by Zen Webnet | Mar 18, 2024 | Blog
Article by Pranav Nayar and Nikhat Jamal
Introduction
The Arbitration and Conciliation Act, 1996 provides parties with limited solutions for an appeal from an arbitral tribunal’s interim orders. In the absence of an established standard and procedure of review, the question arises whether an arbitral tribunal has the jurisdiction to review its own orders. In this article, we discuss the issues that arise owing to the lacunae in the statute and the consequential judicial interpretations. We further analyze the power of the arbitral tribunal to recall its orders and how the judiciary has addressed the same through various judgements.
The Power to Review
The Supreme Court in the landmark case of Kapra Mazdoor Ekta Union v. Management of Birla Cotton Spinning and Weaving Mills Ltd. carved out the difference between a review on merits and a procedural review.[1] In a procedural review, the Court or quasi-judicial authority having jurisdiction proceeds to do so and commits procedural illegality which goes to the root of the dispute. In turn, the authority invalidates the proceeding and the subsequent order passed thereof.[2] For example, cases where a decision is rendered by the Court or a quasi-judicial authority without notice to the opposite party or under a mistaken impression that notice had been served upon the opposite party were held to be falling in the category where the power of procedural review may be invoked. Such a review aims at setting aside a palpably erroneous order passed by the authority under a misapprehension. On the contrary, if a Court or a quasi-judicial authority having jurisdiction to adjudicate on merit proceeds to do so, its order can be reviewed on merit only if such an authority is vested with such power by express provision or by necessary implication. The Supreme Court has held that an arbitral tribunal has no inherent power to review on merit.[3]
The Power to Recall
The power to recall is different from the power of review. The power to review as elucidated above refers to a situation where there was an error apparent in the order of the Tribunal. The power to recall on the other hand relates to the order being reverted to the authority where the party was deprived of making its submission due to a sufficient cause. While the courts have the power to recall their own orders[4], the same is not available to arbitral tribunals. The High Courts have provided contrasting positions while dealing with the issue. While the Patna High Court reasoned that a recall power cannot be interpreted from the provisions of the Act either specifically or by necessary implication. However, the Delhi High Court in the matter of Awasthi Construction Co v. Govt of NCT of Delhi and Anr,[5] differed from the abovementioned judgements and held that the arbitrator does not become functus officio after passing an order under Section 25(a) of the Act and can recall the order after sufficient cause is shown.
Addressing the dichotomy
The aforesaid issues were addressed and settled by the Supreme Court in the case of Srei Infrastructure Finance Ltd v. Tuff Drilling Private Ltd[6]. The Hon’ble Court also upheld the view that every tribunal has inherent powers to review its order on the grounds of a procedural defect. It was held that arbitral tribunal, being a quasi- judicial authority, is vested with the power to invoke procedural review. The Apex Court also affirmed that there is no distinction between a statutory tribunal established under statutory provisions or the constitution when it comes to the authority for procedural review. Additionally, the court pointed out that Section 19 of the Act, which specifies that the arbitral tribunal is not bound by the procedural rules outlined in the Code of Civil Procedure, 1908 (“CPC”), should not be interpreted to mean that the arbitral tribunal is restricted from drawing guidance from any provisions within the CPC. Consequently, the underlying principles of Order IX Rule 9 can be utilized by an arbitrator. Furthermore, by drawing a clear distinction between terminations under Section 25(a) and Section 32, the Court emphasized that the option for recall is only applicable under the former. This distinction arises because Section 25(a) deals with terminations resulting from the ‘default of the claimant,’ while Section 32 pertains to situations where it is ‘impossible’ to continue with the arbitral proceedings.
