Mumbai High Project Dispute: Bombay High Court Orders L&T To Keep ₹150 Crore Bank Guarantee Alive

The Bombay High Court has directed Larsen & Toubro Ltd. to continue renewing and keeping alive bank guarantees worth approximately ₹150.34 crore furnished to ONGC Ltd. in a dispute over liquidated damages arising from the Mumbai High North redevelopment project. The court held that ONGC, though largely unsuccessful in the arbitration after the tribunal awarded higher claims to L&T, could still seek interim protection under Section 9 of the Arbitration and Conciliation Act in a rare and...

ONGC Cannot Seek Re-Deposit Of ₹42.89 Crore Withdrawn With Its “No Objection”: AP High Court

The Andhra Pradesh High Court on 7 May held that Oil and Natural Gas Corporation Ltd. (ONGC) cannot compel Deep Industries Ltd. (DIL) to re-deposit Rs. 42.89 crore or furnish security for amounts withdrawn in arbitration proceedings, particularly since ONGC had earlier given a written “no objection” permitting withdrawal without any condition. A Division Bench of Justices Ravi Nath Tilhari and Balaji Medamalli dismissed ONGC's interim application in its pending Section 37 appeal against an...

Non-Signatory Collaborator Whose Role Was Essential To Contract Can Invoke Arbitration: Supreme Court

The Supreme Court has held that a collaborator whose technical expertise was essential for a contractor to qualify for a project bid can invoke the arbitration clause in the principal contract.This would apply where the collaborator's role makes it effectively a party to the agreement.“The meetings convened between the Employer, the Contractor and the Collaborator, after delay in execution of the contract, the tripartite agreement entered into between them and the further communications...

Section 9 Relief Cannot Restore Ousted LLP Partner Or Confer Final Control: Rajasthan High Court

The Rajasthan High Court on 30 April held that a Commercial Court exercising interim powers under Section 9 of the Arbitration and Conciliation Act 1996 cannot grant relief that effectively restores a removed partner or confers operational control over an LLP, as such directions would amount to granting final relief prior to the commencement of arbitration. A Division Bench of Acting Chief Justice Sanjeev Prakash Sharma and Justice Shubha Mehta set aside the Jaipur Commercial Court's directions...

Confirming Party Cannot Invoke Arbitration Clause Without Express Contractual Right: Delhi High Court

The Delhi High Court on 4 May held that a party described only as a “Confirming Party” or merely having signatory status in an agreement cannot invoke the arbitration clause unless the contract expressly grants such a right. Justice Harish Vaidyanathan Shankar dismissed petitions filed by The Atlas Electric Industries Pvt. Ltd. seeking interim protection and appointment of an arbitrator in a dispute concerning an industrial plot in Haryana. He held: “The arbitration clause, in express terms,...

Calcutta High Court Temporarily Stays Arbitral Award In Tata Nano Singur Land Acquisition Dispute

The Calcutta High Court on Thursday (May 7) temporarily stayed for eight weeks the enforcement of a ₹765.78 crore arbitral award passed in favour of Tata Motors Ltd against the West Bengal Industrial Development Corporation Ltd (WBIDC) in the dispute over the acquisition of land in Singur for Tata's Nano factory. An arbitral tribunal had, on October 30, 2023 directed WBIDC to pay Tata Motors ₹765.78 crore with interest at 11% per annum. Justice Aniruddha Roy granted an unconditional interim...

Limitation In Arbitration Begins From Denial Of Claim, Not Section 21 Notice: Madhya Pradesh High Court

The Madhya Pradesh High Court on 4 May held that limitation for an arbitral claim begins when the claim is denied or repudiated, and not from the date of issuance of notice under Section 21 of the Arbitration and Conciliation Act, 1996. It further held that an arbitral tribunal commits patent illegality if it treats the Section 21 notice as the starting point of limitation. A Bench of Justice Vivek Jain partly allowed the appeal filed by Northern Coal Fields Ltd. (NCL) and set aside portions of...

Financial Institution Need Not Be Secured Creditor To Invoke SARFAESI Arbitration: Bombay High Court

The Bombay High Court has held that a financial institution need not already be a secured creditor to invoke statutory arbitration under the SARFAESI Act, while referring a loan takeover dispute between Aditya Birla Housing Finance Ltd. and Axis Bank to arbitration.Justice Sandeep V. Marne held that Section 11 of the SARFAESI Act does not require a bank or financial institution invoking arbitration to already be a secured creditor. The court observed, “Section 11 of the SARFAESI Act by itself...

Arbitrator Cannot “Conjure” Mesne Profit Figure Solely On “Guesswork”: Delhi High Court

The Delhi High Court on 13 April held that an arbitral tribunal cannot award mesne profits solely on “guesswork” without any foundational material or reasoning supporting the quantification and clarified that while exact proof of unliquidated damages is not necessary, the award must disclose a rational basis linking the material on record to the amount awarded. A Division Bench of Justices Om Prakash Shukla and C. Hari Shankar upheld an order setting aside the arbitral award to the extent it...

Arbitrators Cannot Import Notions Of Fairness And Equity Into Commercial Contracts: Bombay High Court

The Bombay High Court has held that arbitral tribunals cannot import principles of fairness and natural justice into commercial contracts contrary to their express terms. The court made the observation while setting aside an arbitral award passed against Nayara Energy Ltd. that had directed restoration of a petrol pump dealership in Barmer and payment of ₹4 lakh compensation to the franchisee. The court held that the tribunal acted contrary to Sections 28(2) and 28(3) of the Arbitration Act...

Delhi High Court Partly Sets Aside Award Denying FDR Interest Despite Invalid PBG Invocation

The Delhi High Court has held that the Delhi Development Authority (DDA) cannot retain interest accrued on a fixed deposit created from a Performance Bank Guarantee (PBG) amount after an arbitral tribunal held that DDA was not entitled to invoke the PBG. The PBG had been furnished by Jaksons Developers in connection with allotment of a commercial plot by DDA for construction of a hotel project for the 2010 Commonwealth Games. Justice Avneesh Jhingan said: “The realised amount along with...

Courts Hearing Challenges To NH Act Arbitral Awards Cannot Enhance Compensation: Karnataka High Court

The Karnataka High Court has reiterated that courts cannot enhance compensation by modifying arbitral awards in land acquisition disputes under the National Highways Act. Referring to the precedent set by apex court, the court held, "The question whether the court could modify the award was also considered by the Constitution Bench of the Supreme Court in a recent decision in Gayatri Balasamy v. ISG Novasoft Technologies Limited3 . The Supreme Court, by a majority held that the arbitral award...