Latest news with #ArbitrationandConciliationAct
Hindustan Times
10 hours ago
- Business
- Hindustan Times
Delhi govt's PWD removes arbitration clause from contract conditions to cut losses
New Delhi, The Delhi government's Public Works Department has deleted the arbitration clause from its general conditions of contract to reduce the increasing financial losses. According to the new conditions, in case of any dispute between the PWD and a private contractor, the matter will be dealt with only in the courts. "The arbitration clause has been removed from our new tenders. Originally the motive behind arbitration clauses was to fast-track any disputes instead of litigation, but in most of the cases that went for arbitration, the government was incurring heavy financial losses," PWD minister Parvesh Verma said. In the Barapullah Phase 3 project, the government lost around ₹300 crore because the PWD did not make an appeal against the arbitration order and the private company benefited, he added. Last year, LG V K Saxena had said that compared to the tender amount of ₹964 crore, the government would end up paying ₹1,326.3 crore for the Barapullah Phase 3 project. The PWD has been dealing with several legal matters in the past few years, mostly deriving from delays in projects as the construction cost shoots up beyond the initial estimated cost, putting a liability on the government. In 2023, former PWD minister Atishi also took notice of the increasing financial burden on the public exchequer due to the large number of arbitration cases in the department. She had directed officials to make changes in the working of the department to ensure such situations did not arise again. Currently, the PWD has a panel of around half a dozen arbitrators empanelled to fight their legal cases. According to the rules, the empanelled arbitrator shall not have more than five cases of the PWD in hand at a time. In India, arbitration is an alternative dispute resolution method where parties agree to settle their disputes outside of court by a neutral third party, called an arbitrator, who makes a binding decision. This process is governed by the Arbitration and Conciliation Act, 1996.
Time of India
a day ago
- Business
- Time of India
Arbitrator can't be appointed unilaterally, rules Karnataka HC
Bengaluru: Karnataka high court has ruled that unilateral appointment of an arbitrator without the other party's consent is impermissible. The ruling emerged from a case involving Shriram Transport Finance Company, which appointed advocate BK Vishwanath as arbitrator to recover a vehicle loan of Rs 28.3 lakh from the family of a deceased. Tired of too many ads? go ad free now Following the death of one Manjunath on Aug 25, 2018, his wife Manjula and son Tarun Gowda received notice from the finance company in July 2019. It had appointed an arbitrator, who authorised the company to repossess the hypothecated vehicles to prevent third-party claims. The family challenged this in court, arguing that the loan agreement didn't specify a named arbitrator, thus preventing a unilateral appointment. Justice Suraj Govindaraj, upon reviewing the evidence, discovered that the arbitrator's order was issued on July 12, 2019, before the notice dated July 27, 2019. The judge noted: "Shriram has abused the process prescribed under the Arbitration and Conciliation Act, nominated its own person as an arbitrator, who passed an order as an arbitrator even before being appointed." The court has instructed the DGP to assign an officer of superintendent rank or above to investigate the proceedings. The officer must submit a report within six weeks regarding the seizure of hypothecated vehicles by Shriram Transport Finance Company, executed with police assistance following the arbitrator's order.
Indian Express
26-05-2025
- Business
- Indian Express
Bombay HC grants temporary relief to Turkish firm Celebi, restrains MIAL from taking final decision on bids
In a temporary relief to Turkey-headquartered airport ground handling services major Celebi, a vacation bench of the Bombay High Court on Monday restrained Mumbai International Airport Ltd (MIAL) from taking a final decision on tenders invited to replace Celebi's subsidiary till the matter is heard by the regular court. A single bench of Justice Somasekhar Sundaresan was hearing two applications by Celebi's subsidiary Celebi Nas Airport Services India, which operated at the Mumbai airport, filed under Section 9 of Arbitration and Conciliation Act against Adani group-owned MIAL seeking annulment of its termination of contracts with the petitioner. The pleas, through senior advocate Chetan Kapadia, also sought urgent interim measure to restrain MIAL to conclude the tenders issued on May 17 for selection of a new ground handling agency for the Mumbai airport. The parent company Celebi Hava Servisi holds 59% of the capital in Celebi Nas. Justice Sundaresan said the order will operate until the matter is heard by a regular bench in June after summer vacation. The firm has also filed a separate writ petition seeking suspension and annulment of the security clearance cancellation by the Bureau of Civil Aviation Security (BCAS). The Union of India, BCAS, Directorate General of Civil Aviation (DGCA), Airports Authority of India (AAI), and the regional office of the Ministry of Civil Aviation (MoCA) are made respondents in the matter. A division bench comprising two judges will hear the plea in due course. The BCAS, amidst the backlash over Turkey's support for Pakistan in the India-Pakistan conflict, had earlier this month revoked with immediate effect security clearance of the Indian arm of the Celebi citing 'national security'. The revocation led to airports in India where Celebi group operated, terminating their contracts with the group companies, prompting the subsidiaries to approach the courts. The subsidiary of the Turkish firm had approached the Bombay High Court on May 21 after its other subsidiaries Celebi Airport Services India and Celebi Delhi Cargo Terminal Management India had moved the Delhi High Court against the security clearance revocation and the resultant cancellation of Celebi contracts by the Delhi airport operator. The Delhi HC on Friday, May 23 reserved its order on the plea.
