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Delhi High Court appointed a substitute Arbitrator on account of abandonment of Arbitration proceedings by the erstwhile Arbitrator

Case title: North East Centre of Technology Application and Reach (NECTAR) Vs Divine Bamboo Mat Manufacturing Pvt. Ltd. & Anr.

Case no.: O.M.P.(T) 1/2024

Decision on: April 8th, 2024

Quoram: Justice Ms. Justice Neena Bansal Krishna

Facts of the case

The present petition sought for the appointment of a substitute Arbitrator. In this case, NECTAR and Divine Bamboo Mat Manufacturing Pvt. Ltd. had entered into a contract in 2008, through the Original Agreement for Technology Development Assistance valued at Rs. 1,75,00,000/- in lieu of setting up and developing the project for manufacturing of Bamboo Mat Composites. In furtherance of it, a Hypothecation Deed was executed between the parties at New Delhi with regard to certain present and future moveable assets of the respondent. The parties also entered into a Supplementary Agreement (I) which modified the original agreement in respect of the sanction amount. Subsequently, another Supplementary Agreement (II) was entered by the parties, wherein the respondent agreed to repay the amount of Rs. 2,20,00,000/- according to the modified schedule. Though, the petitioners made proposals for settlement, the respondent failed to pay the due amount.

The Clause 17 of Original Agreement provided for Arbitration and also mentioned the venue of Arbitration to be New Delhi. Consequently, the Notice of Invocation of Arbitration was served to the respondent. But however, they ignored the same and stopped communicating with the petitioner. The petitioner appointed the sole Arbitrator to adjudicate the disputes inter se the parties. Upon commencement of arbitral proceedings, both the parties submitted their claims and counterclaims before the Arbitrator. However, the matter reached a deadlock when the respondent filed an Application under Sections 12 and 13 of the Act challenging the appointment of Arbitrator.

Submission of the Parties

The Counsel for the Petitioner detailed the array of facts in the submissions. He asserted that despite the agreement to pay the outstanding amount by the respondents, they defaulted in their repayment obligations in terms of Original Agreement, Supplementary Agreement (I) and (II). Further, he submitted all the facts and circumstances of the case leading to its deadlock. Hence, the Counsel filed a petition under Section 14 read with Sections 15 and 11 of the Arbitration and Conciliation Act, 1996 seeking for the appointment of a substitute Arbitrator to break the deadlock.

The Counsel for respondents on instructions submitted that he has no objection in allowing the present petition. Hence, he did not raise any objections in the present matter.

Legal Provisions

Section 11 – It provides for the Appointment of Arbitrators.

Section 12 & 13 – They provide for the Grounds and Procedure for challenging the Appointment of an Arbitrator.

Section 14 & 15 – They provide for the Termination of Mandate of Arbitrator and his Substitution by another.

Court’s Analysis and Judgement

The Court addressing the question of limitation for filing the application relied on the case of Tarun Kr. Jain, Sole Proprietor vs. M.C.D., which held the limitation period for the substitution of Arbitrator under Section 14 of the Act, 1996 to be three years. It noted that in the present case the time limit for the mandate of the Arbitrator had expired, as per Section 29A of the Act, 1996, even after excluding the COVID-19 Pandemic period. Considering the fact that no proceedings have been undertaken by the Arbitrator since 14.12.2019 when the Application under Section 12 of the Act, 1996 was made, the Court stated that the Arbitrator had abandoned the Arbitration proceedings and also had withdrawn from his Office.

In light of these circumstances, the Delhi High Court allowed the present petition and appointed Mr. Justice V.K. Jain, retired Judge of Delhi High Court, as a substitute Arbitrator to adjudicate the disputes between the parties. Thereby, it facilitated the parties to present their claims and counterclaims before the arbitrator.

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Judgement Reviewed by – Keerthi K

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“Decision of Arbitral Tribunal to not Implead a Party to Arbitration is not an Interim Award”: Delhi High Court

Case title: National Highway Authority of India v. Ms IRB Ahmedabad Vadodra Super Express Tollways Pvt. Ltd

Case no.: O.M.P. (COMM) 455/2022 & I.A. 18565/2022

Order on: 2nd April 2024

Quorum: Justice Prateek Jalan

FACTS OF THE CASE

The petitioner, National Highway Authority of India (NHAI), challenged a decision of a three-member Arbitral Tribunal dated 01.08.2022. This decision rejected NHAI’s application under Order I Rule 10 of the Code of Civil Procedure, 1908 (CPC) for impleadment of the State of Gujarat as a party to the arbitral proceedings. The arbitral proceedings stemmed from a Concession Agreement dated 25.07.2011 between NHAI and the respondent, MS IRB Ahmedabad Vadodra Super Express Tollways Pvt. Ltd.

