by Gunjan

Questions Answered in this month’s CCDQ:

  1. Does the High Court always have jurisdiction to Extend Time Limit of Arbitration Proceedings?
  2. Can an Award be set aside on the Ground of Violation of a Statute?
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  4. Can you use ChatGPT to prepare “original” content?
  5. Section 8 Application filed after the Written Statement, can the matter be referred to Arbitration?
  6. Unable to Quantify your claim; is this a bar to the Grant of an Early Freezing Order?
  7. How far Can Claims based on Novel Formula be Permitted in Construction Contracts?


Does the High Court always have jurisdiction to Extend Time Limit of Arbitration Proceedings?

This issue arose in the case of Aatash Norcontrol Ltd. Vs. Gujarat Maritime Board (Gujarat High Court, Decided on 13.06.2023).

In this case the Petitioner had filed a Petition under Sections 29A(4) & 29A(5) of the #Arbitration & Conciliation Act, 1996(“Act”) for extension of time limit of the arbitration proceedings which were pending between parties. The extension sought was for a period of 9 months.

The Court observed as follows:

  1. Section 2(1)(e) read with section 29A of the Act makes it evident that the power to extend the time limit of arbitration lies with the Principal Civil Court having jurisdiction to entertain application for appointment of Arbitrator as Court of original jurisdiction. (Relied on State of West Bengal & Others Vs. Associated Contractors (2015) 1 SCC 32)
  2. In this case the parties never approached the High Court under Section 11 of appointment of arbitrator as the arbitrator was appointed by consent. (Distinguished DDA Vs. Tara Chand Sumit Construction Co 2020 SCC Online Del 2501).
  3. In other cases where the High Court/Supreme Court acted as Court under Section 29A application for appointment of arbitrator had been earlier made, owing to which they had become the Court of Principal Civil jurisdiction as per Section 2(1)(e) and had power to extend the time limit. But this was not true for the present case.
  4. In view of the above, the High Court would not exercise its jurisdiction to extend time limit.

In light of the same, the Petition was dismissed keeping it open for the Petitioner to approach the Principal Civil Court of original jurisdiction for extending the time limit of arbitration.

Can an Award be set aside on the Ground of Violation of a Statute?

 In ARG Outlier Media Pvt. Ltd. Vs. HT Media Ltd. (Delhi High Court, decided on 04.07.2023), an arbitration #Award was challenged under Section 34 of the #Arbitration & Conciliation Act, 1996 (“A&C Act”).

The case revolved around a commercial agreement between both parties. The three main grounds on which the award was assailed were:

  1. Insufficient stamping of the Arbitration Agreement.
  2. Incorrect interpretation of the terms of the Agreement.
  3. Absence of proof of damages awarded.

On these issues the Court observed as follows:

  1. Even if one party had signed at Mumbai, once the Agreement stated it was executed at New Delhi, and it was admittedly duly stamped in accordance with stamp duty applicable in Delhi, the Agreement could not be said to be under stamped under the Maharashtra Stamp duty act.
  2. Even assuming that the Arbitrator’s interpretation of law violated the Maharashtra Stamp Act, the jurisdiction of the Court was limited under Section 34. Even the contravention of a statute, if it was not liked to public policy or public interest, could not lead to setting aside of an award on ground of patent illegality. (Reliance placed on Ssangyong Engineering and Construction Company Limited v. National Highways Authority of India (NHAI),(2019) 15 SCC 131).
  3. Regarding incorrect interpretation of the terms of Agreement, the Court reiterated the principle of limited jurisdiction of Court to interfere in a plausible interpretation given by the #arbitrator. (Reliance placed on Delhi Airport Metro Express Private Limited(2022)1SCC131.
  4. Regarding Proof of damages, the Court held that the claim of the Respondent was not based on any breach of the Agreement but was based on a clause of the Agreement itself. The question of proof of damage was irrelevant.

In view of the above, the Petition was dismissed and award upheld.


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This issue was discussed as an Obiter Dicta in the case of In ARG Outlier Media Pvt. Ltd. Vs. HT Media Ltd. (Delhi High Court, decided on 04.07.2023), an arbitration #Award was challenged under Section 34 of the #Arbitration & Conciliation Act, 1996 (“A&C Act”).

The said conclusions were reached by Court on the basis of sections 36 and 61 of the Indian stamp Act and are reproduced below:

  1. In terms of law, an improperly stamped agreement could not have been admitted in evidence ( Relied on N.N. Global Mercantile v Indo Unique Flame Ltd 2023SCCOnline SC 495). However, once admitted in evidence by the #Arbitrator, the award passed on the basis of such an agreement cannot be faulted on this ground.
  2. The Court under Section 34 is not an Appellate Court & may not even have powers under Section 61 of the Indian Stamp Act.
  3. Even if it is said that Section 61 is applicable, the Court could maximum impound the document & refer it to the collector of stamps for adjudication on stamp duty & penalty.
  4. However, the same would not in any manner, affect the enforcement or validity of the Arbitral Award.

