Tag: Setting Aside Award

Commercial Contracts & Interest Rates: Supreme Court Reaffirms ‘Party Autonomy’ Over ‘Public Policy’
3Mar By The Legal ChamberNo Comments
Supreme Court

Commercial Contracts & Interest Rates: Supreme Court Reaffirms ‘Party Autonomy’ Over ‘Public Policy’

The Supreme Court held that under Section 31(7)(a) of the Arbitration and Conciliation Act, 1996, party autonomy prevails; where a commercial contract specifies an interest rate, the arbitral tribunal has no discretion to deviate. A stipulated interest rate of 36% with monthly rests in a bill discounting agreement between equal bargaining parties is not unconscionable or against public policy. The rule of contra proferentem does not apply to mutually negotiated commercial contracts. Facts Of The Case: The dispute originated from a bill discounting facility extended by the respondent, Morgan Securities and Credits Private Limited, to M/s BPL Display Device Ltd (BDDL) and the appellant, BPL Limited, through sanction letters dated 27.12.2002 and 11.06.2003. The facility allowed BDDL to ...
Read More
Arbitrator’s Power on Interest Rates: Supreme Court Explains Key Legal Limits
6Feb By The Legal ChamberNo Comments
Supreme Court

Arbitrator’s Power on Interest Rates: Supreme Court Explains Key Legal Limits

This Supreme Court judgment clarifies the limited scope of judicial interference with arbitral awards under the Arbitration and Conciliation Act, 1996. The Supreme Court held that an arbitrator's discretion to award a contractual interest rate of 24% is not per se usurious or against public policy. It reaffirmed that courts cannot reappreciate evidence and may only set aside an award on the narrow, specified grounds under Section 34 of the Act, which were not met in this case. Facts Of The Case: The appellants, M/s Sri Lakshmi Hotels Pvt. Limited and its Managing Director, availed two loans totaling ₹1.57 Crore from the respondent Non-Banking Financial Company (NBFC) in 2006. The loan agreements stipulated an interest rate of 24% per annum. After making partial repayments until April 200...
Read More
Supreme Court: Arbitrator Cannot Rewrite Contracts, Upholds IRCTC’s Catering Policy
28Jan By The Legal ChamberNo Comments
Supreme Court

Supreme Court: Arbitrator Cannot Rewrite Contracts, Upholds IRCTC’s Catering Policy

The Supreme Court held that an arbitral award which contravenes binding government policy circulars—incorporated into the parties' contracts—is patently illegal and in conflict with the public policy of India under Section 34(2A) of the Arbitration and Conciliation Act, 1996. An arbitrator cannot rewrite contractual terms that reflect such policy. Facts Of The Case: The case arose from contracts for catering services on premium Indian Railways trains (Rajdhani, Shatabdi, Duronto). The Railway Board initially increased meal tariffs in 2013 but simultaneously introduced a cheaper "combo meal" to replace the second regular meal on long journeys. This combo meal was swiftly discontinued days later, and caterers were directed to serve a second regular meal instead, but were to be reimbu...
Read More
Arbitrator’s Inaction for 4 Years Leads to Award Being Quashed: Supreme Court Ruling
16Jan By The Legal ChamberNo Comments
Supreme Court

Arbitrator’s Inaction for 4 Years Leads to Award Being Quashed: Supreme Court Ruling

In appeals arising from a delayed and unworkable arbitral award, the Supreme Court held that inordinate and unexplained delay in pronouncement can vitiate an award if it explicitly and adversely impacts its findings, rendering it contrary to public policy or patently illegal under Section 34 of the Arbitration Act. The Court further clarified that such an unworkable award, which fails to resolve disputes and irreversibly alters parties' positions, is liable to be set aside, and in exceptional circumstances, the Court may exercise its jurisdiction under Article 142 of the Constitution to do complete justice. Facts Of The Case: The case originated from a Joint Development Agreement (JDA) dated 17.12.2004 between respondent landowners and a developer (later amalgamated into the ...
Read More
Supreme Court Landmark Ruling: Limitation Issues in Arbitration Must Get a Full Hearing
5Nov By The Legal ChamberNo Comments
Supreme Court

Supreme Court Landmark Ruling: Limitation Issues in Arbitration Must Get a Full Hearing

In a significant ruling, the Supreme Court held that a preliminary issue of limitation, being a mixed question of law and fact, cannot be permanently foreclosed by an arbitrator based on a demurrer. The Court clarified that such a decision on demurrer is not a final adjudication on merits and does not preclude a subsequent examination based on evidence, as it would violate the fundamental mandate of Section 3 of the Limitation Act, 1963. Facts Of The Case: The dispute arose from a Share Subscription Agreement (SSA) dated 23.07.2008 between Urban Infrastructure Real Estate Fund (Petitioner) and Neelkanth Realty Pvt. Ltd. (Respondent). The Petitioner invested Rs. 25 Crore, with a clause stipulating a refund if certain "Conditions Precedent" were not fulfilled within 90 days. The Respondent...
Read More
No Interest on Delayed Payment Clause: Supreme Court Explains Its Limits
9Oct By The Legal ChamberNo Comments
Supreme Court

No Interest on Delayed Payment Clause: Supreme Court Explains Its Limits

This Supreme Court judgment clarifies that a contractual clause merely barring interest on delayed or disputed payments does not, by itself, expressly or by necessary implication prohibit an arbitral tribunal from awarding pendente lite interest. The power to award such interest under Section 31(7)(a) of the Arbitration and Conciliation Act, 1996, is only denuded if the agreement contains a clear and comprehensive bar. Facts Of The Case: The dispute arose from an arbitral award dated 21.11.2004, which directed the appellant, Oil and Natural Gas Corporation Ltd. (ONGC), to pay a total sum of USD 6,56,272.34 to the respondent, M/s G & T Beckfield Drilling Services Pvt. Ltd., for outstanding invoices and other claims. The arbitral tribunal rejected ONGC's preliminary objection to the ma...
Read More