Indian Express
24-05-2025
- Business
- Indian Express
Karnataka High Court rejects L&T's Rs 28.74-crore claim against BMRCL in Metro delay dispute
The Karnataka High Court, in a ruling on May 20, dismissed an appeal by Larsen and Toubro Limited (L&T) against the Bengaluru Metro Rail Corporation Limited (BMRCL), upholding a lower court's decision to nullify an arbitral award of Rs 28.74 crore for losses incurred due to project delays. The judgment was delivered by Justices V Kameswar Rao and S Rachaiah. 'The Tribunal's award of Rs 28.74 crore, ignoring Clauses 2.2 and 8.3, is a jurisdictional error. An arbitrator, bound by the contract, cannot override its express terms, especially when L&T accepted extensions without reserving compensation rights, rendering the award contrary to public policy,' they noted. The case traces back to a December 2009 contract, wherein L&T was tasked with building three elevated Metro stations—Yeshwanthpur, Soap Factory, and Mahalaxmi—for Bengaluru's Metro system. The 22-month project, governed by General Conditions of Contract (GCC), stipulated that delays caused by BMRCL would warrant only extensions of time (EOTs), not monetary compensation, as per Clauses 2.2 and 8.3. Delays emerged due to land acquisition disputes, resolved by May 2012, leading BMRCL to grant five EOTs without liquidated damages but explicitly prohibiting compensation claims. Seeking redress for alleged losses, L&T pursued arbitration. In 2018, the Arbitral Tribunal awarded L&T Rs 28.74 crore, referencing the Supreme Court's General Manager, Northern Railways v. Sarvesh Chopra (2002), which suggested contractors could claim compensation if they notified the employer during EOT acceptance. The Tribunal deemed L&T's communications sufficient to override the contract's no-compensation clauses. BMRCL challenged this under Section 34 of the Arbitration and Conciliation Act, 1996, before Bengaluru's Additional City Civil and Sessions Judge, who, in October 2022, overturned the award, citing its violation of the contract and the Tribunal's overreach. L&T appealed to the High Court, arguing that Clauses 2.2 and 8.3 were void under the Indian Contract Act, 1872, for being against public policy, and that the Sessions Judge improperly re-assessed evidence. Citing Sarvesh Chopra and precedents like ONGC v. Wig Brothers (2010), L&T claimed BMRCL's delays amounted to a fundamental breach. BMRCL countered that the Tribunal disregarded the contract and authoritative rulings, including Wig Brothers and Ramnath International (2007), which uphold no-compensation clauses. They argued L&T's EOT applications lacked explicit intent to claim compensation, failing Sarvesh Chopra's notice requirement. The High Court ruled in BMRCL's favour, finding that L&T's acceptance of EOTs without reserving compensation rights precluded later claims. The Court clarified that Sarvesh Chopra's relevant observations were non-binding, and L&T's communications—ambiguous in the first EOT and absent thereafter—did not meet notice standards. The tribunal's award was deemed a jurisdictional error, breaching public policy by ignoring contractual terms and judicial precedents. The court also criticised the tribunal's arbitrary 50:50 delay attribution and unsupported damage quantification. The court observed that 'an arbitrator, being a creature of the contract, cannot ignore its express terms, and awarding compensation in violation of such terms constitutes a jurisdictional error against public policy.'
