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CBSE Questions for Class 12 Commerce Legal Studies Arbitration,Tribunal Adjudication And Alternate Dispute Resolution Quiz 1 - MCQExams.com
CBSE
Class 12 Commerce Legal Studies
Arbitration,Tribunal Adjudication And Alternate Dispute Resolution
Quiz 1
Legal phrases are followed by four meanings. Choose the most appropriate option:
'Animus possidendi' means:
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Intent to contract
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Intention to harm
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Intention to return
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Intention to possess.
Explanation
'Animus possidendi' means intention to possess. The concept of Intention to possess aims to have has been characterized as including "an adequate level of guardianship and control" and "a goal to exercise such care and control without anyone else sake and for one's very own advantage"
The pendency of any arbitral 'proceeding is not a pre-condition in exercise of power by court. The court may grant interim relief before or during arbitral proceedings or at anytime after making of the arbitral award before it is enforces. It was held in case of
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Om Prakash v. State of Littar Pradesh, AIR $$2010$$ Uttra $$64$$
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Global Co-generation Power Ltd. v. Shri Hirenyakeshi Sahkari Karkhana Niyamit, AIR $$2005$$ Kant $$94$$
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MCD v. Pradeep Oil Mills Pvt. "Ltd., AIR $$2010$$ Del $$119$$
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none of the above
Explanation
In the case of Global Congeneration Power Ltd. v. Shri Hirenyakeshi Sahkari Karkhana Niyamit, [AIR 2005 Kar 94], the question was regarding the awarding of interim award under section 9 of the Arbitration and Conciliation Act, 1996. It was held that under Section 41(b) of the Arbitration Act 1940, the Court had power to grant interim reliefs, for the purpose of, and in relation to arbitration proceedings. Section 41(b) was interpreted to mean that the Court could grant interim relief if the arbitration proceedings were pending before the arbitrator or before the Court. Pendency of any proceedings in the Court in relation to the arbitration was a precondition for the exercise of power by the Court to grant interim relief under Section 41(b) of the Arbitration Act, 1940.
Which one of the following is the most important item of expenditure of the Government of India on revenue account?
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Defence
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Subsidies
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Pensions
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Interest payments
Explanation
A revenue account includes all the revenue receipts also known as current receipts of the government. These receipts include tax revenues and other revenues of the government. Revenue expenditure includes expenses which are not used for the creation of assets or repayment of liabilities. These basically include the current expenses of the government. For example, pensions, giving subsidies, interest payments are instances of revenue expenditure. Out of these, interest payments which include interest payments on government debt-including long-term bonds, long-term loans, and other debt instruments--to domestic and foreign residents, is the most important.
The request for the correction or interpretation of the award by the arbitral Tribunal has to be made by the party:
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within sixty days
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within thirty days
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within ninety days
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none of the above
Explanation
Section 33 of the Act says that if the arbitral tribunal considers the request made by the parties for correction or interpretation of award to
be justified, it shall make the correction or give the interpretation within
thirty days from the receipt of the request and the interpretation shall form
part of the arbitral award.
Which article of the Constitution of India authorises the government to enter into an arbitration agreement:
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Art. $$235$$
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Art. $$299$$
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Art. $$39$$
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both (a) and (c)
Explanation
As per Article 299 of the Indian Constitution, all contracts made in the exercise of the executive power of the Union or of a State shall be expressed to be made by the President, or by the Governor of the State and all such contracts and all assurances of property made in the exercise of that power shall be executed on behalf of the President or the Governor by such persons and in such manner as he may direct or authorise.
Also, neither the President nor the Governor shall be personally liable in respect of any contract or assurance made or executed for the purposes of this Constitution, or for the purposes of any enactment relating to the Government of India, nor shall any person making or executing any such contract or assurance on behalf of any of them be personally liable.
This means article 299 lays down three conditions for making valid contracts in the exercise of
the executive power of the Center or a State:
The contract must be expressed to be made by the president or the Governor as
the case may be;
All contracts made in the exercise of the executive power are to be executed
on behalf of the President/Governor as the case may be; and
The execution must be by such person and in such manner as the President or
the Governor as the case may be, may direct or authorize.
From which source does money flow into the Consolidated Fund of India?
