Newsletter ARBITRATION AND CONCILIATION ACT, 1996 September, 2021 Whether Courts have the scope/ jurisdiction to interfere or Set Aside an Arbitral Award on the ground of public interest? Whether Courts have the scope/ jurisdiction to interfere or Set Aside an Arbitral Award on the ground of public interest Recently, the Hon’ble Supreme Court of Justice L. Nageswara Rao and S. Ravindra Bhat recently decided to uphold the minimal interference model for courts, when it comes to Arbitration. While limiting the scope of patent illegality, observed that contravention of a statute which is not linked to public policy or that public interest cannot be a ground to set aside an arbitration award. It further held, “There is a disturbing tendency of courts setting aside arbitral awards, after dissecting and reassessing factual aspects of the cases to come to a conclusion that the award needs intervention and thereafter, dubbing the award to be vitiated by either perversity or patent illegality, apart from the other grounds available for annulment of the award.This approach would lead to corrosion of the object of the 1996 Act and the endeavours made to preserve this object, which is minimal judicial interference with arbitral awards. That apart, several judicial pronouncements of this Court would become a dead letter if arbitral awards are set aside by categorising them as perverse or patently illegal without appreciating the contours of the said expressions” Read More... Whether the Arbitration Reference to a Chosen Arbitrator can be Declined if Dispute in Question does not Correlate to Arbitration Agreement? Recently, the Hon’ble Supreme Court of India considered a petition filed by DLF Home Developers Limited under Section 11(6) read with Section 11(12) of the Arbitration and Conciliation Act, for appointment of sole arbitrator to adjudicate the differences between itself and other parties, the bench observed that in order to streamline the process of arbitration, the courts are obliged to apply their mind to the core preliminary issues, within the framework of Section 11(6-A) of the Act. It further held that even when an arbitration agreement exists, it would not prevent the Court to decline a prayer for reference to a chosen arbitrator if the dispute in question does not correlate to the said agreement. Read More... The Mandate of an Arbitrator as a Sole Arbitrator Does Not End Even After his Retirement from his Post- Recently, a bench of two judges of the Supreme Court comprising of Justice MR Shah and AS Bopanna recently held that once an officer of the department is appointed as an Arbitrator, considering the arbitration clause, his mandate to continue the arbitration proceedings shall come to an end on his retirement only if the arbitration clause does not specifically provides for the same. Furthermore, it was held that continuance of the arbitration proceedings by such an arbitrator after his retirement cannot be said to be committing a misconduct by such a sole arbitrator. Additionally, in the present case the Civil Judge (Senior Division), Roorkee extended the time to the Sole Arbitrator to complete the arbitration proceedings and granted further period of 30 days which was after his retirement and after specifically overruling/rejecting the objections raised by the respondents that after retirement, he cannot continue with the arbitration proceedings. Hence, the sole arbitrator rightly continued with the arbitration proceedings and passed the award in good faith. Therefore, considering the arbitration clause of the agreement, it can be said that his mandate continued with the arbitration proceedings even after his retirement from the post of chief engineer. Read More... INSOLVENCY AND BANKRUPTCY CODE, 2016 Moratorium as enunciated under section 14 of the Insolvency and Bankruptcy Code, 2016 not Applicable to Proceedings in respect of Directors/Management of Corporate Debtor- The Hon’ble Supreme Court in its decision in ‘Anjali Rathi and Ors. v. Today Homes and Infrastructure Pvt. Ltd. and Ors.’ decided on an issue of the rights of the petitioner home buyers in a group housing project to move against promoters of the Corporate Debtor even though moratorium has been declared under Section 14 IBC. The Hon’ble Bench while reiterating the principles of the judgment titled ‘P. Mohanraj v. Shah Bros. Ispat (P) Ltd., (2021) 6 SCC 258’ clarified that the petitioners would not be prevented by the moratorium under Section 14 IBC from initiating proceedings against the promoters of the first respondent Corporate Debtor in relation to honouring the settlements reached before this Hon’ble Court. However, the Hon’ble Bench noted that the Court cannot issue such a direction relying on a resolution plan, pending approval from the adjudicating authority. Read More... Whether Success Fee does form part of Insolvency and Bankruptcy Code? The Principal Bench of the National Company Appellate Law Tribunal has held that 'success fees' which is more in the nature of contingency and speculative, is not a part of the provisions of the Insolvency and Bankruptcy Code and the related Regulations and thus it is not chargeable by an Insolvency Resolution Professional. The Insolvency Resolution Professional contended that approval of success fees is a commercial decision of the CoC and the Adjudicating Authority could not have interfered with the same at the stage of approval of resolution plan and directing distribution of the amount kept separately for success fees. Subsequently, an amicus was appointed in order to assist the Hon’ble Bench who stated that the quantum of fees payable was a subject justiciable before the Adjudicating Authority, if found to be unreasonable and if the manner, method of payment was inconsistent with the regulations. It was thus noted that since the NCLAT was at the ground level monitoring the progress of CIRP, its observations could not be ignored. Thus, on these lines, the Hon’ble Bench held that even if it was said that the success fee was chargeable, the manner in which it was last minute pushed at the time of approval of the Resolution Plan and the quantum were both found to be improper and incorrect. Read More... Prospects of Resolution Plan Submitted by the Suspended Management of the