In Nathani Steels Ltd. v. Associated Constructions, 1995 Supp (3) SCC 324, it was held as under:
“Even otherwise we feel that once the parties have arrived at a settlement in respect of any dispute or difference arising under a contract and that dispute or the difference is amicable settled by way of a final settlement by and between the parties, unless that settlement is set aside in proper proceedings, it cannot lie in the mouth of one of the parties to the settlement to spurn it on the ground that it was a mistake and proceed to invoke the arbitration clause. If this is permitted the sanctity of contract, the settlement also being a contract, would be wholly lost and it would be open to one party to take the benefit under the settlement and then to question the same on the ground of mistake without having the settlement set aside.” WAPCOS Ltd. v. Salma Dam Joint Venture, (2020) 3 SCC 169.
In Gangotri Enterprises Ltd. v. Union of India, (2016) 11 SCC 720, it was held that the demand of the Government is crystallised or adjudicated upon, the Government cannot withhold the money of the contractor. This judgment is primarily based on the judgment of the Hon’ble Apex Court in Union of India v. Raman Iron Foundry, (1974) 2 SCC 231. In this case it was held that the Government had no right to appropriate the amount claimed without getting it first adjudicated. It was held as under:
“But here the order of interim injunction does not expressly or by necessary implication, carry any direction to the appellant to pay the amounts due to the respondent under other contracts. It is not only in form but also in substance a negative injunction. It has no positive content. What is does is merely to injunct the appellant from recovering, suo motu, the damages claimed by it from out of other amounts due to the respondent. It does not direct that the appellant shall pay such amounts to the respondent. The appellant can still refuse to pay such amounts if it thinks it has a valid defence and if the appellant does so, the only remedy open to the respondent would be to take measures in an appropriate forum for recovery of such amounts where it would be decided whether the appellant is liable to pay such amounts to the respondent or not. No breach of the order of interim injunction as such would be involved in non-payment of such amounts by the appellant to the respondent. The only thing which the appellant is interdicted from doing is to make recovery of its claim for damages by appropriating such amounts in satisfaction of the claim. That is clearly within the power of the court under Section 41(b) of the Arbitration Act, 1940 because the claim for damages forms the subject-matter of the arbitration proceedings and the court can always say that until such claim is adjudicated upon, the appellant shall be restrained from recovering it by appropriating other amounts due to the respondent.” State of Gujarat v. Amber Builders, (2020) 2 SCC 540.
Given the fact that an appellate proceeding is a continuation of the original proceeding as has been held in Lachmeshwar Prasad Shukul v. Keshwar Lal Chaudhuri, AIR 1941 FC 5, and repeatedly followed in various judgments, any delay beyond 120 days in the filing of an appeal under Section 37 from an application being either dismissed or allowed under Section 34 of the Arbitration & Conciliation Act, 1996 should not be allowed as it will defeat the overall statutory purpose of arbitration proceedings being decided with utmost dispatch. N.V. International v. State of Assam, (2020) 2 SCC 109. (See also Union of India v. Varindera Constructions Ltd., (2020) 2 SCC 111.)
In Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd. [Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd., (2011) 5 SCC 532 the following has been laid down:
“ The Arbitral Tribunals are private fora chosen voluntarily by the parties to the dispute, to adjudicate their disputes in place of courts and tribunals which are public fora constituted under the laws of the country. Every civil or commercial dispute, either contractual or non-contractual, which can be decided by a court, is in principle capable of being adjudicated and resolved by arbitration unless the jurisdiction of the Arbitral Tribunals is excluded either expressly or by necessary implication. Adjudication of certain categories of proceedings are reserved by the legislature exclusively for public fora as a matter of public policy. Certain other categories of cases, though not expressly reserved for adjudication by public fora (courts and tribunals), may by necessary implication stand excluded from the purview of private fora. Consequently, where the cause/dispute is inarbitrable, the court where a suit is pending, will refuse to refer the parties to arbitration, under Section 8 of the Act, even if the parties might have agreed upon arbitration as the forum for settlement of such disputes.
The well-recognised examples of non-arbitrable disputes are: (i) disputes relating to rights and liabilities which give rise to or arise out of criminal offences; (ii) matrimonial disputes relating to divorce, judicial separation, restitution of conjugal rights, child custody; (iii) guardianship matters; (iv) insolvency and winding-up matters; (v) testamentary matters (grant of probate, letters of administration and succession certificate); and (vi) eviction or tenancy matters governed by special statutes where the tenant enjoys statutory protection against eviction and only the specified courts are conferred jurisdiction to grant eviction or decide the disputes.
It may be noticed that the cases referred to above relate to actions in rem. A right in rem is a right exercisable against the world at large, as contrasted from a right in personam which is an interest protected solely against specific individuals. Actions in personam refer to actions determining the rights and interests of the parties themselves in the subject-matter of the case, whereas actions in rem refer to actions determining the title to property and the rights of the parties, not merely among themselves but also against all persons at any time claiming an interest in that property. Correspondingly, a judgment in personam refers to a judgment against a person as distinguished from a judgment against a thing, right or status and a judgment in rem refers to a judgment that determines the status or condition of property which operates directly on the property itself.