CONTENTIONS OF THE APPELLANT

Advocates Mr. Ankur Mittal, Mr. Abhay Gupta, and Mr. Ankur Saboo represented NHAI. They argued that the State of Gujarat should be impleaded based on the obligations it undertook in a State Support Agreement dated 11.02.2016, which was related to the Concession Agreement.

CONTENTIONS OF THE RESPONDENTS

Represented by Mr. Atul Nanda, Senior Advocate, the respondent contested NHAI’s application for impleadment, arguing that the Arbitral Tribunal lacked jurisdiction to decide on the impleadment of the State of Gujarat.

Mr. Nanda submits that the question of maintainability of a petition under Section 34 of the Act against an order of an arbitral tribunal declining impleadment of a third party is no longer res integra. He relies upon the decision in National Highway Authority of India vs. Lucknow Sitapur Expressway Ltd. (Lucknow Sitapur Expressway), The Court was, in that case, also concerned with a decision of an arbitral tribunal adjudicating disputes under a Concession Agreement. The Tribunal had rejected an application by NHAI for impleadment of a State Government on the ground that it was a party to a State Support Agreement.

LEGAL PROVISIONS

Section 34 of the Arbitration and Conciliation Act, 1996 – Application for setting aside arbitral award.

It allows parties to challenge an arbitral award before the appropriate court on certain grounds, including that the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties. In this case, the petitioner NHAI, invoked Section 34 to challenge the decision of the Arbitral Tribunal rejecting its application for impleadment of the State of Gujarat.

ISSUE

The main issue was whether the decision of the Arbitral Tribunal rejecting NHAI’s application for impleadment of the State of Gujarat constituted an arbitral award, thus making it amenable to challenge under Section 34 of the Arbitration and Conciliation Act, 1996.

COURT’S ANALYSIS AND JUDGEMENT

The court examined precedents, including the case of Lucknow Sitapur Expressway Ltd., which involved similar circumstances. In Lucknow Sitapur Expressway, it was ruled that a decision rejecting an application for impleadment did not constitute an arbitral award under Section 2(1)(c) of the Act. The court emphasized that for a decision to be considered an award, it must decide a substantive dispute or conclusively settle an issue pertaining to the heart of the dispute.

The court further clarified that the distinction between a decision on jurisdiction and one on merits did not affect the characterization of the decision as an award. Even if the tribunal ruled on the jurisdiction to decide on impleadment, it did not change the nature of the decision. The court referenced various legal principles and previous judgments to support its conclusion.

In light of the precedent set by Lucknow Sitapur Expressway and other relevant judgments, the court held that NHAI’s petition under Section 34 of the Act was not maintainable. Consequently, the petition was dismissed, and all pending applications were disposed of.

The court’s decision in the case of O.M.P. (COMM) 455/2022 reaffirmed the legal position established by precedent, particularly the Lucknow Sitapur Expressway case. It clarified the criteria for a decision to be considered an arbitral award and emphasized that decisions on procedural matters like impleadment did not fall under this category.

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Judgement Reviewed by – Chiraag K A

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“Delhi HC: Proper Officer Must Carefully Evaluate The Response On Its Merits Before Forming An Opinion”

Case title: Canara Bank v. Assistant Commissioner, DGST

Case no.:  W.P.(C) 4689/2024 & CM APPL. 19233-34/2024

Order on: 2nd April 2024

Coram: Hon’ble Mr. Justice Sanjeev Sachdeva & Hon’ble Mr. Justice Ravinder Dudeja

FACTS OF THE CASE

In the High Court of Delhi, a significant judgment was delivered on April 2, 2024, in the case of W.P.(C) 4689/2024 involving Canara Bank and the Assistant Commissioner, DGST. The case revolved around a disputed show-cause notice dated 25.09.2023, proposing a substantial demand against the petitioner under Section 73 of the Central Goods and Services Tax Act, 2017. The court’s meticulous analysis of the facts and legal submissions led to a pivotal decision that merits closer examination.

Canara Bank challenged an order dated 26.12.2023, whereby the impugned show-cause notice proposing a demand of Rs.20,07,15,517.00 against the bank was disposed of, and a demand including penalty was raised. The bank had submitted a detailed reply dated 19.10.2023 to the show-cause notice, providing full disclosures under each of the heads mentioned in the notice. However, the impugned order dismissed the reply as incomplete, unsupported by adequate documents, and unsatisfactory.

CONTENTIONS OF THE PETITIONERS

  • Canara Bank, represented by Mr. G. Shivadass, Senior Advocate, argued that their reply to the show-cause notice was comprehensive and should have been considered on its merits.
  • They contended that the order was cryptic and failed to address the points raised in their reply.