Analysis
Arbitration proceedings are typically guided by the procedure agreed upon between the parties that are involved in the dispute and the provisions of the Act become applicable in cases where the procedure is not agreed upon. While the Act under Section 29 stipulates that the tribunal shall not be bound by the rules of CPC, the provisions of the Act do not prohibit the Arbitral Tribunal from drawing sustenance from the fundamental principles underlying the CPC or Evidence Act, but free the Tribunal from being bound, as would a Civil Court, by the requirement of observing the provisions of the CPC and the law relating to evidence with all its rigor.[7] Therefore, in the current scenario, the use of the CPC by the arbitral tribunal aligns with established court precedents in India. Additionally, applying the CPC to address procedural formalities not explicitly outlined in the Act ensures that the parties have suitable recourse.
Conclusion
The legal position regarding review was further clarified by the Delhi High Court in the case of Delhi Development Authority v. Naveen Kumar[8], which reaffirmed the Supreme Court judgement that the tribunal has no power to review on merit and is not available unless expressly conferred by law[9]. Moreover, the Delhi High Court last year categorically held that though the arbitral tribunal does not have the power of substantive review of its previous order, it does have the power to vacate or modify the conditions of its previous order if the change in circumstances so warrant or causes undue hardships to the party seeking such modification.[10]
While the Act provides for correction and interpretation of an arbitral award[11], the same is not expressly available for an order passed by the tribunal. Thus, the need for a proper legal framework is essential to avoid any arbitrariness in the process, further complicating the resolution process between the parties and requiring the involvement of the courts.
[1] Kapra Mazdoor Ekta Union v. Management of Birla Cotton Spinning and Weaving Mills Ltd, C.A No. 3475 of 2003.
[2] ATV Projects v. Indian Oil Corporation Ltd, 200 (2013) DLT 553.
[3] State of Arunachal Pradesh v. Damani Construction, (2007) 10 SCC 742.
[4] Order IX Rule 13, Code of Civil Procedure, 1908.
[5] Awasthi Construction Co v. Govt of NCT of Delhi, 2013 (1) ARBLR 70 (Delhi).
[6] Srei Infrastructure Finance Ltd v. Tuff Drilling Private Ltd, (2018) 11 SCC 470.
[7] Maharashtra State Electricity Board v. Datar Switchgear Ltd, (2010) 10 SCC 479.
[8] Delhi Development Authority v. Naveen Kumar, 2017/DHC/4058.
[9] Supra Note 3.
[10] Airports Authority of India v. TDI International Limited, ARB. A. (COMM.) 17/2022 & I.As. 6774-75/2022.
[11] Section 33, Arbitration and Conciliation Act, 1996.
by Zen Webnet | Mar 15, 2024 | Blog
Article by Vivek Pandey and Priyanka Rastogi
The Delhi High Court overturned the Boehringer Ingelheim case ruling in the current landmark case of Syngenta Ltd v. Controller of Patents and Designs, bringing much-needed clarity to the requirements for filing divisional applications and offering a precise response to the questions regarding the content of the divisional application and the circumstances in which it may be filed.
Background
Syngenta (the Appellant) is a company registered under the laws of the United Kingdom. Its activities include research and development in a number of areas, including chemicals, agriculture, and healthcare-related products, as well as the production and international distribution of those products.
On December 28, 2005, the appellant submitted a 15-claim patent application (having No. 6114/DELNP/2005) to the Controller of Patents (the Defendant), regarding its invention of an agrochemical concentrate with an adjuvant and a hydrotrope. On September 15, 2011, in accordance with Rule 24 B of the Patents Rules, 2003 and Section 11B of the Act, a request for inspection of the Divisional Application was submitted. One of the three preferred combinations that were present in the parent application’s complete specifications but not claimed in the parent application’s claims was included in the divisional application filed by the appellant Syngenta. After review, the initial/parent application (IN252191) was approved on May 1, 2012. Following that, the Divisional Application no. 7059/DELNP/2011 was published on February 8, 2013. The Controller examined the divisional application, and on December 27, 2015, a First Examination Report was published. In response, the Appellant filed their answer to the FER. After allowing an opportunity of hearing to the Appellant, the Controller by an order dated October 11, 2017, denied the Divisional Application.
