Mohit RohatgiPartner
Ashwini TakAssociate
Karan TrehanAssociate
Key Developments
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Supreme Court clarifies that an application for extension of time-period for making an award is maintainable even after expiry of timelines under the Arbitration Act
In a significant ruling, the Supreme Court clarified that an application for extension of the time-period for passing an arbitral award under Section 29A(4) of the Arbitration and Conciliation Act, 1996 (Arbitration Act) is maintainable even if filed after the expiry of the prescribed extension timelines, given sufficient cause.1
For domestic arbitrations, the Arbitration Act mandates a 12-month period from completion of pleadings for preparing an arbitral award. This period may be extended by six months by mutual consent of the parties. Courts have the power to extend this period further if an extension has been sought with sufficient cause.
However, High Courts had differing views on whether an extension application would be maintainable after the 12-month period or six-month extension had elapsed. The Supreme Court held that while such an application will be maintainable, the “power of the court to extend the time is to be exercised only in cases where there is sufficient cause for such extension”. This judgment clears the long-standing confusion on interpretation of Section 29A of the Arbitration Act.
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Supreme Court clarifies that ‘free of cost’ copy of an NCLT order is on the same footing as a paid certified copy
Rule 50 of the National Company Law Tribunal Rules, 2016 (NCLT Rules) requires the National Company Law Tribunal (NCLT) registry to send a certified copy of NCLT’s final order to the parties to a dispute. It also provides the parties with the option to apply for certified copies upon paying the prescribed fee. The Supreme Court has clarified that a ‘free of cost’ certified copy of a final order of the NCLT has the same legal standing as a paid certified copy.2 This means that parties can use either type of certified copy when filing appeals against an NCLT order before the National Company Law Appellate Tribunal (NCLAT).
This ruling arises from a disagreement between NCLAT members while considering an appeal filed with a three-day delay. A ‘free of cost’ copy of the NCLT’s order was attached with this appeal. The judicial member of the NCLAT held that a ‘free of cost’ copy is not the same as a paid certified copy and therefore dismissed the appeal for being barred by limitation since the appellant had not made an additional application for grant of a certified copy. On the other hand, the technical member held that no distinction could be made between a certified copy obtained through the payment of a fee and a free copy and proceeded to condone the delay upon being satisfied of the cause shown. The matter was referred to a third member who sided with the judicial member. However, the Supreme Court finally put this issue to rest.
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Supreme Court rules that an arbitration agreement will survive ‘full and final settlement’ of a contract
The Supreme Court ruled that the execution of a ‘full and final settlement’ between parties does not automatically bar their recourse to arbitration if disputes arise later on the settlement itself. 3
In this case, the Gujarat High Court had appointed an arbitrator in a dispute between the insured company and the insurer on the settlement amount paid by the insurer. In a challenge before the Supreme Court, the insurer argued that the insured company could not invoke the arbitration clause since the contract stood discharged (i.e., no obligation remained to be fulfilled in the contract) in view of ‘full and final settlement’ between the parties.
Relying on the principle of separability, which would mean that the arbitration clause is independent of the main contract, the Supreme Court affirmed the High Court’s decision holding that the arbitration agreement contained in the original contract continued to be in existence even after the original contract has been discharged.
This ruling adopts a pro-arbitration approach that strengthens the principle of separability and autonomy of arbitration clauses, providing a clear pathway for disputes arising out of settlements to be resolved through arbitration.
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Conflicting High Court rulings on applicability of Bharatiya Nagarik Suraksha Sanhita to proceedings initiated after 1 July 2024 but arising from earlier FIRs
Following the coming into effect of new criminal laws on 1 July 2024, questions regarding their applicability to fresh proceedings initiated after this date but arising out of a first information report (FIR) registered before 1 July 2024 have arisen for adjudication before different High Courts.
The decisions of the High Courts on this issue have centered around the interpretation of Section 531(2)(a) of the Bharatiya Nagarik Suraksha Sanhita (BNSS), which provides that “any appeal, application, trial, inquiry or investigation pending” before the date on which BNSS comes into force “shall be disposed of, continued, held or made” according to the Criminal Procedure Code, 1973 (CrPC).
On the one hand, the High Courts of Punjab and Haryana,4 Kerala,5 Delhi,6 Allahabad7 and Bombay8 have ruled that any proceedings initiated after the commencement of BNSS and arising out of an FIR registered before 1 July 2024 will be governed by the provisions of the BNSS. However, the Rajasthan High Court9 has taken a contrary position and held that such proceedings will be governed by the CrPC.
Given these conflicting interpretations, Supreme Court intervention is required to ensure uniformity in the application of criminal law across different jurisdictions in India.
The coming months are likely to see major developments in the arbitration landscape. On 8 November, the Supreme Court delivered a landmark verdict addressing the unilateral appointment of arbitrators, significantly impacting principles of arbitrator neutrality and appointment practices.10 Additionally, the Court is expected to revisit11 its earlier ruling, which held that delays beyond 120 days in filing appeals under Section 37 of the Arbitration and Conciliation Act cannot be condoned.12
[1]Rohan Builders (India) Pvt. Ltd. v Berger Paints India Ltd.
[2]State Bank of India v India Power Corporation Ltd.
[3]SBI General Insurance Co. Ltd. v Krish Spinning
[4]X v State (UT of Chandigarh)
[5]Abdul Khader v State of Kerela
[6]Prince v State (NCT) of Delhi
[7]Deepu v State of U.P.
[8]Chowgule and Co. Pvt. Ltd. v State of Goa
[9]Krishan Joshi v State of Rajasthan
[10]Central Organisation for Railway Electrification v ECI-SPIC-SMO-MCML (JV)
[11]M/s Sab Industries v State of Himachal Pradesh
[12]Union of India v Varindera Constructions Ltd.