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Business Standard
20-05-2025
- Business
- Business Standard
RIL moves SC against HC ruling in $1.5 bn gas dispute with Centre
Reliance Industries Limited (RIL) has moved the Supreme Court, challenging the Delhi high court (HC) order which upheld the Centre's claim that the Mukesh Ambani-led company and its consortium partners had siphoned gas from deposits of ONGC block in the Krishna-Godavari (KG) Basin, off the coast of Andhra Pradesh. RIL's allocated gas block was next to the one being operated by ONGC. Sources said RIL has, in its plea, contended that the division bench of the Delhi HC should not have gone into the merits of the case since the matter had been heard and decided by a three-member tribunal headed by Singapore-based arbitrator Lawrence Boo. RIL has also pleaded that the order passed by the international tribunal was binding on the parties under the terms of the production-sharing contract (PSC). In arbitration disputes, courts generally do not delve into the merits of the case and their role is to ensure the existence of an arbitration agreement, and that the arbitration process itself was conducted fairly and lawfully, a senior advocate said. RIL has also said in its plea that the Delhi HC division bench order had mixed up the relief granted under Section 34 and Section 37 of the Arbitration Act, sources said. Section 34 of the Arbitration and Conciliation Act, 1996, in India, deals with the setting aside of an arbitral award. Section 37 of the Act outlines the scope of appeals against orders of the arbitral tribunal or the court in an arbitration proceeding. The division bench of the Delhi HC had earlier this year overturned a single-judge bench order of 2023 upholding the ruling of the arbitration tribunal in RIL's favour in 2018. The tribunal had rejected the government's contention and said that the PSC doesn't prohibit the contractor from producing gas, irrespective of its source, as long as the producing wells were located inside the contract area. In its ruling, the division bench of Justices Rekha Palli and Saurabh Banerjee had also said that the arbitration award of July 24, 2018, in favour of the RIL-led consortium, was 'contrary to public policy'. The consortium includes UK-based BP Plc and Niko Resources of Canada. BP and Niko have filed separate but related pleas contesting the findings of the Delhi HC. The Dispute In April 2000, the RIL-led consortium entered into a PSC with the Centre for the exploration and extraction of natural gas from the KG Basin. But in 2013, state-owned ONGC shot off a letter to the Directorate General of Hydrocarbons (DGH), claiming that gas pools in the RIL and adjoining ONGC blocks were connected and that RIL has been siphoning huge amounts of gas from its block. The Ministry of Petroleum and Natural Gas (MoPNG) accused RIL and its partners of an 'unjust enrichment of over $1.729 billion' by siphoning gas from deposits they had no right to exploit. It was then that ONGC filed a writ petition in the Delhi HC in which the petroleum ministry, DGH and RIL were made parties. The petition was disposed of by the court, which directed MoPNG to consider the upcoming report by the expert agency by the name of DeGolyer & MacNaughton (D&M) — a petroleum consulting company based in Dallas, Texas. The agency was to undertake an independent third-party study to verify the claimed continuity and migration of gas from the ONGC block to the Reliance block. On November 19, 2015, D&M said that 'the integrated analyses indicated connectivity and continuity of the reservoirs across the blocks operated by ONGC and RIL', validating the central government and ONGC's stand. The MoPNG also appointed a one-man committee of former Chief Justice of Delhi HC Justice A P Shah on December 15, 2015, to consider the D&M report and recommend a future course of action in light of the findings contained in the report. Based upon the Shah Committee report, the MoPNG raised a demand for $1.5 billion and $174 million in interest from RIL for 'unjust enrichment' made by the company. Reliance then approached the three-member tribunal headed by Singapore-based arbitrator Lawrence Boo. The tribunal rejected the government's contention and said that the PSC doesn't prohibit the contractor from producing gas, irrespective of its source, as long as the producing wells were located inside the contract area. The government then approached the Delhi HC against this order. When the single-judge bench of the HC ruled in favour of RIL, the Centre appealed before the division bench. The government had contended that RIL was guilty of fraud and unjust enrichment totalling over $1.5 billion. 'It is contended that the migrated gas alone was valued at about $1.5 billion as of June 30, 2016,' the Centre had then told the Delhi HC. It had further argued that though RIL had claimed there was no connectivity between their block and the government's, they had consciously siphoned gas from the ONGC block without the government's knowledge. The Centre also argued that the arbitral award it challenged was 'against India's public policy'. The division bench sided with the central government and set aside the arbitral award after which RIL approached the Supreme Court.