Issue
The main issue in this case was regarding the interpretation of Section 16(1) of the Patents Act which talks about the power of the Controller to make orders regarding the division of patent applications, specifically focusing on scenarios where a divisional application is filed to address objections raised by the Controller. Following are issues which were issued:
- Is the Divisional Application Request applicable even if it was submitted voluntarily by the applicant and not in response to the Controller’s objection regarding multiple inventions?
- Does the plurality of invention is liable to be present in the parent claims or would it also to being determined from the provisional or complete specification of the patent application?
Analysis
The Court pointed out that Section 16(1) of the Act permits the submission of a Divisional Application under two circumstances: first, when the applicant of the parent application submits it on their own initiative, and second, when the applicant submits it in response to a Controller objection. When it is believed that the claims of the whole specification apply to more than one invention, this objection is brought up.
The existence of a comma following “if he so desires” in Section 16(1) suggested that the applicant could submit a Divisional Application on their own without the necessity of plurality of innovations, the court noted in the case Indore Development Authority v. Manoharlal. The requirement of a plurality of innovations, however, appeared to apply when the Controller raised an objection because there was no comma after the phrase “raised by Controller.”
The appellant’s claim that the need for multiple innovations in the initial application would only apply when filing a divisional application to respond to a Controller objection was accepted by the court. The court did not rely on the interpretation given in Boehringer Ingelheim International GMBH v. The Controller of Patents. The Court stated that the legislature’s decision to omit a comma from Section 16(1) of the Act’s language following “raised by the Controller” appeared to be made in an effort to match the clause with Article 4(G) of the Paris Convention.
The Court noted that “relate to” and “disclosed in,” two separate terms employed in Section 16(1) of the Act, could not be overlooked for their importance. It would be adequate if the Divisional Application was submitted in relation to one invention disclosed in the provisional or complete specifications, even though the claims in the parent application must relate to a number of innovations.
The claim in the parent application, in the Court’s opinion, corresponded to a number of inventions because it covered all circumstances in which the same continuous phase included both an oil-based adjuvant and a hydrotrope. Numerous adjuvant-hydrotrope combinations could be included in the claim due to the extensive scope. Three distinct adjuvant-hydrotrope combinations were revealed in the detailed specifications that accompanied the claim. One of these exposed adjuvant-hydrotrope combinations was the subject of the appellant’s divisional application.
Consequently, the Court referred the following two questions before a division bench at the Hon’ble High Court:
- Does the requirement of a plurality of inventions in the parent application for a Divisional Application to be maintainable may still apply even when the Divisional Application is filed by the applicant voluntarily (suo moto) and is not based on any objection raised by the Controller.
- Assuming that the requirement of a plurality of inventions in the parent application was necessary for a Divisional Application to be maintainable, did the plurality of inventions have to be reflected in the claims in the parent application, or was it sufficient if the plurality of inventions was reflected in the disclosures in the complete specifications accompanying the claims in the parent application?
Division Bench’s Ruling
At the time of referral, the Single Judge noted that the Boehringer case cannot be legally justified as it essentially reconstructs Section 16 of the Act by replacing the phrase “disclosed in the provisional or complete specification already filed” with the word “claims.” The single judge further noted that the requirement that multiple inventions be included in the original claim would be a restrictive condition that would only be applicable in cases where the divisional application is filed in response to a Controller objection, not in cases where the applicant files a division application on their own.
First, the Division Bench rejected the Single Judge’s observation in the Syngenta case that the two categories should be treated differently. It held that the filing of a divisional application, whether done so suo moto by the applicant or in response to a Controller objection, must be evaluated on the same basis. Second, the Division Bench decided that there doesn’t seem to be any need to limit the divisional application filing process to instances in which the claims contain a plurality of inventions. The terms “disclosed in the provisional or complete specification” in Section 16 of the Act expressly contradict such an interpretation.
The Bench reasoned that since no claims are required in the context of a provisional filing, accepting Boehringer’s logic would essentially mean holding that no divisional application may be filed in the event that a provisional specification is submitted. The Bench further found that the idea of “what is not claimed is disclaimed” is more applicable in an infringement analysis than it is in the formulation of claims.