Generally and traditionally all disputes relating to rights in personam are considered to be amenable to arbitration; and all disputes relating to rights in rem are required to be adjudicated by courts and public tribunals, being unsuited for private arbitration. This is not however a rigid or inflexible rule. Disputes relating to subordinate rights in personam arising from rights in rem have always been considered to be arbitrable.” Emaar MGF Land Ltd. v. Aftab Singh, (2019) 12 SCC 751
In Section 34(3) of the Arbitration and Conciliation Act, the commencement period for computing limitation is the date of receipt of award or the date of disposal of request under Section 33 (i.e. correction/additional award). If Section 17 of the Limitation Act were to be applied for computing the limitation period under Section 34(3) of the Arbitration & Conciliation Act, the starting period of limitation would be the date of discovery of the alleged fraud or mistake. The starting point for limitation under Section 34(3) would be different from the Limitation Act.
In the context of Section 34(3) of the Arbitration & Conciliation Act, a party can challenge an award as soon as it receives the award. Once an award is received, a party has knowledge of the award and the limitation period commences. The objecting party is therefore precluded from invoking Section 17(1)(b) and (d) of the Limitation Act once it has knowledge of the award. Section 17(1)(a) and (c) of the Limitation Act may not even apply, if they are extended to Section 34, since they deal with a scenario where the application is “based upon” the fraud of the respondent or if the application is for “relief from the consequences of a mistake.” Section 34 application is based on the award and not on the fraud of the respondent and does not seek the relief of consequence of a mistake. P. Radha Rai v. P. Ashok Kumar, (2019) 13 SCC 445.
Section 12(5) of the Arbitration
& Conciliation Act is a new provision which relates to the de jure inability
of an arbitrator to act as such. Under this provision, any prior agreement to
the contrary is wiped out by the non obstante clause in Section 12(5) the
moment any person whose relationship with the parties or the counsel or the
subject-matter of the dispute falls under the Seventh Schedule. The sub-section
then declares that such person shall be “ineligible” to be appointed as
arbitrator. The only way in which this ineligibility can be removed is by the
proviso, which again is a special provision which states that parties
may, subsequent to disputes having arisen between them, waive
the applicability of Section 12(5) by an express agreement in writing. What is
clear, therefore, is that where, under any agreement between the parties, a
person falls within any of the categories set out in the Seventh Schedule, he
is, as a matter of law, ineligible to be appointed as an arbitrator. The only
way in which this ineligibility can be removed, again, in law, is that parties
may after disputes have arisen between them, waive the
applicability of this sub-section by an “express agreement in writing”.
Obviously, the “express agreement in writing” has reference to a person who is
interdicted by the Seventh Schedule, but who is stated by parties (after the
disputes have arisen between them) to be a person in whom they have faith
notwithstanding the fact that such person is interdicted by the eventh
Unlike Section 4 of the Arbitration
& Conciliation Act which deals with deemed waiver of the right to object by
conduct, the proviso to Section 12(5) will only apply if subsequent to disputes
having arisen between the parties, the parties waive the applicability of
sub-section (5) of Section 12 by an express agreement in writing. For this
reason, the argument based on the analogy of Section 7 of the Act must also be
rejected. Section 7 deals with arbitration agreements that must be in writing,
and then explains that such agreements may be contained in documents which
provide a record of such agreements. On the other hand, Section 12(5) refers to
an “express agreement in writing”. The expression “express agreement in
writing” refers to an agreement made in words as opposed to an agreement which
is to be inferred by conduct. Here, Section 9 of the Contract Act, 1872 becomes
important. It states:
“9. Promises, express
and implied.—Insofar as the proposal or acceptance of any promise is
made in words, the promise is said to be express. Insofar as such proposal or
acceptance is made otherwise than in words, the promise is said to be implied.”
It is thus necessary that there be an “express” agreement in
writing. Bharat Broadband Network Ltd.
v. United Telecoms Ltd., (2019) 5 SCC
Union of India v. U.P. State Bridge Corporation Ltd.,
(2015) 2 SCC 52, it was held as under:
“In the case of contracts between
Government Corporations/State owned companies with private parties/contractors,
the terms of the agreement are usually drawn by the Government Company or
public sector undertakings. Government contracts have broadly two kinds of
arbitration clauses, first where a named officer is to act as sole arbitrator;
and second, where a senior officer like a Managing Director, nominates a
designated officer to act as the sole arbitrator. No doubt, such clauses give
the Government a dominant position to constitute the Arbitral Tribunal are held
to be valid. At the same time, it also casts an onerous and responsible duty
upon the persona designata to appoint such persons/officers as the arbitrators
who are not only able to function independently and impartially, but are in a
position to devote adequate time in conducting the arbitration. If the Government
has nominated those officers as arbitrators who are not able to devote time to
the arbitration proceedings or become incapable of acting as arbitrators
because of frequent transfers, etc., then the principle of “default procedure”
at least in the cases where the Government has assumed the role of appointment
of arbitrators to itself, has to be applied in the case of substitute
arbitrators as well and the court will step in to appoint the arbitrator by
keeping aside the procedure which is agreed to between the parties. However, it
will depend upon the facts of a particular case as to whether such a course of
action should be taken or not. S.P.
