NLA Arbitration Newsletter
Key rulings from the Supreme Court and Delhi, Bombay, Madhya Pradesh, and Punjab & Haryana High Courts on curative jurisdiction, contradictory awards, the Group of Companies doctrine, Section 9 maintainability, and fresh notice requirements after set-aside of awards.
Supreme Court — Curative jurisdiction exercised to set aside the 2021 judgment that had restored a ₹8,000 crore arbitral award against DMRC
The Supreme Court, on 10 April 2024, relieved the Delhi Metro Rail Corporation (DMRC) of a liability of approximately ₹8,000 crores by setting aside its 2021 judgment, which had upheld the arbitral award passed in favour of Delhi Airport Metro Express Private Limited (DAMEPL, a Reliance Infrastructure subsidiary) against DMRC. Allowing a curative petition filed by DMRC, the bench comprising CJI DY Chandrachud, Justices BR Gavai, and Surya Kant held that the Supreme Court had erred in interfering with the Delhi High Court’s 2019 judgment, which had set aside the arbitral award.
The Court observed that the 2019 Delhi High Court judgment was a well-considered judgment, and the Supreme Court ought not to have interfered with it under Article 136 of the Constitution. “By setting aside the High Court judgment, this Court restored a patently illegal award which saddled a public utility with an exorbitant liability,” the Court observed. The interference amounted to a “great miscarriage of justice” which warranted the exercise of curative jurisdiction under Article 142 of the Constitution. The Supreme Court accordingly set aside its 2021 judgment, restoring the parties to the position they were in on the date of pronouncement of the Delhi High Court’s judgment. Amounts deposited by DMRC pursuant to coercive action are to be refunded, and execution proceedings for the award are to be discontinued. The Court clarified that curative jurisdiction will be exercised only sparingly and in the most deserving cases.
Key Takeaway
The Supreme Court’s curative jurisdiction, established in Rupa Ashok Hurra v. Ashok Hurra, empowers the Apex Court to correct its own final judgments in rare cases amounting to a gross miscarriage of justice. In the DMRC case, the Court found that its prior interference with a well-reasoned High Court judgment—which had set aside a patently illegal arbitral award—was itself the miscarriage warranting curative relief. This case underscores that curative jurisdiction remains an exceptional remedy, exercisable only in the most compelling circumstances.
Madhya Pradesh High Court — Section 9 petition in International Commercial Arbitration must be filed as a ‘Miscellaneous Civil Case’, not an ‘Arbitration Case’
The Madhya Pradesh High Court Division Bench dismissed a petition seeking interim relief under Section 9 of the Arbitration and Conciliation Act, 1996, on the ground that it had been incorrectly filed as an ‘Arbitration Case’ instead of a ‘Miscellaneous Civil Case’, as required under the M.P. High Court Arbitration and Conciliation (Conduct of Arbitral Proceedings) Rules, 2008.
The Petitioner contended that the petition fell under the classification of arbitration cases per Rule 3 of Chapter II of the M.P. High Court Rules, 2008, and that the High Court had original civil jurisdiction to hear it as it pertained to International Commercial Arbitration. The Respondent countered that under Chapter 2, Rule 3 of the 2008 Rules, applications under Section 11 of the Arbitration Act are registered as ‘Arbitration Cases’ dealing with the appointment of arbitrators, and that for interim protection, the Petitioner should have filed a ‘Miscellaneous Civil Case’ under sub-rule 8 of Rule 10, Chapter 2 of the 2008 Rules.
The High Court agreed with the Respondent’s reasoning. It found that the nature of the case and the relief sought did not align with the characteristics of an arbitration case as defined under the Rules. The petition was accordingly dismissed, with the Petitioner granted liberty to file a fresh miscellaneous civil case under sub-rule 8 of the 2008 Rules.
Key Takeaway
Procedural compliance in filing court applications is essential. Under the M.P. High Court Rules, a Section 9 petition seeking interim measures in International Commercial Arbitration must be registered as a ‘Miscellaneous Civil Case’, not an ‘Arbitration Case’—which is reserved for arbitrator appointment matters under Section 11. Misfiling under the wrong category renders the petition liable to dismissal, emphasising the importance of verifying the applicable court rules before filing.
Delhi High Court — Arbitral award with inherently contradictory findings, and failure to adjudicate central issues, is contrary to public policy and set aside under Section 34
The Delhi High Court held that an arbitration award in which the Tribunal rendered findings contrary to its own earlier observations falls within the rubric of ‘public policy’ under Section 34 of the Arbitration and Conciliation Act, 1996, and is liable to be set aside. The Court also held that where an Arbitral Tribunal has given conflicting awards on an identical issue involving the same parties under the same contract, the Court must set aside the anomalous award.
