Arbitration Weekly Round Up [12th May-18th May 2025]

Case Title: M/S HARCHARAN DASS GUPTA VERSUS UNION OF INDIA

Citation : 2025 LiveLaw (SC) 567

Reaffirming that the MSMED Act prevails over the Arbitration Act, as held in Gujarat State Civil Supplies v. Mahakali Foods, the Supreme Court set aside the Karnataka High Court's interference with MSMED proceedings in Delhi, despite the contract naming Bengaluru as the arbitration seat.

The Court clarified that private contractual clauses cannot override the statutory mandate of the MSMED Act. Since the appellant-supplier was registered in Delhi, the Court noted that the Delhi Arbitration Centre had jurisdiction under Section 18(4) of the MSMED Act, regardless of the contract's designation of Bengaluru as the seat of arbitration due to the overriding nature of the MSMED Act. The bench comprising Justices PS Narasimha and Joymalya Bagchi was hearing the case where a tender was issued by ISRO for construction work in New Delhi.

Supreme Court Deprecates 'Deliberate, Ambiguous' Drafting Of Arbitration Clauses; Calls For Suo Motu Action In Malafide Cases

Case Title: South Delhi Municipal Corporation v. SMS Limited, SLP (C) No. 16913/2017

Citation : 2025 LiveLaw (SC) 568

Delivering a significant judgment on arbitration law, the Supreme Court today deprecated the practice of arbitration clauses being deliberately phrased "ambiguously" by members of legal fraternity and urged judicial forums across the country to throw out cases involving "shoddily drafted arbitration clauses" at the threshold.

The Court said that such "malafide cases" are a "criminal wastage of judicial time" and have been allowed to go on for long. It called on the judicial forums to take stringent actions in this regard by invoking their suo motu powers.

A bench of Justices Surya Kant and N Kotiswar Singh delivered the judgment, wherein it was observed that India has made considerable strides in the field of arbitration, but challenges, chiefly in terms of poor drafting of arbitration clauses, remain. Calling for arbitration clauses to be framed with precision, the Court stated,

S. 31(7) Arbitration | Arbitral Tribunal Has Power To Award Different Rates Of Interest For Pre-Reference & Pendente Lite Period : Supreme Court

Case Title: M/S. INTERSTATE CONSTRUCTION VERSUS NATIONAL PROJECTS CONSTRUCTION CORPORATION LTD.

Citation : 2025 LiveLaw (SC) 585

The Supreme Court held that under the Arbitration and Conciliation Act, 1996, an Arbitral Tribunal has the power to award different rates of interest for different phases.

A bench comprising Justices Abhay S. Oka and Ujjal Bhuyan overturned the Delhi High Court's ruling, which had invalidated the tribunal's grant of interest on interest, deeming it impermissible under Section 31(7) of the Act.

The bench heard the case where the dispute originated from a 1984 contract for the Thermal Power Project in Andhra Pradesh. After the completion of work in 1987, the Appellant-Interstate Construction claimed unpaid dues from NPCC, leading to arbitration proceedings that began in 1993 and continued for nearly three decades through multiple arbitrators.

High Courts

Bombay High Court

Interim Relief U/S 9 Of Arbitration Act Must Be Sought With 'Reasonable Expedition': Bombay High Court

Case Title: Ashoka Buildcon Ltd. vs. Maha Active Engineers India Pvt. Ltd. & Anr.

Citation: 2025 LiveLaw (Bom) 192

The Bombay High Court bench of Justice A. S. Chandurkar and Justice Rajesh Patil have held that an applicant under Section 9 of the Arbitration and Conciliation Act, 1996 (“the Act”) must approach the court with reasonable expedition. Delay of several years without adequate explanation is a material factor that militates against the grant of such relief.

The court observed that relief under Section 9 of the Act is discretionary and must be guided by the settled principles of interim relief, namely the existence of a prima facie case, balance of convenience, and irreparable harm. An appellate court can interfere with the discretionary order of the trial court only if such discretion has been exercised arbitrarily, capriciously, or in ignorance of settled legal principles.

Calcutta High Court

Writ Against Third Party Is Maintainable Despite Arbitration Clause When There Are No Disputes Between Contracting Parties: Calcutta HC

Case Title: INDIA AND OTHERS VERSUS SUNIL SAHA AND OTHERS

Case Number: MAT 806 OF 2024 AND FMA 735 OF 2024

The Calcutta High Court bench of Chief Justice T.S. Sivagnanam and Justice Chaitali Chatterjee (Das) has held that when there are no disputes or differences between the parties to an agreement containing an arbitration clause, a writ petition may be entertained against a third party for arbitrary deduction of demurrage amounts. The existence of an arbitration clause between the contracting parties cannot, by itself, be a ground to refuse the maintainability of such a writ petition.