Singla Constructions (P) Ltd. v. State
of H.P., (2019) 2 SCC 488.
In Mcdermott International Inc. v. Burn
Standard Company, (2006) 11 SCC 181, it was held as under:
33 of the Arbitration and Conciliation Act empowers the Arbitral Tribunal to
make correction of errors in arbitral award to give interpretation of a
specific point or a part of the arbitral award and to make an additional award
as to claims, though presented in the arbitral proceedings, but omitted from
the arbitral award. Sub-section (4) empowers the Arbitral Tribunal to make
additional arbitral award in respect of claims already presented to the
Tribunal in the arbitral proceedings but omitted by the Arbitral Tribunal
- There is no
contrary agreement between the parties to the reference;
- A party to
the reference, with notice to the other party to the reference, requests the
Arbitral Tribunal to make the additional award;
request is made within thirty days from the receipt of the arbitral award;
Arbitral Tribunal considers the request so made, justified; and
arbitral award is made within sixty days from the receipt of such request by
the Arbitral Tribunal.”
The powers under Section 33 (4) of the Arbitration and
Conciliation Act cannot be invoked for raising fresh claims or seeking an
appeal against the arbitral award. The powers of the Arbitral Tribunal in these
proceedings are restricted to making an award for such claims which formed a
matter for adjudication and on which the parties had led arguments. Pramod v. Union of India, 2019 (1) AWC 969.
In Union of India v. Tecco Trichy Engineers & Contractors, (2005) 4 SCC 239, a three
Judge Bench of the Hon’ble Supreme Court, in respect to the issue of limitation
for filing application under Section 34 of the Arbitration and Conciliation
Act, 1996 for setting aside the arbitral award, held that the period of
limitation would commence only after a valid delivery of an arbitral award
takes place under Section 31(5) of the Act. It was held as under:
delivery of an arbitral award under sub-section (5) of Section 31 is not a
matter of mere formality. It is a matter of substance. It is only after the
stage under Section 31has passed that the stage of termination of arbitral
proceedings within the meaning of Section 32 of the act arises. The delivery of
arbitral award to the party, to be effective, has to be “received” by the party.
The delivery by the Arbitral Tribunal and receipt by the party of the award
sets in motion several periods of limitation such as an application for
correction and interpretation of an award within 30 days under Section 33(1),
an application for making an additional award under Section 33(4) and an
application for setting aside an award under Section 34(3) and so on. As this
delivery of the copy of award has the effect of conferring certain rights on the
party as also bringing to an end the right to exercise those rights on expiry
of the prescribed period of limitation which would be calculated from that
date, the delivery of the copy of award by the Tribunal and the receipt thereof
by each party constitutes an important stage in the arbitral proceedings.”
In State of Maharashtra v. ARK Builders (P) Ltd., (2011) 4 SCC 616,
while following the Judgment in Union of India v. Tecco Trichy Engineers & Contractors, (2005) 4 SCC 239 held
that the expression “….party making that application had received the arbitral
award….” cannot be read in isolation and it must be understood that Section
31(5) of the Act requires a signed copy of the award to be delivered to each
party. By cumulative reading of Section 34(3) and 31(5) of the Act, it is clear
that the limitation period prescribed under Section 34(3) of the Act would
commence only from the date of signed copy of the award delivered to the party
making the application for setting it aside. Anil Kumar Jinabhai Patel v. Pravinchandra
Jinabhai Patel, (2018) 15 SCC 178.
It is not in dispute that Article 137 of the Limitation
Act would apply to applications filed under Section 11 of the Arbitration and
Conciliation Act, 1996. In Major (Retd.)
Inder Singh Rekhi v. DDA, (1998)
2 SCC 338, the Hon’ble Apex Court held that in application for appointment of
arbitrator Article 137 of the Limitation Act will apply.
137 of the Limitation Act, 1963 is applicable to applications both under Civil
Procedure Code and under the Special Acts. Article 137 constitutes the
residuary Article in regard to applications. The starting point of limitation
under Article 137 is the date when “the right to apply arises”. Article 137 being
a residuary Article to be adopted to different classes of applications, the
expression “the right to apply” is expression of a broad common law principle
and it has to be interpreted according to the circumstances of each case. In Ramanna v. Nallaparaju, 1995 (2) SCR 936, the Hon’ble Apex Court has held that
“the right to apply” means “the right to apply first arises”.
Arbitration and Conciliation Act, 1996, right to apply to the Court having
jurisdiction would arise from the date such controversy arises between the parties.
Central Electronics Limited v. Friends Cable Industries, Noida, 2017 (125) ALR 588.