Conclusion
The Delhi High Court judgement in Syngenta vs. Controller of Patents case is being considered a major step in clarifying the uncertainties regarding the filing of divisional applications by following ways as given below:
- The Hon’ble Court’s clarifies doubt about from where one can refer disclosure of plurality of invention i.e., plurality of inventions can be derived from the disclosures in the specification and not just the claims, which sets a landmark for future cases.
- Also, the Court introduces uniformity between the evaluation criteria for the divisional applications filed voluntarily, and the divisional applications filed to overcome an objection of unity of invention.
In view of above, we can conclude that the court has widened the scope for applicants to file divisional applications by adopting a practical approach to the interpretation of the Indian Patents Act.
In the present case, the Controller’s refusal order signifies a very strict interpretation of section 16 of the Patents Act. Finally, the Delhi High Court’s Division Bench has delivered a resounding judgment, clarifying the requirements for maintaining a divisional patent application. The Bench overturned the Boehringer ruling and held that a divisional application may be maintained under either of the two circumstances—suo moto divisional filing or in response to a Controller objection citing multiple inventions—as long as the multiple inventions are supported by disclosures made in either the provisional or the complete specification.
by Zen Webnet | Mar 14, 2024 | Blog
Article by Ankita Sinha
The question of law and concept of ‘Group-Company Doctrine’ which was referred to the constitution bench of Hon’ble Supreme Court in the matter of Cox & Kings Ltd. v. SAP India (P) Ltd.[1], has now been crystallized and made enforceable under the Arbitration & Conciliation Act, 1996 (‘Arbitration Act’). The Hon’ble Supreme Court has recognized the Doctrine’s application to bind non-signatories to an ‘Arbitration Agreement’ upon satisfaction of certain parameters. The controversy over binding nature of Arbitration Agreement on non-signatories – in absence of their express consent inter-alia the concepts of ‘Autonomy’ and ‘Privity of Contracts’ has been laid to rest to the extent that Court’s seized of the question have to determine if there exists a defined legal relationship between the non-signatory and the parties to the arbitration agreement. Depending on the facts and circumstances of each case, the courts where the question of applicability of doctrine arises will have to see whether the non-signatory has consented to be bound by the arbitration agreement, either expressly or impliedly.
Analysis of “Group of Company Doctrines”
In recognizing the Group Company Doctrine as an applicable concept under the Indian Arbitration regime – and making the joinder of parties who are non-signatory to the Arbitration Agreement – a question of contractual interpretation, the Hon’ble Courts have given way to a more diverse and expansive view of what constitutes an ‘Arbitrable Dispute’. By way of the present Article, the author is trying to analyze the broader impact of the Constitution Bench judgment on the Indian Arbitration regime, with a focus on the meaning of ‘Arbitrable Disputes’ in the subsequent judgments of Indian Court.
However, before delving into what the Hon’ble Courts have held subsequent to the judgment of the Constitution Bench, the present Article is briefly dealing with the findings on the ‘Group Company Doctrine’ as the same forms the backbone of the subsequent rulings on ‘Arbitrable Dispute’. Vide the judgment upholding the ‘Group Company Doctrine’ the Hon’ble Supreme Court has cautioned that a pragmatic approach ought to be adopted to ascertain consent of the non-signatory from the facts of each case. The Hon’ble Court examined the questions of ‘Single Economic Reality’ ‘Implied Consent to arbitrate’ ‘Piercing of Corporate Veil’ etc. to find that the conduct of the non-signatory is the most important factor to be considered by the courts and tribunals as the same is an indicator of the intention of the non-signatory to be bound by the Arbitration Agreement. In its conclusions, it was held that the definition of “parties” under Section 2(1)(h) read with Section 7 of the Arbitration Act includes both the signatory as well as non-signatory parties and that principle of alter ego or piercing the corporate veil cannot be the basis for the application of the group of companies’ doctrine. Indeed, it has been clarified that group of companies’ doctrine has an independent existence as a principle of law which stems from a harmonious reading of Section 2(1)(h) along with Section 7 of the Arbitration Act. It has also been cautioned that the at the referral stage, the referral court should leave it for the arbitral tribunal to decide whether the non-signatory is bound by the arbitration agreement.
