"I realise that some of my criticisms may be mistaken; but to refuse to criticize judgements for fear of being mistaken is to abandon criticism altogether... If any of my criticisms are found to be correct, the cause is served; and if any are found to be incorrect the very process of finding out my mistakes must lead to the discovery of the right reasons, or better reasons than I have been able to give, and the cause is served just as well."

-Mr. HM Seervai, Preface to the 1st ed., Constitutional Law of India.

Saturday, May 31, 2014

Is this the End of N. Radhakrishnan v. Maestro Engineers? Swiss Timing v Organising Committee

Recently, a Single Judge of the Supreme Court of India held in the case of Swiss Timing v. Organising Committee, Commonwealth Games 2010 (28.05.2014) that N. Radhakrishnan v. Maestro Engineers where it was held that where allegations of fraud are involved, such disputes are not arbitrable, was rendered per incuriam. SS Nijjar, rejecting the preliminary objections of the Respondent held that even if criminal cases were pending regarding the alleged corruption, the dispute pertaining to termination of contract and non-payment of dues under the contract was arbitrable.

The Single Judge held that the observations in Maestro Engineers that allegations of fraud and serious malpractices cannot be referred to arbitration but can only be settled in court ran counter to the ratio of HPCL v. Pinkcity Midway Petroleums where it was held that where there was an arbitration clause, the matter is to be referred to arbitration in view of the mandatory language of Section 8. The Single Judge held that although Maestro Engineers made reference to the above judgement but failed to distinguish the said decision from the facts in Maestro Engineers. The court also held that Raju v Raju which held in the same lines as Pinkcity was not even brought to the attention of the court in Maestro Engineers.

The court also held that Maestro Engineers was per incuriam for another reason- it failed to take note of the provisions in Section 16 of the Arbitration and Conciliation Act, 1996 which provided that the arbitral tribunal was competent to rule on its own jurisdiction, including on the question as to the existence or validity of the arbitration agreement.

Two observations on this development: one, recently, the Supreme Court in  WSG (Mauritius) Ltd. v. MSM Satellite (Singapore) Pte. Ltd effectively held Maestro Engineers inapplicable in foreign arbitrations in the context of Section 45. This decision effectively sounds the death knell on the operability of Maestro Engineers in the domestic context. Two, SS Nijjar, J. held that Maestro Engineers was per incuriam because it failed to take note of Section 16. Wasn't SBP & Co. v. Patel Engineering guilty of the same failure?


Geoffrey said...

Logically, an arbitral panel may determine private issues such as whether D's fraudulent conduct has cause loss by C, deciding that D recompense C.
That said, the panel has no ability to deal with the public issue of guilt. That is in the purview of the Court.

Samiron said...

I agree with Geoffrey that the arbitrator has no ability to deal with the public issue of guilt. Disputes relating to rights in rem are required to be adjudicated by courts and public tribunals, being unsuited for private arbitration. No one brought Booz Allen to the Hon’ble Courts notice.