It further added that the grant or refusal of the writ is at the Court's discretion and can only be issued if an existing legal right of the applicant or duty of the respondent is established. The writ is intended to enforce rights that are already established, not to create new ones.

'Non-Consideration Of SC Judgment Amounts To Patent Illegality': Calcutta High Court Sets Aside Award On Grounds Of Unilateral Appointment

Case Title: VIRGO SOFTECH LIMITED & ANR. VS SREI EQUIPMENT FINANCE LTD.

Case Number: AP-COM/361/2025

The Calcutta High Court bench of Justice Shampa Sarkar has held that non-consideration of a judgment of the Supreme Court amounts to patent illegality, which is a valid ground for setting aside an arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996 (Arbitration Act) particularly when the award is passed by an arbitrator unilaterally appointed by one party.

The Supreme Court recently in Central Organisation for Railway Electrification vs. ECI SPIC SMO MCML (JV) A joint Venture Company after citing its own judgment in Perkins Eastman Architects DPC and Another vs. HSCC (India) Ltd.(2019) held that the reason is clear that whatever advantage a party may derive by nominating an arbitrator of its choice would get counter-balanced by equal power with the other party.

Delhi High Court

No Objections U/S 47 Of CPC Can Be Moved By Judgment Debtor Against Execution Of Award U/S 36 Of A&C Act: Delhi High Court

Case Title – Anglo American Metallurgical Coal Pvt Ltd. v. MMTC Ltd.

Citation: 2025 LiveLaw (Del) 538

The Delhi High Court Bench of Justice Jasmeet Singh has observed that a judgment debtor is not entitled to move objections under Section 47, CPC in an application for execution of award under Section 36, Arbitration and Conciliation Act, 1996 (“ACA”) as it would amount to effectively opening a second round for challenging the Award which would undermine the provision of section 34 i.e. challenge to Award on limited grounds and go against the intent of ACA.

The Court clarified that the provisions of CPC are only applicable to the extent of “enforcement” of an Award such as attachment, sale, auction, detention etc. which are reflected in Order XXI, CPC. The legislature did not intend to permit a challenge to an Award during enforcement proceedings again on merits as this would be contrary to the objectives of ACA which aim to ensure finality and limited judicial interference.

When Deciding Application For Appointment Of Arbitrator, Court Cannot Examine Whether Claim Is Barred By Res Judicata: Delhi High Court

Case Title – Hindustan Construction Company Ltd v. Indian Strategic Petroleum Reserves Ltd.

Citation: 2025 LiveLaw (Del) 551

The Delhi High Court Bench of Justice Jyoti Singh has observed that it is not open to the referral court in a petition filed under Section 11, Arbitration and Conciliation Act, 1996 (“ACA”) to examine the issue whether the claim is barred by res judicata. Such an examination falls within the domain of the Arbitral Tribunal. The Court observed that it is settled that in the scope of jurisdiction under Section 11, ACA, the referral Court does not examine the tenability of the claims sought to be referred to arbitration by the applicant. The enquiry at this stage of appointment of arbitrator is restricted to the existence of arbitration agreement and/or whether the petition itself is barred by limitation.

Initial Filing Without Essential Documents Non Est In Law, Limitation Can't Be Circumvented By Curing Defects: Delhi High Court

Case Title: UNION OF INDIA Versus M/S GR-GAWA R(J.V.)

Citation: 2025 LiveLaw (Del) 565

The Delhi High Court bench of Justice Purushaindra Kumar Kaurav has held that an initial filing made without the essential documents like attaching impugned award etc. required for adjudication is non est in law and has no legal existence. Such a filing, made merely to evade the limitation period under Section 34(3) of the Arbitration and Conciliation Act, 1996 (Arbitration Act) cannot be considered valid. The court at the outset noted that the final filing dated 20.01.2025 spans 6,677 pages, in stark contrast to the initial 146-page filing. This significant disparity clearly indicates that the initial filing was a mere formality, intended only to halt the limitation period.

It further added that the skeletal nature of the original filing, lacking essential pleadings and annexures, reflects an attempt to bypass the limitation law. Such a filing cannot be regarded as a bona fide institution of proceedings under Section 34 of the Arbitration Act.

Contempt Court Can Reverse Benefits Obtained From Disobeying Orders U/S 9 & 17 Of Arbitration Act: Delhi HC

Case Title:M/S Rhine Power Pvt. Ltd. Versus M/S Ramprastha Promoters And Developers Pvt. Ltd. & Ors.

Citation: 2025 LiveLaw (Del) 568

The Delhi High Court bench of Justice Anish Dayal has held that the contempt court is empowered to issue directions to reverse any benefits obtained in disobedience of an order passed under Section 9 of the Arbitration and Conciliation Act, 1996 (Arbitration Act) to ensure that parties are restrained from violating the court's orders.