Following the Judgment of Cox & Kings, recently the Hon’ble Delhi HC in the matter of Opuskart Enterprises v. Kaushal Kishore Tyagi[2] dated 10.01.2014 in an application under S.11(6) of the Arbitration Act examined the Arbitration Agreement arising out of a partnership deed between certain individuals. In the said case, the partnership deed clearly narrated that the referred parties intended to carry on the business of trading, import and export of books and any other businesses which the partners intended to deal with under the name of M/s Opuskart Enterprises. Under Clause 12 of the Deed, the parties were required be just and faithful and render true accounts and full information relating to the firm to the other partners and also pay their separate private debts on their own.
It was the case of the Petitioners is that the Respondent – Mr. Tyagi had indulged in misappropriation of funds of the firm. Accordingly, notice was issued initially raising a claim of certain amounts. In the reply to said notice, Respondent stated that apart from being a partner in the partnership firm, the said partners are also Directors in M/s Opuskart India Pvt. Ltd and made allegations that the that the Petitioners intended to hijack, usurp and run away with the business of both the firm as also the company. Whereafter, the Petitioners invoked the Arbitration Clause and since there was no response from the Respondent, the S.11 petition was filed before the Hon’ble High Court of Delhi. The Hon’ble High Court was therefore seized of the question as to whether the disputes raised by the Petitioner, since the business was common between the firm and the company, whether the claim is an arbitrable dispute.
Without going into the factual analysis of the above case, attention is drawn to the Hon’ble High Court’s interpretation of the Cox & Kings judgment (Supra). Rejecting the Respondent’s arguments that the accounts relating to the firm, or the Company would not be ‘Arbitrable Disputes, the Hon’ble Judge took the view that since the business by the Partners is being conducted both through the firm and by the company, the disputes raised would in fact be arbitrable disputes. Therefore, in the Opuskart Judgment (supra) the Hon’ble Judge reiterated the view taken in Cox & Kings and stated that a non-signatory affiliate or sister or parent company can be a party to an arbitration agreement if there is mutual intention of the signatories and non-signatories to this effect.
However, in the subsequent judgment of the Hon’ble Delhi High Court in the matter of Vingro Developers (P) Ltd. v. Nitya Shree Developers (P) Ltd[3] dated 24.01.20214, where once again the main challenge raised by the respondent was that Respondent No. 2 and 3 were not parties to the Arbitration Agreements and thus, the matter could not be referred to arbitration against them, as the Respondent No.2 and 3 had only acted in their capacity as directors of the Respondent No.1. It was argued that they cannot be held personally liable, and the referred disputes were not ‘Arbitrable Disputes’.
The Hon’ble Delhi High Court, interpreted the judgment in Cox & Kings and found that to bind a non-signatory to an arbitration agreement, there must exist a common intention between the parties to do so, and held that there was a principal agent relationship between the Respondent No.1 and Respondents Nos. 2 and 3, and merely because they were signatories to the Builder Buyer Agreement in question, Arbitration could not be invoked against them.
Conclusion
By way of the illustration of the above referred two judgments of the Hon’ble Delhi High Court, in the aftermath of the Constitution Bench Judgment in Cox & Kings, the author is trying to convey that the diverse views being taken by the Hon’ble Court’s is a curiouser subject and begs the present analysis insofar as the contrary views & interpretations only make it fascinating to see how the definition of ‘Arbitrable Disputes’ especially in cases of Partnership Firms and Companies will unfold going forward. The present Article is a mere commentary on the diverse understanding of the evolving Group Company Doctrine, and as stated above, it will be fascinating to follow and analyze. However, it goes without saying, that the Constitution Bench Judgment and recognition of the ‘Group Companies doctrine” has left the Indian Arbitration Jurisprudence much richer.
