Newsletter ARBITRATION AND CONCILIATION ACT, 1996 OCTOBER, 2022 WHETHER AN ARBITRATOR CAN DELVE INTO A QUESTION OF DETERMINATION OF A CLAIM AS A NOTIFIED CLAIM? Recently, a Single bench comprising of Hon’ble Justice Vibhu Bakhru of Delhi High Court in the case titled M/s Janta Associates and Co. Ltd. vs. Indian Oil Foundation & Anr.” observedthat an Arbitrator can only adjudicate upon the claims which have already been notified by the parties. Further, the Hon’ble Court also observed that it cannot delve into the question of determining a claim as a notified claim as that falls outside the scope of the Arbitration. In this regard, the Hon’ble Court also placed reliance on the Judgment titled ‘Indian Oil Corporation Ltd. v. NCC Ltd.’ passed by Hon’ble Supreme Court of India wherein it was observed that certain matters as specified in Clause 9.0.2.0 of the GCC are specifically excluded from the scope of arbitration. In the present case, the petitioner had only submitted a summary of bills and final bill was yet to be made and the concerned authority was yet to determine if Petitioner’s claim was a Notified Claims, in accordance with the contract between the parties. Accordingly, the Hon’ble Court held that the parties were at liberty to invoke arbitration in respect of such claims that are notified in the final bill. Read More... WHETHER USE OF A WORD “CAN” IN AN ARBITRATION CLAUSE RENDER THE CLAUSE INEFFECTIVE? Recently, a single bench comprising of Hon’ble Justice Prateek Jalan of Delhi High Court in the case titled “Panasonic India Pvt. Ltd. vs. Shah Aircon Through Its Proprietor Shadab Raza” was adjudicating a dispute between the parties where Respondent objected to the maintainability of an arbitration agreement between the parties contending that the clause only used the word “can” which only provides for a possibility of arbitration. The bench held that mere use of word “can” in an arbitration agreement would not render the arbitration clause ineffective and the arbitration clause has to be interpreted as a whole along with the other relevant clauses. Further the Hon’ble High Court held that the remainder of the clause, insofar as it refers to the venue of arbitration, the language of arbitration, the applicability of the Act, the requirement to give reasons, and the procedure for appointment of an arbitrator by reference to Court, also supports the view that the parties intended a mandatory reference to arbitration. Read More... WHETHER THE ARBITRATION CLAUSE IN AN INITIAL AGREEMENT SHALL BE BINDING, IF THE SUBSEQUENT SETTLEMENT AGREEMENT DOESN’T HAVE AN ARBITRATION CLAUSE? Recently, a single bench comprising of Hon’ble Justice V. Kameswar Rao of Delhi High Court in the case titled “Omega Finvest LLP versus Direct News Private Limited” observed that an arbitration clause in a rent agreement shall be binding even if the parties had entered into the subsequent “Terms of Settlement” and “Addendum to Settlement” agreements, after  expiry of the rent agreement, which does not contain arbitration clause in it. The bench observed that the relationship between the parties exists due to the execution of initial rent agreement and there is no express stimulation in the subsequent agreements that the arbitration clause between them stood rescinded and thus, parties are bound by the arbitration clause. In the present case, rent agreement executed between the parties had come to an end due to efflux of time and subsequently, parties executed “Terms of Settlement” and “Addendum to Settlement” Agreements. On breach of the said agreements by the Respondent, the petitioner moved an application under Section 11(5) of the Arbitration and Conciliation Act, 1996 before the Delhi High Court, seeking appointment of an arbitrator to adjudicate the disputes between the parties. Consequently, the Respondent challenged the maintainability of the petition as the agreements namely “Terms of Settlement” and “Addendum to Settlement” does not contain any arbitration clause and the rent agreement has already ended due to efflux of time. Read More... INSOLVENCY AND BANKRUPTCY CODE, 2016 WHETHER A SUCCESSFUL RESOLUTION APPLICANT COULD WITHDRAW A RESOLUTION PLAN AFTER IT HAS BEEN APPROVED? Recently, a bench comprising of Hon’ble Justices Ashok Bhushan and Mr. Barun Mitra in National Company Law Appellate Tribunal in the case titled “Shardha Buildcon Pvt. Ltd v. The Dhar Textile Mills Ltd” Company Appeal (AT) (Ins) No. 1128 of 2022, while dismissing an appeal filed by the Successful Resolution Applicant seeking permission to withdraw its resolution plan observed that allowing withdrawal of a resolution plan will defeat the purpose of the IB Code, 2016. In the present case, the Appellant filed an appeal against the order passed by the Ld. Adjudicating Authority