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Revenues
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Fresh loans
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Repayment of loans
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All the above
Explanation
All revenues received by Government by way of taxation like income-tax, central excise, custom, land revenue whereas other receipts flowing to Government in connection with the conduct of Government business like receipts from Railways, Posts, Transport etc. are credited into the Consolidated Fund.
All loans raised by Government by issue of Public notifications, treasury bills and loans obtained from foreign governments and international monetary institutions and all moneys received by Government in repayment of loans and interest thereon are also credited into this Fund.
All expenditure incurred by the Government for the conduct of its business including repayment of internal and external debt and release of loans to States/Union Territory Governments for various purposes is debited against this Fund.
Which statement is incorrect?
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Arbitration agreement is a kind of contract.
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Parties to the arbitration must be legal persons.
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Arbitration agreement recognises verbal agreement.
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Both (B) and (C) are incorrect
Explanation
An arbitration agreement, according to Section
$$7
$$ of the Arbitration and Conciliation Act,
$$1996
$$, means an agreement by the
parties which are legal persons such as an individual, body corporate or association of persons, to submit to arbitration all or certain disputes which have arisen or which may arise between them
in respect of a defined legal relationship, whether contractual or not. It can either be a part of an agreement or in form of a separate arbitration agreement. Section
$$7
$$ also specifies that the agreement must be in writing and not oral or verbal.
The provision of section $$8$$, Arbitration and Conciliation Act, $$1996$$ are ________________.
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pre-emptory
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directory
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discretionary
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optional
Explanation
The term 'pre-emptory' means not open to appeal and is final. 'Directory' means the provision is directing to do so and 'Discretionary' means based on the freedom to decide. Section $$8$$ of the Arbitration and Conciliation Act, $$1996$$ talks about power to refer parties to arbitration where there is arbitration agreement. This means it is peremptory in nature. It provides that a judicial authority shall, on the basis of the arbitration agreement between the parties, direct the parties to go for arbitration.
The validity of an arbitration agreement does not depend on the number of arbitrators specified therein, as the Act does not suggest the requirement of the number of arbitrators for an arbitration agreement: this was laid down in _____________.
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Orma Impex Pvt. Ltd. v. Nissuri Arb. Pte Ltd., AIR $$1999$$ SC $$2871$$
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Olympus Super Structures Pvt. Ltd. v. Meena Vijay Khetan, AIR $$1999$$ SC $$2102$$
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M.M.T.C. Ltd. v. Sterlite Industries(India) Ltd., AIR $$1997$$ SC $$605$$
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None of the above
Explanation
An arbitration agreement, according to Section $$7$$ of the Arbitration and Conciliation Act, $$1996$$, means an agreement by the
parties to submit to arbitration all or certain disputes which have arisen or which may arise between them
in respect of a defined legal relationship, whether contractual or not. It can either be a part of an agreement or in form of a separate arbitration agreement.
The validity of an arbitration agreement was challenged before the Supreme Court in the case of MMTC Ltd. v. Sterlite Industries (India) Ltd. on the grounds that arbitration clause could not be resorted to
and invalid in the light of section 10 of the
Act which provides that the parties are free to determine the
number of arbitrators provided that such number shall not be even number.
The Supreme Court rejected the plea and held that the relevant provision to
determine the validity of the arbitration agreement in section
$$7
$$, which
contains the writing requirement, and that there is no reference to number of
arbitrators within this provision, that the validity of the arbitration clause
does not depend on the number of arbitrators specified therein, and that the
arbitration clause was valid.
Which is correct statement?
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Institutional arbitration has its own set of rules.
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Indian Council of Arbitration is the apex body.
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The rules may provide for domestic or international arbitration or for both.
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All of the above
Explanation
1.An institutional arbitration is one in which a specialized institution with a permanent character intervenes and assumes the functions of aiding and administering the arbitral process, as provided by the rules of that institution. It is pertinent to note that these institutions do not arbitrate the dispute, it is the arbitrators who arbitrate, and only the rules of the institution apply.
2.The Indian Council of Arbitration was established in the year $$1965$$ as an apex arbitral organ at the national level to promote the amicable and quick settlement of industrial and trade disputes by arbitration. The Government of India, the Federation of Indian Chambers of Commerce and Industry, the other important Chambers of Commerce and trade associations in India as well as export promotion councils, public sector undertakings, companies and firms are in its membership.
