Contract and writ: arbitration

Principle:  Writ remedy may not be invoked when the case involves an essentially contractual disputes with the State, or involves questions of fact.  

State of U.P. v. Bridge & Roof (India) Limited, AIR 1996 SC 3515 "that the writ petition filed by the respondent for the issuance of a writ of Mandamus restraining the Government from deducting or withholding a particular sum, which according to the respondent is payable to it under the contract, was wholly misconceived and was not maintainable in law".  Followed by Vindhya Telelinks Limited v. MTNL, 95 (2002) DLT 865.

 The Bridge & Roof Case has been distinguished by the High Court at Guwahati in J. Deep  Chemicals and Fertilizers v. State of Tripura, 2007 (2) GLT 173.  The Guwahati High Court, while agreeing with the principle laid down in the Bridge & Roof Case, held that "the rightful claim or writ petitioner for payment of the remaining amount was not to be withheld by the State authorities. For that purpose the writ petition could have been entertained and there has been no necessity to refer the matter to the arbitrator as no such dispute for interpretation of contract or its terms or controversial facts was involved which could have been referred to the arbitrator".

Arbitration clause, further consent necessary.

Wellington Associates Ltd. v. Kirit Mehta, (2000) 4 SCC 272, the Supreme Court dealing with interpretation of an arbitration clause has held that an 'arbitration agreement' "… postulate an agreement which necessarily or rather mandatorily requires the appointment of an arbitrator/arbitrators. [It] does not cover a case where the parties agree that they "may " go to a suit or that they 'may' also go to arbitration".  

P. Gopal Das v. Kota Straw Board, AIR 1971 Raj 258, it was held by the Rajasthan High Court that the use of the word 'may' indicated that a fresh consent of both parties for arbitration was necessary, and may not constitute a binding arbitration clause. 

Jindal Exports Limited v. Fuerst Day Lawson Ltd, MANU/DE/3204/2009 decided on December 11, 2009, the Delhi High Court has held that "mere use of the word 'arbitration' or 'arbitrator' in a clause will not make it an arbitration agreement, if it requires or contemplates a further or fresh consent of the parties for reference to arbitration. For example, use of words such as "parties can, if they so desire, refer their disputes to arbitration" or "in the event of any dispute, the parties may also agree to refer the same to arbitration" or "if any disputes arise between the parties, they should consider settlement by arbitration" in a clause relating to settlement of disputes, indicate that the clause is not intended to be an arbitration agreement. Similarly, a clause which states that "if the parties so decide, the disputes shall be referred to arbitration" or "any disputes between parties, if they so agree, shall be referred to arbitration" is not an arbitration agreement. Any agreement or clause in an agreement requiring or contemplating a further consent or consensus before a reference to arbitration is not an arbitration agreement, but an agreement to enter into an arbitration agreement in future." However, please note that each arbitration clause is unique and therefore, it is not necessary that the use of the word 'may' would necessarily be construed as a non-binding arbitration clause.  

Fraudulent Preference

In Official Liquidator of Piramal Financial Ltd. v. Reserve Bank of India, [2004] 51 SCL 691 (Guj), the Gujarat High Court has held that “the use of word ‘preference’ implies an act of free will and that would by itself make it necessary to consider whether pressure was or had not been used. A payment made under the impression that unless a particular creditor was paid, the Company would go into liquidation is not done out of free will and volition. If the object was to save the company, it may not amount to fraudulent preference”. Further in Monark Enterprises v. Kishan Tulpule, [1992] 74 Comp Cas 89 (Bombay), the Bombay High Court has held that “if the transaction was entered into as a result of lawful pressure  of a bonafide creditor to recover his dues, the transaction of transfer could not be treated as a fraudulent preference.”  

 transaction by a company to “save its own skin” for its own benefit in the circumstances then prevailing, may     not be construed as fraudulent preference.

Seat will not give jurisdiction

Amrit Lal Madan v. KD Ahuja, delhi high court decided on Feb 8, 2010.
See also

2010 1 BCR 175.

Approbate Reprobate

In this respect, recently in Mumbai International Airports Limited v. Golden Chariot Airports, decided by the Supreme Court on September 22, 2010, the Court has held that a person cannot be allowed to take inconsistent stand in litigation, and once having elected to take a stand cannot be allowed to resile from such a position.

Certificate of posting and presumption

Certificate of posting

119. This general rule regarding certificates of posting has not been changed under Section 53 of the 

Companies Act, although it does provide that if a document is sent by post in the manner specified. "service thereof shall be deemed to be effected". The word "deemed". literally means "thought of" or, in legal parlance "presumed".