whereby the Ld. Adjudicating Authority while placing reliance upon the judgment of Hon’ble Supreme Court in the case titled ‘Ebix Singapore Pvt. Ltd. v. Committee of Creditors of Educomp Solutions Ltd. & Anr.’ dismissed the application filed by Successful Resolution Applicant seeking withdrawal of the resolution plan. Read More... WHETHER A PRE-EXISTING DISPUTE FOR THE PURPOSE OF FILING A PETITION IN IB CODE, 2016 CAN BE ASSESSED FROM THE LENS OF PREPONDERANCE OF PROBABILITY? Recently, a Supreme Court bench comprising of Hon’ble Justices Mr. K.M. Joseph and Mr. Hrishikesh Roy in the case titled “Rajratan Babulal Agarwal vs. Solartex India Pvt. Ltd. & Ors.” held that pre-existing dispute under IB Code, 2016 stands on a different footing than principle of ‘preponderance of probability’ which guides a civil court at the stage of decreeing a suit. In the present case, an Appeal was filed challenging the order of National Company Law Appellate Tribunal which reaffirmed the order of the Ld. Adjudicating Authority wherein the Ld. Adjudicating Authority admitted the application under Section 9 of IB Code, 2016 by observing that there is no pre-existing dispute even when a civil suit was pending against the Respondent No. 1 instituted by the Respondent No. 2.  Hence, the Appellant challenged the said decision before Hon’ble Supreme Court in second appeal. The Hon’ble Supreme Court, while placing reliance on the Judgment titled ‘Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd.’ observed that it is not wise to put the Corporate Debtor into insolvency resolution process prematurely when there is a pre-existing dispute. Read More... WHETHER AN ADJUDICATING AUTHORITY CAN REPLACE A LIQUIDATOR APPOINTED UNDER IBC? Recently, a Principal bench of National Company Law Appellate Tribunal, comprising of Hon’ble Justice Ashok Bhushan, Chairperson, Dr. Alok Srivastava, Technical Member and Mr. Barun Mitra, Technical Member in the case titled “Subrata Maity v Mr. Amit C. Poddar & Ors.” has held that Ld. Adjudicating Authority can invoke its inherent powers to replace the Liquidator in order to do substantial justice. In the present case, an Appeal was filed by Appellant thereby challenging the order of the Ld. Adjudicating Authority by which the Appellant was replaced by Mr. Amit C. Poddar as a Liquidator for Seam Industries Ltd. on the ground that there is no provision under IB Code, 2016 to replace the liquidator. The Hon’ble Appellate Tribunal observed that the present is a case where inherent power can be exercised by the Adjudicating Authority to do substantial justice. Read More... WHETHER THE DECISION OF COMMITTEE OF CREDITORS TO LIQUIDATE THE CORPORATE DEBTORCAN BE SUBJECTED TO JUDICIAL REVIEW? Recently, a Principal Bench of National Company Law Appellate Tribunal comprising of Hon’ble Justice Ashok Bhushan (Chairperson), Dr. Alok Srivastava (Technical Member) and Mr. Barun Mitra (Technical Member) in the case titled “Sreedhar Tripathy v Gujarat State Financial Corporation & Ors.” has held that the decision of Committee of Creditors (‘CoC’) to liquidate the Corporate Debtor is not arbitrary as regards to the facts of the present case wherein  the Corporate Debtor is not a going concern at present and has not been functional since last 19 years. However, the Hon’ble Appellate Tribunal made it clear that the decision taken by the CoC was in the facts of the present case and it cannot be said that whenever decision is taken for liquidation the same is not open to judicial review by the Adjudicating Authority and this Appellate Tribunal. Read More... Code of Criminal Procedure, 1973 WHETHER AN ANTICIPATORY BAIL COULD BE GRANTED SOLELY ON THE GROUND THAT NO CUSTODIAL INTERROGATION WAS REQUIRED? Recently, a Supreme Court bench comprising of Hon’ble Justices Mr. Surya Kant and Mr. JB Pardiwala in the case titled “X vs. Arun Kumar C.K. & Anr.” has held that the courts cannot grant anticipatory bail merely on the ground that no custodial interrogation is required. The Custodial interrogation can be one of the relevant aspects to be considered along with other grounds while deciding an application seeking anticipatory bail. In the present case a criminal appeal was filed by the mother of a victim in a POCSO case against the Kerala High Court Order that granted anticipatory bail to the accused for the reason that no custodial interrogation was required in the case. The Hon’ble Supreme Court while setting aside the said Impugned Order observed that, the first and foremost thing that the court hearing an anticipatory bail application should consider is the prima facie case put up against the accused. Thereafter, the nature of the offence should be looked into along with the severity of the punishment. Custodial interrogation can be one of the grounds