The Court noted at the outset that since the Respondent is a foreign entity, the award arose from an International Commercial Arbitration and could not be challenged on the ground of patent illegality. The dispute concerned a final payment certificate dated 31 August 2014. Under the agreement, a final payment certificate could only be issued after the contractor had given a written discharge, and no such certificate could be issued while a dispute remained pending. The Tribunal had initially recorded that the Respondent had not given the mandatory written discharge—a prerequisite to the issuance of the certificate—but subsequently held that the certificate of 31 August 2014 could be treated as final since there was no dispute between the Engineer and the Respondent on the amount. This was directly contrary to the Tribunal’s own earlier observation.
Further, the Petitioner had raised objections about the engineer’s price formula, quantities of work, variation items, and errors in material pricing. The Tribunal noted these objections but rendered no finding on them, which the High Court held was a violation of natural justice and made the award contrary to public policy. The Court also found that the Tribunal had rendered a completely contrary finding on the same certificate in a different package under the same tender contract, relying on National Highway Authority of India v. Progressive-MVR (JV), (2018) 14 SCC 688. Accordingly, the petition was allowed and the award was set aside.
Key Takeaway
An arbitral award that is internally self-contradictory—where the Tribunal’s conclusions are inconsistent with its own findings—is contrary to public policy and will be set aside under Section 34. Equally, a Tribunal’s failure to adjudicate a submission that goes to the root of the dispute violates natural justice and provides an independent basis for challenge. Where conflicting awards are passed on identical issues under the same contract, courts will intervene to resolve the anomaly.
Punjab & Haryana High Court — No patent illegality where Arbitrator accepts claim in toto when Respondent files no defence and leads no evidence
The Division Bench of the Punjab & Haryana High Court held that an arbitration award cannot be considered patently illegal on the ground that the Arbitrator accepted a claim in full, where the Respondent did not file any written statement of defence and led no evidence to contest the claimed amount.
The Appellant contested the impugned award on two grounds: first, that no opportunity was granted to present their case, resulting in a failure of justice and principles of fair play; and second, that oral submissions made before the Arbitral Tribunal had not been considered in the award. The Court observed that the Appellant had not filed any written statement of defence, had not produced any evidence, and had not presented any witnesses for examination. Given these facts, the Arbitrator did not commit any illegality in accepting the claim in full, particularly when it was not seriously disputed. The Court reiterated that an award can be set aside as patently illegal only if it is against the public policy of India, and that courts do not review an award on its merits. The Court also held that since the Appellant had made oral submissions before the Arbitrator, it could not be said that they were denied an opportunity to be heard. The appeal was accordingly dismissed.
Key Takeaway
A party that chooses not to file a written statement of defence, lead evidence, or produce witnesses before the Arbitral Tribunal cannot later challenge the resulting award as patently illegal simply because the Arbitrator accepted the opposing party’s claim in full. Having had the opportunity to participate through oral submissions, the right to be heard is satisfied. Patent illegality, as a ground for challenge, requires a demonstrable violation of public policy—not a mere dissatisfaction with the outcome of proceedings the party chose not to meaningfully contest.
Bombay High Court — No fresh Section 21 notice required when recommencing arbitration after the first award is set aside under Section 34
The Bombay High Court held that there is no requirement to issue a fresh notice under Section 21 of the Arbitration and Conciliation Act, 1996, when recommencing arbitration after the first award has been set aside under Section 34. Since the arbitration mechanism had already been triggered and proceedings had commenced, no new notice was needed. The opposite party was already fully aware of the existence of the dispute, and the Petitioner sought the appointment of a competent arbitrator to continue the arbitration—not a fresh invocation of the arbitration clause.
The Respondent had objected to the maintainability of the petition on the ground that no Section 21 notice had been issued and that the Court’s jurisdiction under Section 11(6) could only be invoked after the parties had mutually failed to appoint an arbitrator. The Court rejected this argument, finding that the dispute between the parties remained unchanged and that requiring a fresh Section 21 notice in such circumstances would be a purposeless formality. The Court allowed the petition and appointed a sole arbitrator.
Key Takeaway
Where an arbitral award has been set aside under Section 34 and the parties must recommence arbitration, a fresh notice under Section 21 is not required. The arbitration mechanism having already been invoked and the other party being fully aware of the dispute, imposing a fresh notice requirement would be a purposeless formality inconsistent with the legislative intent to minimise procedural obstacles to arbitration.
Bombay High Court — Absence of a prayer for impleadment of a non-signatory in a Section 11 application does not preclude the Arbitral Tribunal from applying the Group of Companies doctrine
The Bombay High Court Single Bench held that the Arbitral Tribunal has the power to decide whether a non-signatory is bound by an Arbitration Agreement and to implead that non-signatory, even where no specific prayer for impleadment was made in the Section 11 application. The absence of such a prayer in the Section 11 application does not preclude the application of the Group of Companies doctrine by the Tribunal.