120. There is a distinction between "presumption" and "proof". A presumption has been defined as "an inference, affirmative or dis-affirmative of the truth or falsehood of a doubtful fact or proposition drawn by a process of probable reasoning from something proved or taken for granted" (Izhar Ahmad V. Union of India : AIR1962SC1052 ). They are rules of evidence which attempt to assist the judicial mind in the matter of weighing the probative or persuasive force of certain facts proved in relation to other facts presumed or inferred (ibid). Sometimes a discretion is left with the Court either to raise a presumption or not as in Section 114 of the Evidence Act. On other occasions no such discretion is given to the Court so that when a certain set of facts are proved, the Court is bound to raise the prescribed presumption. But that is all. The presumption may be rebutted.

Madhoosoodanan, 2003(6)ALD1(SC), [2003]117CompCas19(SC), (2003)4CompLJ185(SC),

2003(6)SCALE191, (2004)9SCC204, [2003]46SCL695(SC)

Certificate of posting viewed with suspicion

1981 3 SCR 647
1995 I LLJ 1162 SC

Appeal, when interfered

Dollar Company AIR 1975 SC 1670 A three Judge Bench
of the Apex Court observed, inter alia, that a Court of appeal interferes
not when the judgment under attack is not right, but only when it is shown
to be wrong.

Award / Decree and winding up

433(1)(a) can be invoked after obtaining award / decree.




Title

• Madhuban Private Limited v. Narain Dass Gokul Chand, 1971 (41) CompCas 685

• In re Unique Cardboard Box Mfg Co. Pvt Ltd, 1978 (48) Comp Cas 604

• All India General Transport Corporation Limited v. Raj Kumar Mittal, 1978 (48) Comp Cas 604

• Seethai Mills Limited, 1980 (50) Comp Cas 422

• Sarabhai Machinery v. Haryana Detergents Limited, 1986 (60) Comp Cas 169

• Sugam Constructions Private Limited (unreported Bombay HC)

• National Aluminium Company Limited v. SGN Telecoms (reported on Manupatra)

• 1997 88 Comp Cas 673

• 1971 41 Comp Cas 685

• 1984 56 Comp Cas 165

• 2007 (5) Bom CR 752





Contrary case-laws

Title

• Kitti Steels Ltd. vs. Sanghi Industries Ltd., [2010] 154 Comp Cas 102 (AP)

• National Research Development Corporation vs. Electro Flux (P.) Ltd., [2005] 127 Comp Cas 23 (AP)

• Maharashtra Apex Corporation Ltd. vs. Spartek Ceramics India Ltd., [2005] 57 SCL 467 (AP)

• Manipal Finance Corporation Ltd. vs. CRC Carrier Ltd., [2001] 107 Comp Cas 288 (Bom)

• Ishwar Industries Ltd. vs. Lakshmi Machine Works Ltd., MANU/TN/2947/2009

• Pradeshiya Industrial and Investment Corporation of Uttar Pradesh vs. North India Petro Chemical Ltd. and Another, [1994] 79 Comp Cas 835 (SC)

Kesar Enterprises Ltd. vs. IDI Ltd., [2002] 112 Comp Cas 174 (Bom)

I.C.D.S Ltd. vs. Asha Latex and Allied Industries Pvt. Ltd, [2003]144 Comp Cas 581 (Bom).

Rediffusion – Dentsu, Young & Rubicam P. Ltd vs. Solidaire India Ltd., [2008] 145 Comp Cas 693 (Mad)

Berger Paints India Ltd. vs. Steel Strips Wheels Ltd., MANU/PH/0571/1997.

Pankaj Aluminium Industries P. Ltd. vs. Pankaj Extrusions Ltd., [2009] 149 Comp Cas 660 (Guj)

Arbitrator misconstruing contract and relying on equity

The Arbitrators have proceeded on the erroneous notions of equity by using phrase "Heads I win tails you lose" to describe the contentions of the petitioner. The question of interpreting a legal document voluntarily entered into between two parties is a question of law and the document is required to be construed according to law and notions of equity cannot be imported for construing such a document. An arbitrator is not a conciliator and cannot ignore the law or misapply it in order to do what he thinks is just and reasonable. He is a tribunal selected by the parties to decide their disputes according to law and so is bound to follow and apply the law and if he does not he can be set right by the Court provided his error appears on the face of the award. see Seth Thawardas v. Union of India, reported in MANU/SC/0070/1955 : [1955]2SCR48
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