Corporate Debtor- The Appeal before the Hon’ble NCLAT was filed challenging the order wherein suspended management of the Corporate Debtor, being an MSME Unit was given a chance to submit resolution plans. The Appellant, in the instant case is the successful resolution applicant whose plan was accepted by 91.84% of CoC members but the said plan was pending approval before the Ld. Adjudicating Authority. On the other hand, Respondent/MSME expressed its desire to submit a resolution plan at a belated stage and submitted that the Appellant has no locus to file this appeal. Furthermore, the Respondent also submitted that the Resolution Professional did not provide him a copy of the plan submitted by the Appellant to the CoC in accordance with Regulation 21(III) of the IBBI Regulation. The Hon’ble Bench observed that the intention of the legislature is that the promoters of MSME should be encouraged to pay back the amount with the satisfaction of CoC to regain the control of the CD and entrepreneurship by filing Resolution Plan which is viable, feasible and fulfils the relevant criteria of laid by the Board and Code. Hence, the order of the Ld. Adjudicating Authority was affirmed by the Hon’ble NCLAT. Read More... Time line for completion of CIRP process within 330 days shall be adhered by NCLT and NCLAT must - Recently, the Hon’ble Supreme Court decided on the issue of exit routes under the Indian Insolvency Regime for a successful Resolution Applicant. The Appeal was preferred in the wake of COVID-19 pandemic, whereby several Resolution Plans remained pending before Adjudicating Authorities due to the lockdown and significant barriers to securing a hearing.  There are innumerable successful Resolution Applicants who no longer wish to abide by the terms of their submitted Resolution Plans that are pending approval under Section 31, on account of the economic slowdown that impacted every business in the country. However, the Hon’ble Bench noted that no legislative relief for enabling withdrawals or re-negotiations has been provided, in the last eighteen months. In the absence of any provision under the IBC allowing for withdrawal of the Resolution Plan by a successful Resolution Applicant, vesting the Resolution Applicant with such a relief through a process of judicial interpretation would be impermissible. It was further observed that after the amendment to Section 12 in 2019 which mandate a 330 days outer-limit for conclusion of the CIRP, which can be breached only under exceptional circumstances as held under Essar Steel Judgment, it would be contradictory to the purpose of IBC to allow the Ld. Adjudicating Authority to use its plenary powers under Section 60(5)(c) to extend these timelines to enable the CoC to either issue a fresh RFRP if the plan is withdrawn by a successful Resolution Applicant or direct further negotiations with the Resolution Applicant who is seeking a modification of the plan, whose failure could result in withdrawal as well.The likely consequence of a withdrawal by a successful Resolution Applicant after going through the stages of the CIRP for nearly 180 days (provided all statutory timelines have been strictly followed) would inevitably be a delayed liquidation after the value of the assets further depreciates. Thus, the appeal was dismissed. Read More... The Code of Criminal Procedure, 1973 Himachal Pradesh High Court observed that Granting Interim Maintenance is Similar to giving First Aid- The Hon’ble High Court of Himachal Pradesh observed that granting interim maintenance under Chapter IX of CrPC is like giving first aid which prevents wives and children from various modes of vagrancy and it's consequences. The plea was raised by a husband seeking quashing the order of Family Court, that was upheld by the Sessions Court, with directions to pay monthly interim maintenance of Rs. 2,000 towards his wife and children. On the other hand, the wife submitted that she was a widow at the time of the wedding, and that on the Petitioner's persuasion, she agreed to marry him. On the other hand, the petitioner husband argued that the woman has been drawing benefits, which is given to widows, and as such the marriage was never solemnized between the two. Considering the provision and relevant judgments on the subject, the Court opined that the Proviso to S. 125 CrPC empowers the Magistrate to order monthly allowance for the interim maintenance and also the expenses of such proceeding during its pendency. Read More... THER RELEVANT JUDGMENTS PASSED BY VARIOUS COURTS UNDER VARIOUS LAWS The Hon’ble Supreme Court Recalled Suo Motu Extension of Limitation with effect from 2nd October 2021- The Hon’ble Supreme Court recalled the suo motu order dated 27.04.2021 which extended w.e.f 14.03.2021, the limitation period to file cases in view of the surging cases of the pandemic. Thus, a bench comprising of Justice NV Ramana, L. Nageswara Rao and Justice Surya kant observed that the limitation period will stand withdrawn w.e.f., 02.10.2021. Additionally, the Hon’ble Bench also observed that in cases where the limitation would have expired during 15.03.2020 till 02.10.2021, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 03.10.2021. Read More... Whether a Writ Court Can Adjudicate Factual Disputes arising out of Pure Contractual Matters- The division bench of Hon’ble Supreme Court comprising of Justice Hemant Gupta and Justice A.S. Bopanna observed that writ court cannot adjudicate factual disputes arising out of pure contractual matters in the field of private law having no statutory flavour. In appeal, one of the contentions raised was that there are serious disputes about the facts in respect of authenticity of the Joint Final Report and the work done. Such disputed question of facts could not have been adjudicated by the Writ Court as disputed question of facts relating to recovery of money could not have been entertained, the centre contended. The Hon’ble Bench affirmed the said contention and observed that the dispute as to whether the amount is payable or not and/or how much amount is payable are disputed questions of facts which cannot be adjudicated by the Writ Court. 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. 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