to decline anticipatory bail. However, even if custodial interrogation is not required or necessitated, by itself, cannot be a ground to grant anticipatory bail. Read More... Miscellaneous WHETHER PLAINT CAN BE RETURNED FOR WANT OF TERRITORIAL JURISDICTION? AND WHETHER THE PLAINT IS LIABLE TO BE REJECTED ON ACCOUNT OF FAILURE ON PART OF APPELLANT TO EXHAUST THE REMEDY OF PRE-INSTITUTION MEDIATION AS REQUIRED UNDER SECTION 12A OF THE COMMERCIAL COURTS ACT, 2015? Recently, a single Judge bench comprising of Hon’ble Justice Vibhu Bakhru in Delhi High Court in the case titled ‘Chandra Kishore Chaurasia v. R A Perfumery Works Pvt. Ltd.’ held that examination for the purpose of an application under Order VII Rule 10 CPC is limited to averments made in the plaint and the documents filed by the Plaintiff. Thus, the Hon’ble Court held that in returning a plaint on the grounds of jurisdiction, the Court should assume that the averments made in the Plaint are taken to be correct in its entirety.  Hence, the impugned order of the Commercial Court which allowed Respondent’s Application under Order VII Rule10 of the CPC was set aside by the Hon’ble High Court in Appeal. Further, the Hon’ble Court observed that in accordance with Section 12A of the Commercial Courts Act, 2015, the requirement of exhausting the remedy of pre-institution mediation before institution of Suit is mandatory except in case of urgent interim relief being contemplated. In the present case, the Appellant did not prefer an application to indicate the urgent interim reliefs and accordingly, did not exhaust the remedy of pre-institution mediation. The Hon’ble Court observed that the question whether a suit involves any urgent interim relief is to be determined solely on the basis of the pleadings and the relief(s) sought by the plaintiff. The bench further noted that if a plaintiff seeks any urgent interim relief, the suit cannot be dismissed on the ground that the plaintiff has not exhausted the pre-institution remedy of mediation as contemplated under Section 12A(1) of the Commercial Courts Act, 2015. Read More... WHETHER A CONDITIONAL ACCEPTANCE TO A NEW TERM INTRODUCED IN A TENDER WOULD RENDER THE WHOLE OFFER VOID? Recently, a Delhi High Court bench comprising of The Hon’ble Chief Justice and Hon’ble Justice Mr. Subramonium Prasad in the case titled “M/s Green Gene Enviro Protection and Infrastructure Pvt. Ltd. vs. Municipal Corporation of Delhi & Anr” has reiterated that when the acceptor puts in a new condition while accepting the contract already signed by the proposer, the contract is not complete until the proposer accepts that condition. It is a well settled in law that an acceptance with a variation is no acceptance. It is, in effect and substance, simply a counter-proposal which must be accepted fully by the original proposer, before a contract is made. In the present case, a petition was filed wherein Petitioners was aggrieved by the Respondent’s action of adding an additional criterion after the bid was submitted by the Petitioners. The Respondent after receiving a bid, placed it before the competent authority for administrative approval in a meeting conveyed, therein the Special Officer, added an additional criterion and the Letter of Acceptance (‘LOA’) was issued to the Petitioners. Consequently, Petitioners tendered their acceptance and stated that they would be unable to follow the requirement of additional criterion added. Therefore, the Hon’ble Supreme Court held that the Petitioners did not tender an unconditional acceptance to the LOA and thus, no contract was concluded between the parties, and no rights accrued in favour of the Petitioners. The Hon’ble Supreme Court further placed reliance on the judgment passed in “Tata Cellular v. Union of India” and observed that the decision to accept the tender or award the contract is reached by process of negotiations, based upon the advice of qualified experts and it may also be borne in mind that Courts show restraint in interfering with the terms of the tendering process, considering that this falls within the realm of contract. Read More... NEW DELHI X -3, Green Park Main, New Delhi, 110016, Telephones: +91 11 2652 0041-42 For further / specific information, please contact us at: info@tandonandco.com Disclaimer: The contents of this newsletter are intended for information purposes only, and parts of this newsletter are based on news reports and have not been independently verified. The newsletter is not in the nature of a legal opinion or advice. They may not encompass all possible regulations and circumstances applicable to the subject matter and readers are encouraged to seek legal counsel prior to acting upon any of the information provided therein. 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