Bhadrakumar Das vs Krishna Kumar

P.N. Ravindran, J.—The petitioner is the first respondent in an arbitration proceedings pending before the sole Arbitrator appointed by this Court in A.R. No. 26 of 2008. After evidence was recorded, he filed an application to recall PW1, the first plaintiff, stating that due to an inadvertent omission PW 1 could not be confronted with documents which had already been marked. By Ext.P4 order passed on 2.3.2013, the sole Arbitrator appointed by this Court rejected the said petition. Hence this Original Petition under Article 227 of the Constitution of India challenging Ext.P4 order passed by the sole Arbitrator. The Apex Court has in S.B.P. and Co. Vs. Patel Engineering Ltd. and Another, held as follows:

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. We see no warrant for such an approach. S. 37 makes certain orders of the arbitral tribunal appealable. Under S. 34, the aggrieved party has an avenue for ventilating its grievances against the award including any in-between orders that might have been passed by the arbitral tribunal acting under S. 16 of the Act. The party aggrieved by any order of the arbitral tribunal, unless has a right of appeal under S. 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, a 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. Such an intervention by the High Courts is not permissible.

The object of minimizing judicial intervention while the matter is in the process of being arbitrated upon, will certainly be defeated if the High Court could be approached under Article 227 or under Article 226 of the Constitution against every order made by the arbitral tribunal. Therefore, it is necessary to indicate that once the arbitration has commenced in the arbitral tribunal, parties have to wait until the award is pronounced unless, of course, a right of appeal is available to them under S. 37 of the Act even at an earlier stage.

We, therefore, sum up our conclusions as follows:

i) The power exercised by the Chief Justice of the High Court or the Chief Justice of India under S. 11(6) of the Act is not an administrative power. It is a judicial power.

ii) The power under S. 11(6) of the Act, in its entirety, could be delegated, by the Chief Justice of the High Court only to another judge of that court and by the Chief Justice of India to another Judge of the Supreme Court.

(iii) In case of designation of a Judge of the High Court or of the Supreme Court, the power that is exercised by the designated Judge would be that of the Chief Justice as conferred by the statute.

(iv) The Chief Justice or the designated Judge will have the right to decide the preliminary aspects as indicated in the earlier part of this judgment. These will be his own jurisdiction to entertain the request, the existence of a valid arbitration agreement, the existence or otherwise of a live claim, the existence of the condition for the exercise of his power and on the qualifications of the arbitrator or arbitrators. The Chief Justice or the designated Judge would be entitled to seek the opinion of an institution in the matter of nominating an arbitrator qualified in terms of S. 11(8) of the Act if the need arises but the order appointing the arbitrator could only be that of the Chief Justice or the designated judge.

(v) Designation of a District Judge as the authority under S. 11(6) of the Act by the Chief Justice of the High Court is not warranted on the scheme of the Act.

(vi) Once the matter reaches the arbitral tribunal or the sole arbitrator, the High Court would not interfere with the orders passed by the arbitrator or the arbitral tribunal during the course of the arbitration proceedings and the parties could approach the court only in terms of S. 37 of the Act or in terms of S. 34 of the Act.

(vii) Since an order passed by the Chief Justice of the High Court or by the designated Judge of that court is a judicial order, an appeal will lie against mat order only under Article 136 of the Constitution to the Supreme Court.

(viii)There can be no appeal against an order of the Chief Justice of India or a Judge of the Supreme Court designated by him while entertaining an application under S. 11(6) of the Act.

(ix) In a case where an arbitral tribunal has been constituted by the parties without having recourse to S. 11(6) of the Act, the arbitral tribunal will have the jurisdiction to decide all matters as contemplated by S. 16 of the Act.

(x) Since all were guided by the decision of this Court in Konkan Railway Corporation Ltd. and Another Vs. Rani Construction Pvt. Ltd., and orders under S. 11(6) of the Act have been made based on the position adopted in that decision, we clarify that appointments of arbitrators or arbitral tribunals thus far made, are to be treated as valid, all objections being left to be decided under S. 16 of the Act. As and from this date, the position as adopted in this judgment will govern even pending applications under S. 11(6) of the Act.

(xi) Where District Judges had been designated by the Chief Justice of the High Court under S. 11(6) of the Act, the appointment orders thus far made by them will be treated as valid; but applications if any pending before them as on this date will stand transferred, to be dealt with by the Chief Justice of the High Court concerned or a Judge of that court designated by the Chief Justice.

(xii) The decision in Konkan Railway Corporation Ltd. and Another Vs. Rani Construction Pvt. Ltd., is overruled.

It was held that the orders passed by the arbitral tribunal during the course of arbitration proceedings can be challenged only in terms of S. 34 or 37 of the Arbitration and Conciliation Act, 1996. It was held that the party aggrieved by any order of the arbitral tribunal has to wait until the award is passed by the Arbitrator unless he has a right of appeal under S. 37 of the Act, that under S. 34 of the Act, the aggrieved party has an avenue for ventilating its grievance against the award including the in-between orders that have been passed by the arbitral tribunal acting under S. 16 of the Act. The Apex Court also disapproved the stand adopted by some of the High Courts that any order passed by the arbitral tribunal is capable of being corrected under Article 226 or 227 of the Constitution of India and that such intervention by the High Court is not permissible. In the light of the binding decision of the Apex Court in S.B.P. and Co. Vs. Patel Engineering Ltd. and Another, , the relief prayed for by the petitioner cannot be granted.

The Original Petition fails and is dismissed, but without prejudice to the right of the appellant to challenge the impugned order in other appropriate proceedings.