The Supreme Court in Balwantbhai Somabhai Bhandari v Hiralal Somabhai Contractor (2023) held that the contempt court does have the power to declare a contemptuous transaction as void, even if such transfer pendente lite is not void ab initio under Section 52 of the Transfer of Property Act, 1882.

The Apex Court further held that in contempt proceedings, the court can declare such transactions void or direct their reversal to ensure that the contemnor does not benefit from disobedience of court orders. This includes issuing appropriate directions to authorities to nullify any advantage gained through such contumacious conduct, thereby upholding the majesty of law.

Arbitrator's Decision To Choose Internationally Recognised Formula Based On Expertise For Computing Damages Can't Be Faulted: Delhi High Court

Case Title: DELHI DEVELOPMENT AUTHORITY Versus M/S NARAINDAS R ISRANI

Citation: 2025 LiveLaw (Del) 570

The Delhi High Court bench of Justice Manoj Kumar Ohri has held that different formulae may be applied depending on the circumstances, and the choice of method for computing damages falls within the arbitrator's discretion. Sections 55 and 73 of the Indian Contract Act, 1872 (Contract Act) do not prescribe any specific formula for the calculation of damages. Therefore, the arbitrator's decision to apply any internationally recognized method, based on their expertise, cannot be faulted.

The court noted that the Arbitral Tribunal (AT) reviewed the evidence, including the hindrance register, and concluded that the delay was attributable to the petitioner. These are factual findings within the AT's domain, and this Court will not reappreciate the evidence or assess its sufficiency. Based on the above, it held that there is no patent illegality or apparent error in the award. As for the lack of detailed calculations, the AT's reasoning sufficiently explains the partial allowance of the claim and the basis for the awarded amount.

Limitation For Application U/S 11(6) Of Arbitration Act Can't Be Bypassed By Claiming Advocate Was Not Authorised To Issue Notice: Delhi High Court

Case Title: RINKOO AGGARWAL versus GAURAV SABHARWAL & ANR.

Citation: 2025 LiveLaw (Del) 572

The Delhi High Court bench of Justice Jyoti Singh has held that the bar of limitation for filing an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 (Arbitration Act) seeking the appointment of an arbitrator, cannot be circumvented merely on the ground that the demand-cum-arbitration invocation notice was issued by the petitioner's counsel without proper authorization. The court held that such a contention, if accepted, would render the limitation period for filing such applications meaningless and defeat the very purpose of prescribing a time frame.

The Court also noted that the Apex Court further clarified that while determining the issue of limitation in a petition under Section 11(6), the referral Court would confine its inquiry to examining whether the petition is within the period of limitation of 03 years or not. It further said that the referral Court will not conduct an intricate evidentiary inquiry into the question whether the claims raised by the applicant are time barred and this would be left for determination by the Arbitrator.

Waiver To Section 12(5) Of Arbitration Act Has To Be Given After Constitution Of The Tribunal: Delhi High Court

Case Title – M.V. Omni Projects (India) Ltd. v. Union of India through Chief Engineer Northern Railways & Anr.

Citation: 2025 LiveLaw (Del) 573

Th Delhi High Court Bench of Justice Jasmeet Singh has observed that the party giving no-objection to the applicability of Section 12(5), Arbitration and Conciliation Act, 1996 (“ACA”) has to give such no-objection after the constitution of the Arbitral Tribunal. The waiver to applicability has to be done after the arbitrators are appointed with the names and details. The Court also observed that any waiver before the constitution of the arbitral tribunal is no waiver in the eyes of law.

The Court observed that the waiver contemplated in the proviso of Section 12(5), ACA applies not to the manner or the mechanism under which the Arbitral Tribunal is to be constituted but to the constitution/individual members of the Arbitral Tribunal. The Court referred to the judgment of the Hon'ble Supreme Court in Bharat Broadband v. United Telecom (2019) 5 SCC 755, whereby it was clarified that “express agreement in writing” to waive refers to a “person” who is interdicted by the Seventh Schedule. If an individual falls within any of the categories as mentioned in the Seventh Schedule, then the said person/s are ineligible to be appointed as arbitrator and only to remove the ineligibility, the party may waive by an express agreement the said ineligibility in writing qua the person/s who are ineligible to be appointed.

No Damages For Loss Of Profit In Absence Of Proof Of Missed Profitable Ventures Due To Delay In Contractual Payment: Delhi High Court

Case Title: UNION OF INDIA Versus AHLUWALIA CONTRACTS (INDIA) LTD.

Citation: 2025 LiveLaw (Del) 576

The Delhi High Court bench of Justices Vibhu Bakhru and Tejas Karia has held that unless it is demonstrated that the delay in payment for the completion of the work contract prevented the contractor from undertaking other profitable ventures, damages for loss of profits cannot be awarded.

