Whether any order passed by arbitral tribunal during arbitration can be challenged under Article 226 or 227 of Constitution?

 Having heard learned counsel for the parties
at length, we find that the judgment of the High
Court is liable to be set aside on one ground alone.
The High Court entertained a writ petition under
Article 227 of the Constitution of India against an
order of the learned District Judge, Gautam Budh
Nagar purportedly passed under Section 20 of the
Arbitration and Conciliation Act, 1996(for short,
"the Arbitration Act") read with Section 19 of the
Micro, Small & Medium Enterprises Development Act,
2006 (for short, "the MSME Act"). This application
was made to the District Judge by respondent No. 1-
Jayprakash Associates Ltd. against a partial award
made under Section 16 of the Arbitration Act. Such
an application was not tenable vide Section 16 (6) of
the Arbitration Act. Since such an application was
not tenable, we fail to understand how in a writ

petition filed against an order made by the District
Judge in an untenable application, the High Court
could have set aside the partial award. This is
clearly contrary to law. This court in the case of
SBP & Co. vs. Patel Engineering Ltd. & Anr., reported
in (2005) 8 SCC 618 in Paragraph No. 45 held as
follows.
"45.It is seen that some High Courts
have proceeded on the basis that any
order passed by an arbitral tribunal
during arbitration, would be capable
of being challenged under Article 226
or 227 of the Constitution of India.
We see no warrant for such an
approach. Section 37 makes certain
orders of the arbitral tribunal
appealable. Under Section 34, the
aggrieved party has an avenue for
ventilating his grievances against
the award including any in-between
orders that might have been passed by
the arbitral tribunal acting under
Section 16 of the Act. The party
aggrieved by any order of the
arbitral tribunal, unless has a right
of appeal under Section 37 of the
Act, has to wait until the award is
passed by the Tribunal. This appears
to be the scheme of the Act. The
arbitral tribunal is after all, the
creature of a contract between the
parties, the arbitration agreement,
even though if the occasion arises,
the Chief Justice may constitute it
based on the contract between the
parties. But that would not alter the
status of the arbitral tribunal. It
will still be a forum chosen by the
parties by agreement. We, therefore,
disapprove of the stand adopted by
some of the High Courts that any
order passed by the arbitral tribunal

is capable of being corrected by the
High Court under Article 226 or 227
of the Constitution of India. Such an
intervention by the High Courts is
not permissible."
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 7117-7118 OF 2017

M/S. STERLING INDUSTRIES Vs JAYPRAKASH ASSOCIATES LTD.

Dated:JULY 10,2019.

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Whether court can suo motu remand case to arbitral tribunal after setting aside arbitral award?

On the aspect of remand of the proceedings as ordered by the learned Principal District Judge, it is found that said direction is contrary to the provisions of Section 34(4) of the said Act as well as the law as laid down in Kinnari Mullik and another (supra). It has been held in the aforesaid decision that the limited discretion available to the Court under Section 34(4) of the said Act can be exercised only if a written application is made by a party to the arbitration proceedings before passing of the award. Said power cannot be exercised suo-motu by the Court after the award has been set aside. By the impugned order, the award has been set aside and the proceedings have been remanded to the Arbitrator for fresh adjudication. Such course is not permissible in view of the aforesaid law as laid down. That direction issued by the learned Principal District Judge to that effect is thus liable to be set aside.

IN THE HIGH COURT OF BOMBAY (NAGPUR BENCH)

Arbitration Appeal No. 3 of 2017

Decided On: 07.09.2018

 Chandrashekar Vs. Yogi Construction and Ors.

Hon'ble Judges/Coram:

A.S. Chandurkar, J.

Citation: 2019(1) MHLJ 628

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Whether issues with regard to accord and satisfaction of claims or existence of dispute would be decided by Arbitral Tribunal?

Where there is contestation or the decision rendered by the General Manager leaves scope for argument as to whether

the claims lodged by a Contractor can be categorized as Notified Claims is best left to the Arbitral Tribunal. In other words, except for the situation where there is no doubt that the claims were not lodged with the Engineer and the Site Engineer as required under Clause 6.6.1.068 read with 6.6.3.069, the matter would have to be left for resolution by Arbitral Tribunal. II) Aspects with regard to accord and satisfaction of the claims or where there is a dispute will also have to be left to the Arbitral Tribunal. The position in law in this regard remains the same both pre and post amendment brought about in the 1996 Act after 23.10.2015. III) After the insertion of Subsection (6A) in 11 of the 1996 Act the scope of inquiry by the Court in a Section 11 petition, (once it is satisfied that it has jurisdiction in the matter) is confined to ascertaining as to whether or not a binding arbitration agreement exists qua the parties before it which is relatable to the disputes at hand.