[1] 2023 SCC OnLine SC 1634
[2] 2024 SCC OnLine Del 266
[3] 2024 SCC OnLine Del 486
by Zen Webnet | Mar 13, 2024 | Blog
Article by Navantak Agarwal
In the recent past, it is apparent that the brands are proactively involved in the protection of their Intellectual Property Rights in order to standout in the commercial hub. However, certain reprobates driven with malicious intent attempts to meddle rights of honest users by virtue of squatting. In the words of World Intellectual Property Organisation (“WIPO”), Trademark squatting is defined as the registration or use of a generally well-known foreign trademark that is not registered in the country or is invalid as a result of non-use. In such instances, the trademark squatters apply for the earlier adoption of the well-known marks before the products released in the market with an intent to sell it to the rightful owner at the hefty price. For instance, Apple Inc., had to pay a whopping US $ 60 million to settle a dispute involving its mark ‘IPAD’ with a Chinese company, Shenzen Proview Technology, which had registered the trademark IPAD in China in 2012. In most cases, the squatter does not intent to use the mark in relation to any legitimate business activities but to enforce their statutory rights against the true owner for trademark infringement or sell the mark back to the legitimate owner.
One such case emerged in the IP landscape is of Sony’s PS5 trademark, wherein the Sony attempted to file registration for its PS5 mark, however the same has already been registered by another Applicant named “Hitesh Aswani”. The mark “PS5” received an objection in their examination report by Registry which showcases another registration in the same name. The judicial authority relied on the precedents of trans border reputation of the well-known marks as laid down in the case of N.R. Dongre v. Whirlpool Corporation [1996 PTC (16) 476]. In the present case at hand, it may be argued that the PS5 mark has not been registered in India yet, however, its predecessors, PS3 and PS4 were quite popular. Hence, it can be said that Sony’s PlayStation Series has customers in the country, thus providing a substantial reason for its registration on the first to use basis. As of now, Hitesh Aswani has withdrawn the Application.
It can be said that such incidents pose a threat to the rightful owner causing significant damage to their established goodwill, hence there needs a formation of stringent laws to provide wider protection to the well-known marks.
by Zen Webnet | Mar 12, 2024 | Blog
Article by Saima Mahmood
Introduction
Review and Appeal are two sides of the same coin, if judicial caution is not exercised while adjudicating an order under review and appeal, the same may resultantly lose its essence. Court effectively operates on legislatively imposed constraints. Hence it becomes vital that a “Laxman Rekha” is drawn between review and appeal.
The nexus of a review and appeal is only one and i.e. the re-visiting of an order/judgement. However, the leash of the Legislature is clear in demarcating the scope and effect of review and appeal. The legislative intent is very clear so is the mischief it seeks to prevent. The legislature has given a very clear distinction between review and an appeal. Section 114 read with Order 47 of the Civil Procedure Code 1908 deals with the power Court to review its own order. However, the Code also limits the scope of such review and provides a clear demarcation to the extent that that same is not interchangeably used as powers of the Appellant Court.
This article attempts to analyze this scope of review under the ambit of the Arbitration and Conciliation Act, 1966 (as amended) (‘ACA’).
Definitive Limits of Review as per Civil Procedure Code, 1908
The impulse to depart from the formal design in order to announce a legal principle arises from the anomaly of “Judgement Call” of our judicial system. However, the function of our Review Court can only be exercised rightly by giving true import to the legislative intent. Scope of review has been limited to “error apparent”, if the Court has to depart from the same and go into the merits of the case, such exercise is beyond the definitive limits prescribed under Order 47 of the Code.
The Order 47of Code provides grounds for filing an application for review of the judgement which are as follows:
- New and important evidence is discovered by the applicant which was not in knowledge or with due diligence was unable to provide the evidence when the decree was passed.
- Error apparent on the face of the record and not on the erroneous decision.
- Any other sufficient grounds which is analogous to those specified in these rules.
- The misconception of the court can be regarded as the sufficient ground for review of the judgment.