3.The rules of arbitration does provide for domestic and international commercial arbitration or both which is governed by the provisions of Arbitration and Conciliation Act, $$1996$$.
The appointment of arbitrator/arbitrators, can be made _______________.
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by the parties
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by designated authority
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by arbitral institution
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Either (a) or (b) or (c)
Explanation
Appointment of arbitrators under Arbitration Act, $$1996$$ has been provided under Section $$11$$ of the act. Under this section, parties are free to agree on a procedure for appointing the arbitrator or arbitrators. If the parties fail to appoint any arbitrator by agreement, the arbitration will be with three arbitrators where each party shall appoint one arbitrator, and the two appointed arbitrators shall appoint the third arbitrator who shall act as the presiding arbitrator. If the parties fail to agree on the arbitrator within thirty days from receipt of a request by one party from the other party to so agree the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him or by an arbitral institution.
Section $$12(3)$$ provides the ground for challenging to the arbitrator when ___________.
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he is not independent or impartial
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he is a foreign national
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he is not qualified as per agreement between the parties
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Both (a) and (c)
Explanation
Section 12 provides for grounds of challenge the arbitrator. Under section 12(3) of the Act, an arbitrator may be challenged only if
circumstances exist that give rise to justifiable doubts as to his
independence or impartiality, or if h
e does not possess the qualifications agreed to by the parties.
Under section $$32$$, the principle of res judicata is applicable in:
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a case having reference to an arbitral Tribunal
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a suit in a court of law
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interim award made by the arbitral Tribunal
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only (a) and (b)
Explanation
Section 32 of the act says that t
he arbitral proceeding shall be terminated by the final arbitral award or
by all order of the arbitral tribunal.
The arbitral tribunal shall issue an order for the termination of the arbitral
proceedings where-
(a) The claimant withdraws his claim, unless the respondent objects to
the order and the arbitral tribunal recognizes a legitimate interest
on his part in obtaining a final settlement of the dispute,
(b) The parties agree on the termination of the proceedings as, or
(c) The arbitral tribunal finds that the continuation of the proceedings has for
any other reason become unnecessary or impossible.
An arbitral award may be set aside by the court if:
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the arbitral award is in conflict with the public policy of India
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the subject matter of dispute is not capable of settlement by arbitration under the law for the time being in force
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both (a) and (b) are incorrect
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both (a) and (b) are correct
Explanation
The second part of section 34 of the 1996 Act, provides that an arbitral award by the court if it finds that the subject-matter of the dispute is not capable of
settlement by arbitration under the law for the time being in
force, or t
he arbitral award is in conflict with the public policy of India.
Section $$34$$ of $$1996$$ Act is analogous to:
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section $$30$$ of $$1940$$ Act
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section $$28$$ of $$1940$$ Act
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section $$32$$ of $$1940$$ Act
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none of the above
Explanation
Section 34 of the 1996 Act, provides for the procedure for applying for setting side the arbitral award which contains ground for such application. This section is similar to section 30 of the 1940 Act, which provided for grounds for setting aside the award.
The Arbitral Tribunal shall rule _______________.
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at the direction of court
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on its own discretion
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at the instruction of parties
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as per provisions of General Clauses Act, $$1897$$:
Explanation
The Arbitral Tribunal is constituted on agreement between the parties but the tribunal has been given power under section $$16$$ of the Act to rule on its own discretion including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that purpose
an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract and
a decision by the arbitral tribunal that the contract is null and void shall not entail the invalidity of the arbitration clause.
In an arbitration by three arbitrators where the parties fail to agree upon appointment of arbitrators, under section $$11$$, Arbitration and Conciliation Act, $$1996$$.
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each party shall appoint one, and the two appointed arbitrators shall appoint the third arbitrator
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the claimant shall appoint two arbitrators and the disputant shall appoint one
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the disputant shall appoint two arbitrators and the claimant shall appoint one
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all the three, to be appointed by the Court
Explanation
Under Section 11 of the Arbitration and Conciliation Act, 1996 which provides for procedure of appointment of arbitrators; a person of any nationality may be an arbitrator, unless otherwise agreed
by the parties.
In case if the parties fail to reach an agreement regarding appointment of arbitrator, in an arbitration with
three arbitrators, each party shall appoint one arbitrator, and the two
appointed arbitrators shall appoint the third arbitrator who shall act as the
presiding arbitrator.