IV) The space for correlating the dispute at hand with the arbitration agreement is very narrow. Thus, except for an open and shut case which throws up a circumstance indicative of the fact that a particular dispute does it not fall within the four corners of the arbitration agreement obtaining between the parties the matter would have to be resolved by an Arbitral Tribunal. In other words, if there is contestation on this score, the Court will allow the Arbitral Tribunal to reach a conclusion on way or another. This approach would be in

68 Supra 9, Page 8 69 Supra 7, Page 8

keeping with the doctrine of Kompetenz Kompetenz; a doctrine which has statutory recognition under Section 16 of the 1996 Act. 

 IN THE HIGH COURT OF DELHI AT NEW DELHI

Judgment pronounced on: 08.02.2019

 ARB.P. 115/2018

NCC LIMITED Vs   INDIAN OIL CORPORATION LIMITED 

CORAM:

HON'BLE MR. JUSTICE RAJIV SHAKDHER

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Whether arbitration tribunal can be constituted contrary to terms of arbitration agreement?

 A perusal of the arbitration clause reveals that the same contemplated the appointment, only of a Sole Arbitrator, by the Respondent. It is indeed strange as to how a three member tribunal came to be constituted by the Respondent. The Respondent appears to have "played safe" in the words of the learned counsel for the Respondent. There is, however, nothing on record to show that the Petitioner indeed demanded for constitution of a three member tribunal. It is nigh possible that the Respondent decided to adopt a fair attitude by appointing a three member tribunal, however, if a three member tribunal had to be appointed, then the same ought to have been done with the consent of the Petitioner and in accordance with the provisions of the Act. The arbitration agreement, as per the 1996 Act, has to be in writing and since the arbitration clause, which is a part of the contract, was in writing, the same could not have been superseded by any oral demand or agreement. The Petitioner may have been clever in orally demanding a three member tribunal but it is clear that the procedure adopted by the Respondent is impermissible. The Petitioner having raised its objection at the initial stage itself to the constitution of the tribunal but the tribunal having proceeded further with the matter, the Petitioner is entitled to challenge the said constitution at this stage by raising its objections under Section 34. If, as per the clause, a Sole Arbitrator was to be appointed, then only a Sole Arbitrator could have been appointed. It appears that the so called safe approach has, in fact, proved to be dangerous for the Respondent as the appointment of three arbitrators by the Respondent was not contemplated in the agreement. The Petitioner has rightly relied upon Prime Industries Ltd. v. SEIL Ltd., MANU/DE/1507/2010 : 2010 Law Suit (Del) 996 which holds that the will of the parties, as reflected in the agreement, has to prevail. Relevant portion of the judgment is quoted below:

"..................

[10] We are unable to persuade ourselves to agree with the view taken by the learned Single Judge. It is trite to say that the will of the parties as reflected in the agreement must prevail in case of constitution of an Arbitration Tribunal.

IN THE HIGH COURT OF DELHI

O.M.P. (COMM) 136/2017

Decided On: 27.08.2018

Mother Boon Foods Pvt. Ltd. Vs. Mindscape One Marketing Pvt. Ltd.

Hon'ble Judges/Coram:

Prathiba M. Singh, J.

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Whether arbitration award can be set aside on ground of breach of fundamental policy of Indian law?

The appellant invited our attention to the dictum in VHCPL-ADCC Pingalai Infrastructure Pvt. Ltd., (supra). In that case, the Court considered the question whether the petitioner had preferential right to match the lowest bid without pre-qualifying or participating in the bidding process. In that case, Article 14.1(c) of the concession agreement stipulated that the respondent No. 1 could invite proposals from eligible persons for capacity augmentation of the project which required the petitioner to give an option to submit its proposal. The Court after noticing the precedents on the relevant aspects, went on to observe that if the concessionaire chose not to submit its proposal, it did not have the right to match the preferred offer as would be the case of the respondent herein, in view of the express stipulation in the tender documents requiring the respondent to participate in the bidding process. The appellant has also placed reliance on the decision in Raj West Power Limited, (supra). We agree with the respondent that this decision does not lay down any principle which may have any bearing on the case in hand.

28. In view of the above, we have no hesitation in concluding that the decision of the Arbitral Tribunal as confirmed by the High Court, falls foul of the fundamental policy of Indian law and cannot be countenanced.

In the Supreme Court of India

(Before Dipak Misra, C.J. and A.M. Khanwilkar and D.Y. Chandrachud, JJ.)

