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Arbitration & Commercial LawSupreme Court of India

Nirmal Software Services Pvt. Ltd. v. Dr. Babasaheb Ambedkar Marathwada University & Ors.

Special Leave Petition (Civil) · 2019 INSC 739Decided 9 Jul 2019
Special Leave Petition (Civil) No. 30863 of 2018
Justice Abhay Manohar Sapre · Justice Indu Malhotra

Background

The petitioner company had entered into a Memorandum of Understanding (MoU) with the respondent university to provide web-enabling services, with a clause requiring any disputes to go to arbitration at Aurangabad. When the university kept a purchase order in abeyance, the petitioner approached the Bombay High Court (Aurangabad bench) instead of arbitration, seeking payment. The High Court dismissed the writ petition because the MoU's arbitration clause had to be given effect to, and the petitioner then appealed to the Supreme Court.

Decision Breakdown

During the hearing, the petitioner's counsel agreed to refer the dispute to arbitration as per the MoU, and both parties jointly requested the appointment of a named retired Bombay High Court judge as the Sole Arbitrator. The Supreme Court appointed that retired judge as Sole Arbitrator, subject to the usual independence/impartiality declarations under Section 12 of the Arbitration and Conciliation Act, 1996, fixed Aurangabad as the seat of arbitration (as per the MoU), and directed the arbitration to be completed within 12 months with fees as per the Fourth Schedule of the Act.

Lesson Learnt

When a contract contains a valid arbitration clause, courts will generally insist that disputes go through arbitration rather than ordinary litigation, and once parties agree in court to arbitrate, the court will simply facilitate (e.g., appoint the arbitrator) rather than decide the underlying dispute itself.

Nirmal Software Services Pvt. Ltd. v. Dr. Babasaheb Ambedkar Marathwada University & Ors. – Legal Case Shots | LegalAware