The expression 'costs' under section $$31$$ means reasonable costs relating to:
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fees and expenses of the arbitrators
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administration fees of the institution supervising the arbitration
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only (a)
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both (a) and (b)
Explanation
Under section 31(8) of the Act, for the purpose this section, “costs” means reasonable costs
relating to-
The fees and expenses of the arbitrators and witnesses,
Legal fees and expenses,
Any administration fees of the institution supervising the
arbitration, and
Any other expenses incurred in connection with the arbitral proceeding and the arbitral award.
The arbitral tribunal may by order terminate the arbitral proceedings _______________.
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when parties have mutually agreed to seek termination of arbitral proceedings
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when the claimant withdraws his disputed case and which is not objected by the respondent
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when the arbitral Tribunal thinks it is impossible to continue proceedings
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all of the above
Explanation
The arbitral tribunal can order to terminate the arbitral on the circumstances specified under section $$32$$ of the Act. These include:
(a) the claimant withdraws his claim, unless the respondent objects to the order and the arbitral tribunal recognises a legitimate interest on his part in obtaining a final settlement of the dispute,
(b) the parties agree on the termination of the proceedings, or
(c) the arbitral tribunal finds that the continuation of the proceedings has for any other reason become unnecessary or impossible.
The delay in making an application for setting aside the arbitral award under section $$34$$
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cannot be condoned
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can be condoned for a maximum period of $$30$$ days
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can be condoned for a maximum period of $$60$$ days
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can be condoned for a maximum period of $$90$$ days
Explanation
Section 34(3) of the Act provides that an application for setting aside may not be made after three months have
elapsed from the date on which the party making that application had
received the arbitral award
from the date on which that request had been disposed of by the
arbitral tribunal. In case when
the court is satisfied that the applicant was prevented by
sufficient cause from making the application within the said period of
three months it may entertain the application within a further period of
thirty days, but not after that.
Section $$53$$ talks about the arbitration agreement:
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in general
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in specific
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in simpliciter
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none of the above
Explanation
As per section 53 of the Act, “foreign award” means an arbitral award on
differences relating to matters considered as commercial under the law in force in
India made after the 28th day of July 1924, -
(a) In pursuance of an agreement for arbitration to which the Protocol set
forth in the Second Schedule applies, and
(b) Between persons of whom one is subject to the jurisdiction of someone of
such Powers as the Central Government, being satisfied that reciprocal
provisions have been made, may, by notification in the Official Gazette,
declare to be parties to the Convention set forth in the Third Schedule, and
of whom the other is subject to the jurisdiction of some other of the
Powers aforesaid, and
(c) In one of such territories as the Central Government, being satisfied that
reciprocal provisions have been made, may, by like notification, declare to
be territories, to which the said Convention applies, And for the purposes
of this Chapter, an award shall not be deemed to be final if any proceedings
for the purpose of contesting the validity of the award are pending in the
country in which it was made.
As per these provisions, the arbitration agreement here is talked about in unconditional sense and hence in simpliciter.
Section $$39$$ deals with:
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costs of arbitration
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fees for the arbitrators
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unpaid costs of arbitration
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none of the above
Explanation
Section 39 of the Arbitration and Conciliation Act, 1996 deals with lien i.e a right to keep possession of property belonging to another person until a debt owed by that person is discharged, on arbitral awards. It says that the arbitral tribunal shall have a lien
on the arbitral award for any unpaid costs of the arbitration.
Section $$38$$ deals with:
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unpaid costs of arbitration
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fixation of the costs of an arbitration
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both (a) and (b)
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none of the above
Explanation
Section 38 of the act talks about deposits to be made as cost of arbitration. It states that the arbitral tribunal may-fix the amount of the deposit or supplementary
deposit as an advance for the costs
which it expects will be incurred in respect of the
claim submitted to it. If there is a
counter-claim that has been
submitted to the arbitrat tribunal, it may fix separate amount of deposit for
the claim and counter claim.
Under section $$34$$, misconduct in proceeding means:
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proceeding ex prlrte without sufficient cause
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improper rejection of evidence
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both (a) and (b)
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only (a)
Explanation
As per Section 34 of the Act, grounds for application to set aside the arbitral award has been provided. But there are certain unstated grounds of setting aside the awards such as any misconduct in proceedings of arbitration. Such misconducts in proceedings include any arbitral proceedings is carried on ex-parte i.e. without party or parties without any sufficient cause to the same. Also in case if evidence was rejected in improper manner, it amounts to misconduct of proceedings.