The court noted that the 15% mark-up under the contract applies only to deviations involving extra items, quantities, or substitutions, to cover overheads and costs. However, the respondent's claim did not arise from such deviations but sought compensation for costs incurred due to prolongation of the contract, which was allegedly caused by the appellant. Based on the above, it held that the Arbitral Tribunal's rejection of the respondent's claim, citing the 15% mark-up under Schedule 'F', is unsustainable. Clause 2(x) of Schedule 'F' does not apply to claims for additional costs due to prolongation of work. Therefore, the award is vitiated by patent illegality to that extent.

Karnataka High Court

Once Parties Intend To Resolve Their Dispute By Arbitration, It Is Needless For Court To Decide Whether Partnership Was At Will: Karnataka HC

Case Title: N. H. Gowda Versus Mr. Rangarama And Ors.

Citation: 2025 LiveLaw (Kar) 179

The Karnataka High Court bench of Chief Justice N. V. Anjaria and Justice K. V. Aravind has held that when both parties have agreed to resolve their disputes regarding the nature of the partnership through arbitration, it is unnecessary for the Court to determine whether the partnership is one "at will." Such issues are more appropriately left for adjudication by the arbitrator. The court further said that while directing the parties to resolve their dispute through arbitration, the interim arrangement ordered by the Commercial Court cannot be sustained without modification. The existing arrangement is impractical and disproportionately affects the interests of both parties, potentially leading to further litigation.

Rajasthan High Court

Refund Of Liquidated Damages Imposed By Party Responsible For Delay In Work Can't Be Interfered With U/S 37 Of Arbitration Act: Rajasthan High Court

Case Title: Rajasthan Urban Infrastructures Development Project Versus M/s National Builders

Citation: 2025 LiveLaw (Raj) 176

The Rajasthan High Court bench of Justices Avneesh Jhingan and Bhuwan Goyal has held that the imposition of liquidated damages by a party primarily responsible for the delay in completion of the work is unjustified. Therefore, the arbitrator's direction to refund such damages cannot be interfered with, given the limited scope of appellate intervention under Section 37 of the Arbitration and Conciliation Act, 1996 (Arbitration Act).

The Supreme Court in Punjab State Civil Supplies Corpo ration Limited & Anr. vs. M/s Sanman Rice Mills & Ors.(2024) held that the role of the Appellate court under section 37 of the Arbitration Act is not to determine whether the arbitral tribunal's decision is right or wrong, but merely to ensure that the decision under Section 34 was rendered within the statutory framework. The appellate court may interfere only if the court under Section 34 either overstepped its jurisdiction or failed to exercise it altogether. This supervisory power is comparable to the revisional jurisdiction of civil courts.

Arbitral Award Can't Be Set Aside Over Insufficient Stamping Without Opportunity To Cure Defect: Rajasthan High Court

Case Title:Sunil Kumar Bhakoo Versus Smt. Varisha

Case Number: Civil Miscellaneous Appeal No.2157/2024

The Rajasthan High Court bench of Justices Avneesh Jhingan and Bhuwan Goyal has held that when a court, in proceedings under Section 34 of the Arbitration and Conciliation Act, 1996 (Arbitration Act) finds that the agreement to sell, on which the arbitration was initiated, is insufficiently stamped, it must provide the party an opportunity to cure the defect by impounding the instrument. The court cannot set aside the arbitral award on the ground that the agreement was invalid due to insufficient stamping. The court further observed that section 35 of the Stamp Act mandates that an instrument must be duly stamped to be admissible in evidence, registered, or authenticated. Proviso (a) allows admissibility upon payment of the due stamp duty and penalty.

Telangana High Court

Unfair To Presume That Plea Of Limitation Can't Be Adjudicated By Arbitrator, Court U/S 11 Must Not Conduct Roving Inquiry: Telangana High Court

Case Title: M/s GRN Constructions Private Limited vs The Singareni Collieries Company Limited

Case Number: ARBITRATION APPLICATON No.276 OF 2024

The Telangana High Court bench of Justice K. Lakshman has held that in a scenario where the referral court can discern the frivolity of the dispute from the bare minimum pleadings, it would be incorrect to presume that the arbitral tribunal, equipped to undertake a detailed examination of the pleadings and evidence, would be unable to reach the same conclusion. Therefore, it is better that the plea of limitation should be left to be decided by the Arbitrator.

The court at the outset observed that it is relevant to note that following the amendment to the Arbitration Act effective from 23.10.2015, and in light of the principles laid down by the Supreme Court in Vidya Drolia v. Durga Trading Corporation, this Court, acting as the referral court under Section 11 of the Act, is bound to refer the matter to arbitration unless the dispute is manifestly non-arbitrable.