CONTENTIONS OF THE RESPONDENTS

  • The Assistant Commissioner, DGST, represented by Mr. Rajiv Aggarwal, ASC, defended the impugned order, asserting that the petitioner’s reply was inadequate and unsatisfactory.

LEGAL PROVISIONS

Section 73 of the Central Goods and Services Tax Act, 2017 – Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized for any reason other than fraud or any willful-misstatement or suppression of facts.

ISSUE – The primary issue before the court was whether the impugned order dismissing the petitioner’s reply as incomplete and unsatisfactory was valid.

COURT’S ANALYSIS AND JUDGEMENT

Upon careful consideration of the submissions and perusal of the show-cause notice and the petitioner’s reply, the court found the impugned order untenable. Despite the petitioner’s detailed response, the order summarily dismissed it without proper consideration. The court noted that the Proper Officer had not applied his mind to the petitioner’s submissions and failed to seek further clarification if needed.

Consequently, the court set aside the impugned order and remitted the matter to the Proper Officer for re-adjudication. The Proper Officer was directed to intimate the petitioner regarding any additional details or documents required and provide an opportunity for a fresh hearing. The court clarified that it had not adjudicated on the merits of the case, leaving all rights and contentions of the parties reserved.

The judgment in W.P.(C) 4689/2024 underscores the importance of proper adjudication and due process in tax matters. It emphasizes the need for authorities to carefully consider the submissions made by taxpayers and provide them with a fair opportunity to present their case. By setting aside the impugned order and directing a re-adjudication, the court upheld the principles of natural justice and procedural fairness.

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Judgement Reviewed by – Chiraag K A

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The Delhi High Court directed the Grievance Appellant Committee to expeditiously adjudicate TV Today’s plea challenging their Instagram Account Suspension under Rule 3(1)(c) of IT Rules

Case title: TV Today Network Limited and Anr. Vs Union of India and Ors

Case no.: W.P.(C) 4912/2024 & CM APPL. 20090/2024

Decision on: April 4th, 2024

Quoram: Hon’ble the Acting Chief Justice and Justice Manmeet Pritam Singh Arora

Facts of the case

In this case, the petitioners Instagram account created for its magazine Harper’s Bazaar India i.e.,”@bazaarindia” was suspended by the respondents based on third-party copyright complaints. Aggrieved by this, the petitioner’s filed a writ petition seeking a declaration that Rule 3(1)(c) of the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 is unconstitutional and contended that it must be read in a manner consistent with the intent and object of Section 79 of the Information Technology Act, 2000, Section 52 of the Copyright Act, 1957 and Articles 14, 19 and 21 of the Constitution.

Submissions of the Petitioner

The Counsel for the petitioners contended that impugned action was undertaken without following any safeguards as provided under Rule 4(8) for identifying unlawful or infringing content under Rule 3(1)(b) of the IT Rules. He stated that restricting or terminating the petitioner no. 1’s access to the platform is violative of petitioners’ constitutional rights under Articles 14 and 19 of the Constitution. Further, he submitted that the respondent exploited the ambiguity created by the language of Rule 3(1)(c) & (d) of the IT Rule empowering them with absolute and unlimited discretion to suspend/terminate its user’s accounts without due process or giving the user a fair opportunity to contest such punitive action.

The Counsel stated that at the relevant stage, the Petitioner would file an appeal before the Grievance Appellate Committee as provided under Rule 3A of the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021.

Court’s Direction

The Court directed the Grievance Appellant Committee to decide the Petitioners’ appeal as expeditiously as possible, preferably, within two weeks and listed the matter for further hearing May 17th, 2024.

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Judgement Reviewed by – Keerthi K

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The Delhi High Court ruled that a Retired Public Officer cannot occupy the position of Inquiry Officer under the Export Inspection Agency Employees Rules, 1978

Case title: Parveen Kumar Vs Export Inspection Council & Ors.

Case no.: W.P. (C) 3940/2017 & CM APPL.14022/2021

Decision on: March 6th, 2024

Quoram: Justice Tushar Rao Gedela

Facts of the case

The Petitioner, Parveen Kumar was working as a Technical Officer in Export Inspection Agency under the respondent office. The Petitioner, in the course of his employment exposed a recruitment scam in his department in which sixteen Assistant Director was recruited fraudulently. In 2013, the Petitioner was directed to proceed to sub-office (SO), Kanpur to hold charge but he requested to not depute him on tour to SO Kanpur. The same was rejected by the respondents and the Petitioner stood relieved from EIA Delhi Head Office. Further, he filed the tour programme which was approved by the respondent.