The expression 'foreign award' is defined under:
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section $$41$$
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section $$42$$
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section $$44$$
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section $$40$$
Explanation
Part II of the Arbitration Act, 1996 deals with enforcement of the foreign awards. Chapter I of this part deals with New York Convention. Section 44 of the act defines foreign award as an arbitral award on differences between persons arising out of
legal relationships, whether contractual or not, considered as commercial under
the law in force in India, made on or after the 11th day of October, 1960.
Under section $$48$$, 'contrary to public policy of 'India' connotes _______________.
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interests of India
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justice or morality
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fundamental policy of Indian Law
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all of the above
Explanation
As per section 48 of the Act, an award is said to be in conflict with the public policy of India if it has been affected by fraud or corruption; or it was in violation of the of the Act; or it was in contravention with the fundamental policy of Indian law or basic principles of morality or justice.
Part II of the Act deals with _____________.
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New York Convention awards
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Concilliation
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None of the above
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both (A) and (B)
Explanation
Part II of the Arbitration and Conciliation Act, 1996 deals with execution of certain foreign awards which includes New York Convention Awards as well as Geneva Convention Awards. Conciliation on the other hand is dealt with part III of the Act. Hence, the most appropriate option is New York Convention awards.
Delay in making an application for setting aside the arbitral award
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can be condoned under section $$5$$ of Limitation Act
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cannot be condoned by invoking section $$5$$ of Limitation Act
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may be condoned under section $$5$$ of Limitation Act as per discretion of the Court
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only (a) and not (b) or (c)
Explanation
Section 34(3) of the Act provides that an application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award from the date on which that request had been disposed of by the arbitral tribunal. In case when the court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not after that
Section $$48$$ lays down the provisions for:
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foreign award
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power of judicial authority to refer parties to arbitration
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binding effect of foreign award
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conditions for enforcement of foreign awards
Explanation
Section 48 of the Arbitration and Conciliation act, 1996, provides for conditions required for the enforcement of foreign award. The conditions include:
A foreign award may not be enforced in India if it is proved by the party against whom it is sought to be enforced that:
the parties to the agreement were under some incapacity to perform under the law to which they were subjected to and in the absence of any mention of such law, the law of the country where the award was made, i.e. the place of arbitration, or,
the agreement was invalid under the law to which the parties have subjected it and in the absence of any mention of such law, the law of the country where the award was made, or,
a fair trial was not conducted by the tribunal passing the award by failing to adhere to the principles of fair hearing, or,
the award passed was partly or wholly beyond the scope of the arbitration agreement, in which case the part of the award exceeding the scope of submission to arbitration may be separated from rest of the award, or,
the composition of the arbitral tribunal or authority and/or the procedure of its appointment was not in accordance with the arbitration agreement or in the absence of any mention of the same in the agreement, it was not in accordance with the law of the country where the arbitration proceedings were held, i.e. the place of arbitration, or,
the award has not yet been made binding on the parties or has been set aside or suspended by a competent authority of the country which is either the place or seat of arbitration.
the settlement of the award is not as per Indian arbitration laws, or the enforcement of the award is contrary to the public policy of India.
An award is said to be in conflict with the public policy of India if it has been affected by fraud or corruption; or it was in violation of the of the Act; or it was in contravention with the fundamental policy of Indian law or basic principles of morality or justice.
Section $$41$$ deals with:
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provision in case of insolvency
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provision in case of death
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provision in case of minor
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none of the above
Explanation
As per provisions of section 41 of the act, where it is provided by a term in a contract to which an insolvent is a
party that any dispute arising there out or in connection therewith shall be
submitted to arbitration, the said term shall, if the receiver adopts the
contract, be enforceable by or against him so far as it relates to any such
dispute. Also, w
here a person who has been adjudged an insolvent had, before the commencement of the insolvency proceedings, become a party to an arbitration agreement, and any matter to which the agreement applies is required to be determined in connection with, or for the purposes of, the insolvency proceedings, then any other party or the receiver may apply to the judicial authority having jurisdiction in the insolvency proceedings for an order directing that the matter in question shall be submitted to arbitration in accordance with the arbitration agreement
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