Daneil Proprietary v. Ministry of Defence.

FACTS
The Ministry of Defence, Government of India (MoDS) placed an order on Denel Proprietary
Limited (Denel) for the supply of certain units of an equipment. Some of the units supplied
by Denel were rejected by MoD. Subsequently, MoD put hold to all the contracts with Denel.
Denel contended that the rejected units failed due to the use of improper items by MoD.
Disputes arose. Clause 19(4), the arbitration clause in the contract, provided:
"All the disputes and difference arising out of or in any way touching or concerning the
agreement (matters for which the decision of a specific authority as specified in the
contract shall be final under this agreement, shall not be subject to arbitration) shall be
referred to the sole arbitration of the Director General, Ordnance Fys. Govt. of India
for the time being or a Government servant appointed by him. The appointee shall not
be a Govt. Servant who had dealt with the matters to which this agreement relates and
that in the course of his duties as Govt. Servant has had not expressed views on all or
any of the matter is in dispute or difference. In case the appointed Govt. Servant in
place of the incumbents."

Apprehending bias, Denel wrote to the arbitrator invoking Section 14 of the 1996 Act and
terminating the mandate of the arbitrator. The arbitrator nevertheless proceeded with the
arbitration. Consequently, Denel applied to the District Court which terminated the mandate
of the arbitrator and ordered the Director General, Ordnance Factory, Govt. of India to either
act as the arbitrator or nominate the arbitrator as per the contract. The Director General,
Ordnance Factory, Govt. of India did not take any action pursuant to the said direction within
thirty days. Hence, Denel approached the Supreme Court of India under Section 11(6) of the
1996 Act on 02.03.2011 for the appointment of an independent arbitrator.

Brief Facts
When disputes arose out of a Collaboration agreement entered into by the parties, Karmayogi
Shelters Pvt. Ltd (M/s Karmayogi) approached the Delhi High court to appoint a Sole
arbitrator u/s 11 of the Arbitration and Conciliation Act 1996( 1996 Act). Accordingly, a
Sole arbitrator was appointed by the High Court to resolve the disputes. After considering the
materials brought on record, the Sole arbitrator passed an award holding that M/s Karmayogi
had committed breach of the terms of Collaboration Agreement and directed Benarsi
Committee to refund the sum of Rs 41 lakhs received from M/s Karmayogi. The award was
passed on 12th May 2004 and a duly signed copy of the award was received by Advocate of
M/s Karmayogi on 13th May 2004. However, M/s Karmayogi received the copy of the signed
award only in December 2004 and in February 2005, they filed an application u/s 31 (5) and
34 of 1996 Act to set aside the award.

Assesment criteria for marking the Arbitration Exercises

Students Must:

Specific Outcomes:

Students must demonstrate that, given a

set of facts they can identify the nature
of a disputes and the path that the
conflict has followed and then indicate,
with reasons, the substantive provisions
of law applicable to the same.

The ability to analyze a conflict

situation by determining issues
and to identify the provisions
relating to arbitration Act and and
demonstrate adequate knowledge
of Law governing Arbitration.

Students must be able to identify core

issues from the evidence; probe and
clarify issues; apply the law of evidence

Ability to appreciate application

of procedural law, such as the
Evidence Act.

Students must participate in arbitration

exercises and based on documents ask
relevant questions within the framework
of accepted norms, for example not
asking leading question in examination
in chief.

Be able to appreciate and admit

relevant documents based on rules
of evidence. question witnesses
effectively in the adducing of their
evidence, both in examination in
chief and in cross-examination.

Students must be able to summarize

facts and the evidence, determine with
reasons what evidence is relevant and
reliable and what evidence is not
relevant or not reliable; and write an
award.

Be able to write an award and

chair a hearing effectively.

Ability to understand the scheme of

Arbitration as an ADR mechanism
and to expeditiously and effectively
dispose of case on hand.

To
demonstrate
that
time
management is the essence of any
Arbitration proceedings.