The Petitioners argued that the Arbitral Tribunal lacked inherent power to implead a non-signatory and that, per Cox & Kings Ltd. v. SAP India (P) Ltd., (2024) 4 SCC 1, no such power was conferred on the Tribunal by law. The Respondents countered that Section 16 of the Arbitration Act empowers the Tribunal to decide on the existence and scope of the Arbitration Agreement, including whether a non-signatory is bound by it, and that non-impleadment in the Section 11 application was not determinative.
The High Court, referring to the Supreme Court’s ruling in Cox and Kings, noted that the Apex Court had itself held that an Arbitral Tribunal possesses the authority to determine if a non-signatory is bound by the Arbitration Agreement and to include them in the proceedings if necessary. The High Court found no indication in Cox and Kings that this power is contingent upon a specific prayer for impleadment having been made in the Section 11 application. The Court accordingly dismissed the arbitration petition, finding no valid grounds under Section 34 to set aside the arbitral award.
Key Takeaway
Under the Group of Companies doctrine as affirmed in Cox and Kings, an Arbitral Tribunal is empowered to determine whether a non-signatory is bound by an arbitration agreement and to implead them accordingly. This power is not contingent on a formal prayer for impleadment having been made at the Section 11 stage. The scope of the Tribunal’s jurisdiction under Section 16 extends to all questions of the existence, validity, and applicability of the arbitration agreement, including its reach over non-signatories.
Delhi High Court — Section 9 petition maintainable even where seat of arbitration is outside India; status quo on ads directed to prevent irreparable loss
The Delhi High Court directed Google India to maintain status quo with respect to the advertisements displayed on its platforms by the Petitioner, observing that the Petitioner’s main revenue stream was ad revenue and that en-masse blocking of advertisements would cause irreparable loss. The Bench also reiterated that a Section 9 petition under the Arbitration and Conciliation Act, 1996, is maintainable in an arbitration with a seat outside India.
The Petitioner had been in continuous correspondence with Google from August 2023 to February 2024, but Google’s responses to disapproval of the Petitioner’s advertisements were mostly automated and unsatisfactory. The Respondent challenged the maintainability of the Section 9 petition on the ground that the seat of arbitration under the parties’ agreement was in Santa Clara County, California, USA, under the International Centre for Dispute Resolution of the American Arbitration Association.
The Court rejected this objection, confirming that a Section 9 petition for interim measures is maintainable in Indian courts even where the arbitration seat is situated outside India. Finding that the Respondent’s blocking of ads had deprived the Petitioner of revenue on which it heavily relied, and considering the irreparable nature of this loss, the Court directed the Respondent to maintain the status quo on currently unblocked advertisements labelled as ‘Eligible (limited)’ until the next hearing.
Key Takeaway
A party to an international arbitration agreement with a foreign seat is not precluded from seeking interim measures of protection under Section 9 of the Indian Arbitration Act before Indian courts. This is particularly significant in disputes where the underlying commercial harm—such as the mass blocking of revenue-generating digital ads—may cause immediate and irreparable loss before the arbitration proceedings can be concluded. Parties should be aware of this avenue for emergency relief regardless of the chosen arbitration seat.
Delhi High Court — Arbitration clause in work orders validly invoked by referring to work orders; identical clauses in tender and work orders create no ambiguity
The Delhi High Court Single Bench appointed an arbitrator in a dispute where the Petitioner had invoked arbitration by referring to work orders signed by the parties. The Court held that the invocation was valid and in accordance with the terms of both the tender document and the work orders, notwithstanding a contractual stipulation that the tender would prevail over work orders in case of conflict.
The High Court noted that the Petitioner had referred to both work orders in its arbitration notice, providing a clear invocation of the arbitration clause. It further observed that the arbitration clause in the tender document and that in the work orders were identical in content. Clause 31.1 of the tender provided a comprehensive arbitration procedure covering all disputes under the agreement, including the mechanism for appointment of a sole arbitrator by the Chairman-cum-Managing Director of BBNL. Clause 29.6 of the work orders stipulated that in case of conflict between the work orders and the tender document, the tender would prevail. The High Court found no ambiguity, since the identical nature of the clauses meant there was no actual conflict to resolve. The petition was allowed, and Justice Mukta Gupta (Retd.) was appointed as Sole Arbitrator.
Key Takeaway
Where a tender and work orders contain identical arbitration clauses, a party invoking arbitration by reference to the work orders does so validly, even if the tender document is expressed to prevail over the work orders in case of conflict. Identical provisions raise no conflict, and there is no basis to challenge the invocation on the ground that it should have been made exclusively under the tender. Parties must ensure their arbitration notices clearly identify the relevant documents and disputes to avoid objections at the Section 11 stage.
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