The Code specifically provides that an order can only be reviewed on the grounds mentioned above. The Court has dealt with the definitive limits of Review vide various judgements. The Calcutta High Court in Soumitra Panda v. A.K. Agarwal, 1994 SCC OnLine Cal 14 has held that the review within the frame work of order 47, Rule 1 of the Code of Civil Procedure is contemplated only on error apparent on the face of the record, discovery of new fact which could not have been found out even by diligence at the appropriate point of time and for any other sufficient reason. Further the Court has analyzed the “other sufficient cause” and held that reason as contemplated in Order 47, Rule 1 means that the reason thereof must be for review which is similar in nature but does not come within the first two reasons mentioned in Rule 1 of Order 47. Even in the case of Binay Krishna v. Suraj Bali Misra[1], a Division Bench of this High Court has observed that the phrase “Ejusdem generis” is more restricted than the word ‘Analogous’. It has been made clear by the Courts that any Applicant “other sufficient cause” is limited to be similar to the other grounds as enumerated under Order 47 of the Code.
Further in Ram Sahu v. Vinod Kumar Rawat[2], the Hon’ble Apex Court held that an application for review is more restricted than that of an appeal and the court of review has limited jurisdiction as to the definite limit mentioned in Order 47 Rule 1CPC itself. The powers of review cannot be exercised as an inherent power nor can an appellate power be exercised in the guise of power of review.
Since the scope of Review and the grounds have been well settled, the next question that was raised before the Court is whether that same test shall apply to order vide which the arbitrator is appointed under Section 11 First, the Court discussed the parameters of the 1996 Arbitration and Conciliation Act. Substantive review is not maintainable since it is a product of statutes, and the ACA does not give the Court the authority to review under Section 11.
ACA is a self-contained Code. The intent of the Act is effective resolution of the dispute and party autonomy.
The Apex Court in recent 7-judge bench judgement[3] In Re: Interplay between Arbitration Agreements under the Arbitration and Conciliation Act, 1996 and the Indian Stamp Act, 1899 paragraph 93 has observed that “The Arbitration Act is a self-contained code inter alia with respect to matters dealing with appointment of arbitrators, commencement of arbitration, making of an award and challenges to the arbitral award, as well as execution of such awards[4]. When a self-contained code sets out a procedure, the applicability of a general legal procedure would be impliedly excluded[5]. Being a self-contained and exhaustive code on arbitration law, the Arbitration Act carries the imperative that what is permissible under the law ought to be performed only in the manner indicated, and not otherwise. Accordingly, matters governed by the Arbitration Act such as the arbitration agreement, appointment of arbitrators and competence of the arbitral tribunal to rule on its jurisdiction have to be assessed in the manner specified under the law. The corollary is that it is not permissible to do what is not mentioned under the arbitration Act. Therefore, provisions of other statutes cannot interfere with the working of the Arbitration Act, unless specified otherwise.”
In Fuerst Day Lawson Ltd. v. Jindal Exports Ltd., (2011) 8 SCC 333 the Hon’ble Court has held that application of the general principles of a special Act set out a self-contained code and the applicability of the general law procedure would be impliedly excluded.
Supreme Court observation on Review of Order for appointment of Arbitrator
The Apex Court in SBP & Co. v. Patel Engg. Ltd., (2005) 8 SCC 618 wherein the court has observed that “..while entertaining an application under Section 11(6) of the Act is adjudicatory, then obviously, the outcome of that adjudication is a judicial order. Once it is a judicial order, the same, as far as the High Court is concerned would be final and the only avenue open to a party feeling aggrieved by the order of the Chief Justice would be to approach the Supreme Court under Article 136 of the Constitution.”
Further, in Duro Felguera, S.A. v. Gangavaram Port Ltd., (2017) 9 SCC 729 it was observed that “14. The Arbitration and Conciliation (Amendment) Act, 2015 (w.e.f. 23-10-2015) has brought in substantial changes in the provisions of the Arbitration and Conciliation Act, 1996. After Amendment Act 3 of 2016, as per the amended provision of sub-section (6-A) of Section 11, the power of the court is confined only to examine the existence of the arbitration agreement. It further clarifies that the decision of appointment of an arbitrator will be made by the Supreme Court or the High Court (instead of Chief Justice) and under Section 11(7), no appeal shall lie against such an appointment.”