This conclusion drawn by the Court, although not directly applicable to the case, goes one step ahead discussing a scenario as to what happens if an insufficiently stamped agreement is admitted in evidence by an Arbitrator, albeit incorrectly, and an award is passed on that basis.

This Obiter is a reiteration of various judgments such as Javer Chand & Others v. Pukhraj Surana, (1962) 2 SCR 333, Shyamal Kumar Roy v. Sushil Kumar Agarwal, (2006) 11 SCC 331; Sirikonda Madhava Rao v. N. Hemalatha, SLP (C) No. 14882 & 14883/2022 (order dated 14.11.2022), SNG Developers Limited v. Vardhman Buildtech Private Limited, 2021:DHC:4100.


Can you use ChatGPT to prepare “original” content?

Recently, there have been a slew of law suits against OpenAI, the company who developed the popular language AI Model, #ChatGPT. Most of these cases revolve around copyright issues. Some of them are:

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  • Filed on June 28, 2023 in Northern California Court by anonymous individuals.
  • This Alleges that OpenAI violated privacy laws by using 300 billion words from the internet, including personal information, without consent. It accuses OpenAI of stealing “private information, including personally identifiable information, from hundreds of millions of internet users, including children of all ages, without their informed consent or knowledge.”
  • Class action seeking $3 billion in damages.


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  • Complaint filed in November 2022 on behalf of open-source programmers as a class action lawsuit, which accuses OpenAI and its funder partner Microsoft of having ripped off coders in an effort to train GitHub Copilot- which is AI driven virtual assistant.
  • Again a Class action alleging copyright infringement and accusing OpenAI of profiting unfairly from open-source creators.


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  • Lawsuit filed in July 2023 by two authors alleging that #OpenAI has committed copyright infringement and violated Digital Millennium Copyright Act by using their books to train ChatGPT.
  • The novels allegedly used were Tremblay’s novel “The Cabin at the End of the World” and two of Awad’s novels: “13 Ways of Looking at a Fat Girl” and “Bunny”.
  • Seeks unspecified damages.

All of these are still pending where openAI has specifically denied all allegations and claims. The fate of these is still to be seen.

One thing is for certain that these lawsuits will surely have a big impact on the Future of AI.


Section 8 Application filed after the Written Statement, can the matter be referred to Arbitration?

 Dwarkadas Himatlal Shah v. Girishbhai Himatlal (Gujarat High Court, decided on 14.07.2023), was an appeal filed against an order of Trial Court allowing an application under Section 8 of the #Arbitration & Conciliation Act, 1996 (“A&C Act”) (for reference of disputes to arbitration).

The disputes had arisen under an MOU entered into between the parties regarding a family dispute of partition of property. The MOU contained an arbitration clause but the Petitioner had filed a civil suit.

As per the contention of the Petitioner, the section 8 application could not be allowed as it was filed after the filing of the written statement. This was contended because the mandate of section 8 provides that such an application needs to be raised before submission of the first statement on the substance of the dispute.

The Court observed as follows:

  1. The Written Statement filed by the Respondent mentioned that the parties were governed by the arbitration clause contained in the MOU.
  2. Thereafter an application under Order 7 Rule 11 of the CPC (rejection of Plaint), and the aforementioned application under Section 8 was also filed by the Respondents on the same day.
  3. The provisions of section 8 provide that a party merely needs to insinuate the judicial authority about the arbitration clause before filing the first statement on the substance of the disputes. Thereafter the judicial authority is compelled to refer disputes to arbitration.
  4. Once the objection regarding the existence of arbitration & the disputes being governed by the same was already raised in the written statement, which was the first statement on the substance of the disputes.

In view of the above, no interference was called for in the order of the trial court, the Petition was dismissed.

Unable to Quantify your claim; is this a bar to the Grant of an Early Freezing Order?

This issue was discussed in Kee Management Pty Ltd. v. Casey [2023]WASC259 (Supreme Court of Western Australia, 13.07.2023)

In this case, the Defendant had entered into a contract of employment with the Plaintiff, upon alleged breach of which, the Plaintiff had suffered loss and damages.

A writ had been filed by the Plaintiff, along with an application seeking urgent relief of #FreezingOrder (“FO”) over the Defendant’s assets, to prevent him from disposing off or dissipating proceeds of his alleged breaches of duty.