National Highways Authority of India

v.

Gwalior Jhansi Expressway Limited 

Civil Appeal No. 3288 of 2018

Decided on July 13, 2018

The Judgment of the Court was delivered by

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Whether parties can exclude jurisdiction of any court by arbitration agreement?

Supreme Court in the case of Indus Mobile has indeed laid down as a matter of law that any agreement between the parties as to the seat of arbitration is in the nature of an exclusive jurisdiction clause. This exclusive jurisdiction cause would then oust the jurisdiction of any other court having concurrent jurisdiction. Further, such exclusive jurisdiction clause would forbid Section 42 having any play for the purpose of determination of jurisdiction of the Court. As held by the Supreme Court in the case of State of West Bengal Vs. Associated Contractors MANU/SC/0793/2014 : (2015) 1 Supreme Court Cases 32, where the agreement between the parties restricted jurisdiction to only one particular court out of courts having concurrent jurisdiction, that court alone would have jurisdiction, since neither Section 31(4) nor Section 42 contains a non obstante clause wiping out a contrary agreement between the parties. In other words, if there is a contrary agreement between the parties conferring exclusive jurisdiction on one particular court, it is that court and that court alone which will entertain any challenge to an arbitral award. There is no difficulty thus far. The difficulty arises when we come to consider whether or not there is indeed a seat of arbitration fixed or agreed between the parties in the present case. It is important to note that a seat of arbitration, as observed by the Supreme Court in case of Indus Mobile, is a place chosen by or on behalf of the parties; it is designated either in the arbitration agreement or in the terms of the reference or reflected in the minutes of proceedings or in some other way as "place or seat of arbitration". As far as the agreement between the parties in the present case is concerned, there is indeed no place of arbitration chosen. If at all, the agreement points to a seat outside Mumbai inasmuch as the jurisdiction to arbitrate, under the agreement, is conferred on the Commissioner of Municipal Corporation for the cities of Kalyan & Dombivli, whose seat is indisputably beyond the city of Mumbai. Mr. Chinoy, learned Senior Counsel appearing for the Petitioner, however, submits that in the face of this agreement, when this Court was approached under Section 11 of the Act, an independent arbitrator was chosen. It is submitted that this Arbitrator held the proceedings of the reference in Mumbai, with the concurrence of the parties and also declared his award in Mumbai. Learned Counsel submits that there being nothing contrary either in the agreement or in the minutes of proceedings or otherwise, the very fact that the meetings in the arbitration reference were held, and the award was made, in Mumbai, fixes the seat of arbitration in Mumbai. I am afraid that is not a correct way of ascertaining the seat of arbitration. The seat of arbitration, in the context of fixation of jurisdiction of the curial Court, is not the same as the venue where the arbitral forum held its sittings or the place where it made its award. In fact, there is a well known distinction between the venue of arbitration and seat of arbitration. Even if the parties by their contract designate any place as the seat of arbitration, the arbitral forum is free to hold sittings at any place other than the seat of arbitration. For that matter, all sittings can be held and even an award can be made, at a location outside the place of seat of arbitration. In the face of this distinction, the simple fact of conduct of arbitration reference or making of an award at a particular place, in this case, Mumbai, is neither here nor there. In the present case, the seat of arbitration having not been designated either in the contract between the parties or in the terms of the reference or in the minutes of proceedings or otherwise, the city of Mumbai cannot be termed as the seat of arbitration, going by the sheer conduct of meetings in the reference there. Even there, as a matter of fact, it is not disputed that some of the meetings in the arbitration references were actually held in Thane, within the jurisdiction of the District Court at Thane, though even that fact, on the reasoning discussed above, is hardly relevant.

5. In the premises, the combined effect of the law laid down by the Supreme Court in the cases of Indus Mobile and Associated Contractors (supra), does not imply ouster of jurisdiction of the District Court at Thane. As noted above, it is not in dispute that the cause of action did arise in Thane and application/s under Part-I was/were infact made before the Court at Thane prior to the present arbitration petitions. The District Court at Thane, accordingly, has curial jurisdiction over the award within the meaning of Section 42 read with Section 2(1)(e) of the Act. It is the only Court to exercise jurisdiction in any challenge to the arbitral award, and not this Court.

IN THE HIGH COURT OF BOMBAY

Arbitration Petition No. 372 of 2016, Notice of Motion (L) No. 1302 of 2016, Miscellaneous Application No. 193 of 2016 and Arbitration Petition No. 373 of 2016

Decided On: 05.07.2017

 Municipal Corporation for the city of Kalyan & Dombivli

Vs. Rudranee Infrastructure Ltd.

