Wednesday, 2 October 2019

Whether writ petition is maintainable against interlocutory order of arbitrator?

 In Patel Engineering Ltd. (supra), the Constitution Bench of the Hon'ble Supreme Court has observed that interlocutory orders made by the Arbitrator cannot be subjected to challenge under Article 226 or 227 of the Constitution of India. Such intervention by the High Courts was held to be not permissible as the object of minimizing judicial intervention when the process of arbitration was going on would be defeated by entertaining such challenge at an interlocutory stage. It was further observed that once arbitration proceedings had commenced, the parties would have to wait until the award was pronounced after which the remedy under Section 37 of the Arbitration and Conciliation Act, 1996 could be availed of.

IN THE HIGH COURT OF BOMBAY (NAGPUR BENCH)

Writ Petition No. 316/2019

Decided On: 25.03.2019

Space Wood Office Solution Pvt. Ltd. Vs. Anupam Rai Construction

Hon'ble Judges/Coram:
A.S. Chandurkar, J.

Citation: 2019(5) MHLJ 356


1. RULE. Rule made returnable forthwith. The writ petition is heard finally with consent of the learned counsel for the parties.

2. By this writ petition filed under Article 227 of the Constitution of India, the petitioner seeks to challenge the orders dated 21.12.2018 and 05.01.2019 passed by the sole Arbitrator in arbitration proceedings between the parties. The order dated 21.12.2018 has been passed on an application seeking production of certain documents while the order dated 05.01.2019 has been passed on an application seeking framing of issues.

3. A preliminary objection has been raised by Shri S.C. Mehadia, learned counsel for the respondent to the maintainability of the writ petition. Placing reliance on the decision of the Constitution Bench in S.B.P. & Co. Versus Patel Engineering Ltd. [MANU/SC/1787/2005 : (2005) 8 SCC 618], it was submitted that it has been held in clear terms that judicial intervention when the process of arbitration was going on ought to be minimal and challenge to interlocutory orders of the present nature ought not to be entertained. Reference is also made to the judgment of learned Single Judge in Amar Tea Distributors Versus Coca-Cola India Pvt. Ltd. [MANU/MH/1363/2016] as well as the judgment of the Karnataka High Court in Radiant Infosystems Limited Versus The Karnataka State [MANU/KA/3644/2018 : AIR 2019 Kar 6]. According to the learned counsel, the remedy of challenging the award if passed against the petitioner was available and this Court ought not entertain the writ petition.

4. Shri A.M. Sudame, learned counsel for the petitioner however submitted that the power of superintendence conferred by Article 227 of the Constitution of India cannot be overlooked and that the correctness of the impugned orders can be taken into consideration. Placing reliance on the decision in L. Chandra Kumar Versus Union of India & Others [MANU/SC/0261/1997 : 1997(2) Mh. L.J. 198 (SC)], it was submitted that the power to exercise judicial superintendence over decisions of all Courts and Tribunals was part of basic structure of the Constitution and hence this Court cannot be called upon not to entertain such challenge as raised. He also referred to the decision in Management Committee of Montfort Senior Secondary School Versus Vijay Kumar & Others [MANU/SC/0556/2005 : (2005) 7 SCC 472] to urge that orders passed by the Tribunal could be subjected to judicial review under Article 227 of the Constitution of India. He then referred to the judgment of the learned Single Judge in M/s. Sanwal Coal Carriers Versus Western Coalfields Limited & Others [MANU/MH/0574/2010] to urge that a somewhat similar objection raised therein was not accepted and this Court had entertained a challenge to an interim order passed by the Arbitrator. It was thus submitted that the correctness of the impugned orders be adjudicated upon.

In reply, it was submitted by the learned counsel for the respondent that the decision in M/s. Sanwal Coal Carriers (supra) has been considered by another learned Single Judge in Milind Dattatraya Mahajan & Others Versus Pramod Deshraj Budhraja [MANU/MH/2479/2018 : AIR 2018 Bombay 272] and said decision has been rightly distinguished.