Scope of Review in Order for Appointment of Arbitrator by the High Court
The Allahabad High Court in Manish Engineering Enterprises vs. Managing Director, IFFCO, New Delhi & Ors.[6], has held that the power of review is a creature of the statute. In the absence of such specific power, a review is not maintainable, unless the review is a procedural review.
In Sanjay Gupta v. Kerala State Industrial Development Corporation Ltd., the Kerala High Court explained this principle by observing that the Review of Order under Section 11 of the Arbitration & Conciliation Act, 1996 does not lie with the High Court. Even when a Judge of the High Court acts as a Nominee of Chief Justice, he acts merely as a Statutory Authority as designated by the Chief Justice in terms of Section 11 of the Act. Therefore, unless the power of review is expressly conferred under the Act itself, general power of review as may be available to the High Court under other jurisdictions : civil, criminal or writ, cannot be extended to review the earlier Order issued by the Nominee of the Chief Justice.[7]
The Madhya Pradesh Court in Cobra-CIPL JV v. Railway Electrification[8], held that review petition under section 11 order is not maintainable.
The Andhra Pradesh High Court in Nagireddy Srinivasa Rao vs. Chinnari Suryanarayana[9], has observed that “There is no provision in the Arbitration and Conciliation Act, 1996, providing for a review of an order passed under Section 11 of the Act. The provisions of the Act also do not make out a case for holding that such a power of review is available by implication.”
The Calcutta High Court in Sarada Construction vs. Bhupendra Pramanik and Ors.[10], has observed that “the Act is a complete code which does not specifically confer any power upon this Court to review an application under the statute which is section 11 of the Act and consequently, a review in the instant case is not maintainable”.
Most recently, The Delhi High Court in M/s Diamond Entertainment Technologies Private Limited & Ors. vs. Religare Finvest Limited[11], has observed that “By way of the present review petition, the petitioner is seeking review of the Order vide which an application under Section 11 of the Arbitration & Conciliation Act, 1996 has been allowed. Since the Order made under Section 11 of the Act is in exercise of the statutory powers as defined under the Arbitration & Conciliation Act, any review of the same can be only within the parameters of the Statute. Since, there is no provision of review in the Arbitration & Conciliation Act, this Court finds itself without any jurisdiction to review the present Order.”
Conclusion
From the plethora of judgment as provided above, it can be safely concluded that the power conferred to the referral Courts adjudicating on Section 11 of the ACA, do not have the power to review their judgement for appointment of arbitrator. Since the ACA is a self-contained act and do not envisage a scope of review under Section 11 therefore, no review may lie before the referral Court. Additionally, it is important to clarify, though ACA has curbed the right to review the appointment of arbitrator order, however it has not left the Appellants remediless. Section 16 of the ACA provides for power to the Arbitral Tribunal to rule over its own jurisdiction which also includes challenging the appointment of arbitrators. The purposive interpretation of the ACA is clear that any dispute arising out of an arbitration agreement is required to be dealt before the Arbitrator. Further, this not only unburdens the Referral Court but also acts as an effective remedy.
[1] AIR 1963 Calcutta 100
[2] (2021) 13 SCC 1
[3] 2023 SCC Online SC 1666
[4] Pasl Wind Solutions (P) Ltd. v. GE Power Conversion (India) (P) Ltd., (2021) 7 SCC 1; Kandla Export Corporation v. OCI Corporation, (2018) 14 SCC 715
[5] Subal Paul v. Malina Paul, (2003) 10 SCC 361
[6] 2008 SCC OnLine All 84
[7] 2009 SCC OnLine Ker 6361
[8] 2021 SCC OnLine MP 5439
[9] MANU/AP/2580/2022
[10] 2023 SCC OnLine Cal 342
[11] 2023 SCC OnLine Del 95
