Tag: arbitration

Mere Use of Word “Arbitration” Doesn’t Bind Parties: Key Business Contract Lesson from Supreme Court
20Jan By The Legal ChamberNo Comments
Supreme Court

Mere Use of Word “Arbitration” Doesn’t Bind Parties: Key Business Contract Lesson from Supreme Court

The Supreme Court held that Clause 8.28 did not constitute a valid arbitration agreement under Section 7 of the Arbitration and Conciliation Act, 1996. The clause lacked essential attributes, such as finality and a binding decision by a neutral tribunal, as it ultimately permitted parties to seek remedies in civil courts if unresolved. Facts Of The Case: The appellant, M/s Alchemist Hospitals Ltd., entered into a Software Implementation Agreement with the respondent, M/s ICT Health Technology Services India Pvt. Ltd., on 1st November 2018 for upgrading its hospital-information software. Following implementation, the appellant alleged persistent technical failures and operational issues with the respondent's "HINAI Web Software," leading to the system being rolled back i...
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Supreme Court Dismisses Arbitration Petition Due to Limitation Issues
29Dec By The Legal ChamberNo Comments
Supreme Court

Supreme Court Dismisses Arbitration Petition Due to Limitation Issues

The Supreme Court dismissed the petition for appointment of an arbitrator under Section 11(5) of the Arbitration and Conciliation Act, 1996. The Court held that the underlying claim for recovery of money was hopelessly barred by limitation, rendering the appointment of an arbitrator untenable in law. Facts Of The Case: The case involves a dispute arising from a partnership deed containing an arbitration clause. The petitioner, residing in the UK, entered into a partnership with the respondent on 20.09.2014, succeeding an earlier partnership involving the petitioner’s sister. The petitioner alleged that he paid substantial sums amounting to Rs. 2.31 crores, relying on a clause entitling him to 75% of profits from a property purchased on 04.05.2016, but received nothing. The partnership wa...
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Supreme Court Reins In Judicial Intervention in Arbitration After Appointment
17Sep By The Legal ChamberNo Comments
Supreme Court

Supreme Court Reins In Judicial Intervention in Arbitration After Appointment

This Supreme Court judgment holds that a non-signatory to an arbitration agreement has no legal right to be present in the arbitral proceedings as the award would not bind them, violating the confidentiality mandate under Section 42A. Furthermore, a court becomes functus officio after appointing an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996, and cannot entertain subsequent applications for intervention or issue ancillary directions. Facts Of The Case: The case originated from an oral family settlement between Pawan Gupta (PG) and Kamal Gupta (KG), later recorded in a Memorandum of Understanding/Family Settlement Deed (MoU/FSD) dated 09.07.2019, which was not signed by KG’s son, Rahul Gupta (RG). PG initiated proceedings under Section 11(6) of the Arbitra...
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SARFAESI Act’s Section 11: Supreme Court Affirms Mandatory Arbitration for Financial Institutions
11Jun By The Legal ChamberNo Comments
Supreme Court

SARFAESI Act’s Section 11: Supreme Court Affirms Mandatory Arbitration for Financial Institutions

The Supreme Court, in Bank of India vs. M/s Sri Nangli Rice Mills Pvt. Ltd., ruled that Section 11 of the SARFAESI Act is mandatory, requiring inter-se disputes between banks and financial institutions concerning secured assets to be resolved through arbitration. No explicit arbitration agreement is needed; the provision legally mandates it, thereby divesting DRT of jurisdiction in such matters. Facts Of The Case: In the case of Bank of India vs. M/s Sri Nangli Rice Mills Pvt. Ltd. & Ors., the core dispute involved the priority of charge over secured assets (stocks of paddy and rice) belonging to a common borrower, M/s Sri Nangli Rice Mills Pvt. Ltd., between two public sector banks: Bank of India (appellant) and Punjab National Bank (respondent). Both banks had extended credit facil...
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