5. I have heard the learned counsel for the parties at length and I have given due consideration to their respective submissions. It is not in dispute that pursuant to an agreement between the parties an Arbitrator has been appointed to resolve the disputes amongst them. In proceedings before the Arbitrator, the petitioner herein had filed two applications, one seeking production of certain documents and another seeking framing of certain issues. As noted above, the sole Arbitrator has adjudicated upon those applications and the petitioner has sought to challenge that adjudication. The final award is yet to be passed and the Arbitrator is seized of the arbitration proceedings.

6. In Patel Engineering Ltd. (supra), the Constitution Bench of the Hon'ble Supreme Court has observed that interlocutory orders made by the Arbitrator cannot be subjected to challenge under Article 226 or 227 of the Constitution of India. Such intervention by the High Courts was held to be not permissible as the object of minimizing judicial intervention when the process of arbitration was going on would be defeated by entertaining such challenge at an interlocutory stage. It was further observed that once arbitration proceedings had commenced, the parties would have to wait until the award was pronounced after which the remedy under Section 37 of the Arbitration and Conciliation Act, 1996 could be availed of. Following aforesaid decision, the Hon'ble Supreme Court in Lalitkumar V. Sanghavi (Dead) Thr. LRs Neeta Lalit Kumar Sanghavi & Another Versus Dharamdas V. Sanghavi & Others [MANU/SC/0166/2014 : (2014) 7 SCC 255] reiterated that the scope for interference under Article 227 of the Constitution of India was limited in matters of such nature. In that case, an application invoking Section 11 of the Act of 1996 came to be dismissed holding the same to be not maintainable. It was observed by the High Court that the remedy was in invoking the jurisdiction under Article 226 of the Constitution of India. The Hon'ble Supreme Court referring to its earlier judgment in Patel Engineering Ltd. held that the aforesaid view of the High Court was not in accordance with law and set aside the same.

7. The ratio of the decision in Patel Engineering Ltd. (supra) has been followed in Amar Tea Distributors (supra) and a writ petition challenging an order passed by the sole Arbitrator with regard to termination of the proceedings was not entertained. The Division Bench of the Karnataka High Court in Radiant Infosystems Ltd. has also followed the aforesaid law and did not entertain the writ petition seeking to challenge an order passed by the Arbitrator in the matter of rejection of an application seeking permission to produce additional documents. It is thus clear that the ratio of the decision in Patel Engineering Ltd. (supra) precludes entertaining a challenge to an interlocutory order by invoking jurisdiction under Article 227 of the Constitution of India. Even though the power of the High Courts to exercise judicial superintendence over decisions of all Courts and Tribunals forms the part of basis structure of the Constitution, same cannot justify interference at an interlocutory stage as sought to be urged. Moreover, the Tribunal referred to in Management Committee of Montfort Senior Secondary School (supra) was the Tribunal constituted under provisions of Section 11 of the Delhi School Education Act, 1973 and not an arbitral Tribunal.

8. The ratio of the decision in M/s. Sanwal Coal Carriers (supra) wherein a challenge to an interim report of the Arbitrator was entertained cannot be applied to the case in hand. The facts of that case indicate that the learned Single Judge therein found that if the error in question that had arisen therein was not corrected at that stage, the same would be to the prejudice of all the parties. The aforesaid decision has been distinguished in Milind Dattatraya Mahajan & Others (supra) by observing that the ratio of the decision in M/s. Sanwal Coal Carriers Limited (supra) was restricted to the facts of that case in the light of the interim report submitted by the Arbitrator therein. It was further observed that interlocutory orders cannot be subjected to challenge during pendency of the arbitration proceedings. I am in respectful agreement with the observations of the learned Single Judge in Milind Dattatraya Mahajan & Others (supra). As noted above, the orders under challenge relate merely to production of certain documents and framing of an additional issue. Such challenges are purely of an interlocutory nature and same can be raised in proceedings under Section 37 of the Act of 1996 if the need so arises.

9. In that view of the matter, I am not inclined to entertain the writ petition. By keeping the challenge as raised to the impugned orders open for being raised after the award is passed, the writ petition is not entertained. Same is disposed of as such. The parties shall bear their own costs.


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