Hon'ble Judges/Coram:

S.C. Gupte, J.

Citation: 2017(6) MHLJ 753

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Whether court has power to remand case to arbitral tribunal?

On a bare reading of this provision, it is amply clear that the Court can defer the hearing of the application filed Under Section 34 for setting aside the award on a written request made by a party to the arbitration proceedings to facilitate the Arbitral Tribunal by resuming the arbitral proceedings or to take such other action as in the opinion of Arbitral Tribunal will eliminate the grounds for setting aside the arbitral award. The quintessence for exercising power under this provision is that the arbitral award has not been set aside. Further, the challenge to the said award has been set up Under Section 34 about the deficiencies in the arbitral award which may be curable by allowing the Arbitral Tribunal to take such measures which can eliminate the grounds for setting aside the arbitral award. No power has been invested by the Parliament in the Court to remand the matter to the Arbitral Tribunal except to adjourn the proceedings for the limited purpose mentioned in Sub-Section 4 of Section 34. This legal position has been expounded in the case of McDermott International Inc. (supra). In paragraph 8 of the said decision, the Court observed thus:

8..... parliament has not conferred any power of remand to the Court to remit the matter to the arbitral tribunal except to adjourn the proceedings as provided under Sub-section (4) of Section 34 of the Act. The object of Sub-section (4) of Section 34 of the Act is to give an opportunity to the arbitral tribunal to resume the arbitral proceedings or to enable it to take such other action which will eliminate the grounds for setting aside the arbitral award.
The Division Bench of the High Court of Karnataka in the case of Bhaskar Industrial Development Limited (Supra) has expounded that the power of the Court Under Section 34 of the Act is not to remand the matter to the Arbitral Tribunal after setting aside the arbitral award.

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 5172 of 2017 (Arising out of SLP (Civil) No. 2370 of 2015)

Decided On: 20.04.2017

 Kinnari Mullick and Ors.Vs. Ghanshyam Das Damani

Hon'ble Judges/Coram:

Dipak Misra, A.M. Khanwilkar and Mohan M. Shantanagoudar, JJ.

Citation:AIR 2017 SC 2785,(2018) 11 SCC328

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Whether arbitrator can initiate contempt of court proceeding?

Though the Court is not separately defined under the Contempt of Courts Act, it is considered as a "Court" within the meaning of the Court defined under Section 2(e) of the Arbitration andConciliation Act, 1996. Under Section 2(d) of the Act, the "Arbitral Tribunal" is defined as "a sole arbitrator or a panel of arbitrators". Under Section 2(e) of the Act, a "Court" is defined as follows :

Sec.2(e): "Court" means the principal civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not include any civil Court of a grade inferior to such principal civil Court, or any Court of Small Causes".

Thus, this clearly shows that Arbitral Tribunal is not a Court and thus meaning of the Court for the purpose of contempt of Courts Act is to be restricted the definition of Court under Section 2(e) of the Act stricto-sensu and therefore the violation of the orders of Arbitrator unless it is specified can not be subjected under the Contempt of Courts Act.

Bombay High Court

Smt. Alka Chandewar vs Shamshul Ishrar Khan on 27 October, 2015

Bench: Mridula Bhatkar

 Citation;2016(2)ALLMR 734

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Whether arbitral Tribunal can enforce its own order by appointing Advocate Commissioner/Receiver?

 To sum up the discussions as above, it has to be declared


that the Arbitral Tribunal cannot pass an order to enforce its order by



directing the Advocate Commissioner/Receiver to repossess the


vehicle from the opposite party. It is made clear that the Advocate


Commissioner or Receiver as the case may be, can be appointed for


any other purpose, but not to enforce an order of repossession


passed by the Tribunal.    Any order of repossession can only be


enforced through a civil court.

The repossession of the vehicles by enforcing the order of


the Arbitral Tribunal without the intervention of the civil court,


therefore, has to be treated as violation of Article 21 of the


Constitution of India.   
IN THE HIGH COURT OF KERALA AT ERNAKULAM

                           PRESENT:

        THE HONOURABLE MR. JUSTICE A.MUHAMED MUSTAQUE

  WEDNESDAY, THE 16TH DAY OF MARCH 2016.
                 WP(C).No. 38725 of 2015 (M)
               
               PRADEEP K.N.
              Vs

            THE STATION HOUSE OFFICER,
              

                  A.MUHAMED MUSTAQUE, J.
                ~~~~~~~~~~~~~~~~~~~~~~~~~
                        W.P.(C).Nos.
                      38725/2015   7932/2016
                    

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