In 2014, the Respondent again directed the Petitioner to be deputed on tour to SO, Kanpur till further orders. He immediately filed a tour programme but the same was rejected for not having a termination date of tour. The respondents repeatedly intimated the petitioner to rectify the improper tour programme but the petitioner was unable to do it and requested the respondents to co-operate and help him in the same.  However, the respondents issued a charge memorandum against the Petitioner alleging disobedience of the order.

A disciplinary enquiry was initiated against the Petitioner in which he made a representation against the illegal appointment of an ineligible person, being a retired public servant, as Inquiry Officer in contravention of Rule 11 of the EIA Rules. But, the representation was rejected by the Respondent. The Disciplinary Authority passed an order of penalty of reduction in rank from Technical Officer to Lower Post of Junior Scientific Assistant against the petitioner. Consequently, the Petitioner preferred a statutory appeal which was dismissed by the Appellate Authority. Aggrieved by the same, the Petitioner filed the present Writ Petition, challenging the impugned orders of the Disciplinary Authority and the Appellate Authority.

Contentions of the Petitioner

Praveen Kumar appearing in person challenged the Disciplinary Authority (DA) primarily on two grounds which violated the Principles of Natural Justice and Rules and Regulations of the Export Inspection Agency (EIA). He submitted that the appointment of the Inquiry Officer was invalid as it violated Rule 11 (2) of the respondent (EIA Rules). Rule 11(2) prescribes the Inquiry Officer to be a “Public Servant” but submitted that the Inquiry Officer in the present case was a retired employee and was not in active duty. As such, retired employees cannot be called a Public Servant. Further, the petitioner contended that he was not granted any opportunity of hearing by the Disciplinary Authority before passing the impugned order, because according to Rule 11 (4) of the EIA Rules, after the written Statement of Defence is submitted, if the Charged Officer seeks hearing, the Disciplinary Authority must grant such hearing before passing the final order. However, he was not granted any Personal Hearing in spite of his requisition, which according to the petitioner not only violated the statutory rules but also the well settled Principles of Natural Justice.

Contentions of the Respondents

The Counsel, on the contrary submitted that even the retired officer can be construed as a public servant and as such, the Inquiry Officer was appointed is in accordance with the EIA Rules. The Inquiry Officer was paid remuneration for the purposes of conducting inquiry against the Petitioner who is a public servant and the disciplinary proceedings itself would fall within the public duty of the Respondent. Further, with respect to the violation of Rule 11(4) the Counsel submitted that there was no defence raised by the Petitioner in the defence statement except making allegations except against the officers and authorities. He opined that if personal hearing was granted, the Petitioner would have simply continued the tirade of baseless allegations and thus, the denial of the same cannot be termed as a violation of the said rule.

Court’s Analysis and Judgement

The Court considering the arguments of the parties notes that the issue in present petition revolves around the interpretation of the provisions of Rule 11(2) and Rule 11 (4) of the EIA Rules, 1978.

The Bench, on perusal of Rule 11(2) of the EIA Rules, asserted two key aspects. According to the rule, firstly, the Disciplinary Authority may itself inquire into the truth of any imputation of misconduct against agency employee; and secondly, that it may appoint under that sub rule ‘a public servant’ to inquire into such truth thereof. The court adopting a plain and simple reading of the provision emphasized that the term such person / Inquiry Officer must be a servant of the public and not a person who ‘was’ a servant of the public and thereby rejected the argument of the respondent. The Inquiry Officer, who was a retired officer of the respondent, did not fulfil the criteria of a ‘public servant’ and held such appointment to be violative of Rule 11 (2) of the EIA Rules. Thus, it ruled that a public servant occupying the position of Inquiry Officer cannot be a retired person.

The Court further adjudicated on the issue of violation of the Rule 11(4) of the EIA Rules wherein the Charged Officer was permitted to seek personal hearing before the DA. The said Rule prescribed the e procedure as to how the DA would proceed after the conclusion of the Inquiry Officer’s report. The Court referring to the rule asserted that the DA was mandated to afford the Charged Officer (CO) an opportunity to tender a written Statement of Defence against the Articles of Charge and the proposed penalty. Moreover, even in accordance with the principles of natural justice the DA ought to afford an opportunity of personal hearing to the CO, if he desires. It highlighted that the opportunity of personal hearing is not a mere formality. It is intrinsic and intertwined not only with the disciplinary proceedings but also with the principles of natural justice. But however, in the instant case it was observed that even on the receipt of requisition no such an opportunity was afforded to the petitioner by the respondent, thus violating Rule 11 (4) of the EIA Rules, 1978.

The Delhi High Court in view of the above violations remitted the matter back to the Disciplinary Authority for adjudication.

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Judgement Reviewed by – Keerthi K

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