The key principles for grant were summarised as below:


  1. The court has inherent jurisdiction to make a FO, the purpose being the preserve the efficacy of execution lying against a prospective judgment debtor.
  2. The object of FO is not merely providing a security to the Plaintiff.
  3. FO is a drastic remedy not to be granted lightly.
  4. FO is to be granted where Plaintiff can show a good arguable case. (Not necessarily more than 50% success).
  5. Plaintiff must show, (i) assets of Defendant might be disposed off. ii) danger that prospective judgment may be wholly/partly unsatisfied. iii) danger arises because assets of defendant are disposed off, or diminished in value.
  6. Risk/danger must be real or substantial & not merely theoretical. But it is not necessary to establish that it is more probable than not that judgement will be ultimately unsatisfied. Decision has to be taken on basis of Balance of probabilities.
  7. Acts of the respondent for avoiding judgment are not necessary before FO can be granted.
  8. The Court deemed fit that all conditions were satisfied. Plaintiff had shown a good prima facie case and the risk of dissipation was also shown.
  9. The Plaintiff had this stage only indicated an approximate amount it would suffer if it was successful. It was not an exact quantification. However, the Court observed, “The inability to quantify a claim at this early stage is not necessarily a bar to the grant of a freezing order.”
  10. The discretionary consideration was also, that the Plaintiff was a relatively large company, with a well-established business, while the Defendant appeared to have no assets of note. Phe Plaintiff also rendered an undertaking as to damages. On the other hand, the Defendant had refused to give information as to his bank records/assets & also declined to voluntarily sign an undertaking not to deal with the moneys received as a result of the alleged breaches.

In view of the above, the Court granted the FO.

A note on the expeditiousness of the matter. The Plaintiff had commenced proceedings on 10th July 2023 and also served it on the Defendant on the same date. The case was listed on the 11th, the Defendant appeared in person, and submitted a lack of opportunity to seek legal advice. The Court gave him complete opportunity of hearing, and also took into account his lack of opportunity to seek legal advice into account, but still delivered the decision on 11th July 2023 (albeit being published on 13th July 2023).


How far Can Claims based on Novel Formula be Permitted in Construction Contracts?

Satluj Jal Vidyut Nigam v. M/s Jaiprakash Hyundai Consortium (Delhi High Court, decided on 12.07.2023), was a petition under Section 34 of the #Arbitration & Conciliation Act, 1996 (“A&C Act”) challenging an Order passed by #arbitrator.

The disputes between parties pertained to a contract for construction civil works in a Hydro-Electric project in Himachal Pradesh.

One of the Claimant’s claims in arbitration was additional costs incurred on account of increase in Minimum Wages. Amongst other grounds, it was the Petitioner’s contention, that the Claimant’s claim was based merely on a formula & not actual evidence.

The Court’s findings were as follows:

  1. To support this claim of additional costs, the Claimant had produced Statement-1 which was supported by muster rolls reflecting wage increase on unskilled labour (but not skilled and semi-skilled).
  2. Statement-2 was a calculation of total expenditure on labour, based on the premise that labour expenditure amounts to 10% of total work done. This 2nd statement made no reference on Statement 1.
  3. While Statement-2 used the words “actually paid”, the computation is only a mathematical derivation with no supporting evidence as to the actual labour. The amount shown was 77.26 Crores.
  4. Yet for the basis of the award of this claim, this amount, while being duly noted to be a mathematical calculation in the award, was taken as actual expenditure. In doing so, the Arbitral Tribunal acted without evidence.
  5. Apart from this even when viewed from another angle, when applying the price escalation (duly paid to the claimant) the total amounts to INR 78.75 Cr which was more than the expenditure claimed. As such this in itself would have been more than adequate compensation for the additional cost on account of minimum wage increase. However, the tribunal had applied some vague formulae to notionally reduce this amount to justify the additional award.

In view of the above, the Award was set aside, the Petition stood allowed.

Key observation of the Court was:

Entertaining financial claims based on novel mathematical derivations, without proper foundation in the pleadings and/or without any cogent evidence in support thereof can cause great prejudice to the opposite party.  Especially in the context of construction contracts where amounts involved are usually astronomical, any laxity in evidentiary standards and absence of adequate diligence on the part of an arbitral tribunal in closely scrutinizing financial claims advanced on the basis of mathematical derivations or adoption of novel formula, would cast serious aspersions on the arbitral process. The present case is an example where substantial liability has sought to be fastened on one of the contracting parties based on specious paper calculations. It cannot be overemphasized that arbitral tribunals must exercise due care and caution while dealing with such claims.”


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