 proceedings had already commenced when the 2015 Amendment Act came into effect, it was held that the pre-amendment position would prevail. In the aforesaid scenario, the Apex Court found that the arbitrator’s conclusions were not in accordance with the fundamental policy of Indian law, and could thus be set aside under the pre-amendment interpretation of Section 34 of the Arbitration Act.

Date- 23.12.2021

Arbitration petition is not maintainable after a petition under Section 7 of the IBC
Kotak India Venture (Offshore) Fund filed a petition under Section 7 of the IBC against Indus Biotech Private Limited for CIRP, against which Indus filed an application under Section 8 of the Arbitration Act seeking a direction to refer parties to arbitration. The Arbitration Application was allowed by the NCLT and the Section 7 petition stood dismissed.

Kotak approached the Supreme Court contending that a Section 7 proceeding is an action in rem and therefore, insolvency and winding up matters are non-arbitrable. The Supreme Court held that it is only when the Section 7 petition is admitted, and once the corporate insolvency process commences, does the proceeding become a proceeding ‘in rem‘, i.e., on the date of admission and from that point onwards the matter would not be arbitrable. Though actions in rem are not arbitrable, the trigger point is not the filing of the application under Section 7, but admission of the same. As the petition was yet to be admitted, therefore it had not assumed the status of a proceedings in rem.

Date– 23.12.2021

MCX settled arbitration proceedings against PESB
The dispute between MCX, the country’s largest commodity exchange and PESB Ltd, a UK-based vendor, which was engaged in developing a spot platform for the exchange, pending before Singapore International Arbitration Centre since January has been amicably settled.

The arbitration proceeding against the software vendor was settled after it agreed to pay the amount equivalent to outstanding invoices.

Date– 21.12.2021

If Conciliation Not Successful, Arbitration Proceedings Must Be Resorted To under the MSMED Act
The Supreme Court while dealing with a matter pertaining to delayed payment of dues by Jharkhand electricity board to a Conductors supplier under the provisions of the MSMED Act read with the Arbitration Act, held that the Facilitation Council, on the failure of the conciliation proceedings can only refer the parties to arbitration and not pass an award.

It observed that arbitration and facilitation cannot be clubbed together to pass an award. Such an order would be patently illegal and would not constitute an award within the meaning of the Arbitration Act.

Date– 15.12.2021

Delhi High Court refused to intervene in the ongoing Amazon – Future Group arbitration proceedings
The Future Group had moved the Delhi High Court seeking to quash the ongoing arbitration proceedings in Singapore with Amazon relating to the Rs 24,500-crore merger deal with Reliance Retail. Further, they sought a direction to the SIAC arbitral tribunal to first decide their applications on termination of arbitration proceedings.

The High Court did not find any grounds for interference and noted that the arbitrators have far greater flexibility in adopting procedure to conduct the arbitration proceedings as compared to a civil court. The High Court also stated that it was not for the court to interfere with the scheduling of the arbitration proceedings as sought by Future and that the arbitral tribunal is the sole master of the procedures under the Arbitration and Conciliation Act.

Dismissing the plea the court said that mere fixation of tight timelines or denial of requests for adjournment or deciding the order in which the pleas filed by the parties will be taken up cannot be reason enough to contend that the orders of the tribunal are perverse or lacking in inherent jurisdiction.

Date– 04.01.2022

No obligation on the court to remit a matter to the arbitral tribunal under Section 34
The Supreme Court in IPay Clearing Services Private Limited v. ICICI Bank Limited held that 34(4) of the Arbitration Act does not impose any obligation on the court to remit a matter to the arbitral tribunal for resuming arbitral proceedings.

It was held that Section 34(4) of the Arbitration Act vested the Court with discretion for remitting the matter to Arbitral Tribunal to give an opportunity to resume the proceedings or not. The words “where it is appropriate” itself indicate that it is the discretion to be exercised by the Court, to remit the matter when requested by a party.

It was further held that this discretionary power conferred is to be exercised where there is inadequate reasoning or to fill up the gaps in the reasoning, in support of the findings which are already recorded in the award. Under guise of additional reasons and filling up the gaps in the reasoning, no award can be remitted to the Arbitrator, where there are no findings on the contentious issues in the award.

Date – 04.01.2022

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