Brief facts

The respondent was selected by the petitioner through a tender process for the construction of a ladies hostel building and the extension works of the electrical buildings. The work was completed and disputes then arose between the parties regarding payment for the work carried out.

The defendant invoked the arbitration clause of the agreement between the parties. A sole arbitrator was appointed. The applicant submitted an application under section 16(2) of the Arbitration and Conciliation Act, 1996 to frame a preliminary question of limitation. He was rejected.

Being aggrieved, Writ Petition No. 7278 of 2023 was filed. The decision was also overturned and the case went to the Supreme Court. The Supreme Court dismissed SLP, by order dated 10.11.2023, granting liberty to raise the plea. Thereafter, the Arbitrator passed interim orders on various dates which are subject to challenge in the present application in the form of prayers under clauses 37(b) to (g). Prayer clause (h) concerns the termination of the mandate of the arbitral tribunal. The remaining prayers are consequential in nature. The maintainability of the petition must be judged on the basis of prayers (a) to (h).

The respondent submits that considering the ratio laid down by the Constitutional Bench of the Supreme Court in the case of M/s. SBP and company vs. Patel Engineering Ltd. and Another (2005), the High Court cannot interfere with the orders made by the arbitrator during the course of the arbitration. The applicant must wait for the final sentence to be pronounced. There are alternative and statutory remedies available under section 34 of the Act.

He further submitted that prayer clause 37(h) relates to section 14 of the Act. There is no basis for invoking Article 14 and the petition is likely to be dismissed as the petitioner’s allegation does not fall under Article 14.

On the other hand, the petitioner is of the view that the powers of judicial review under Articles 226 and 227 of the Constitution of India are an integral part of the fundamental structure of the Constitution. It cannot be removed either by law or by the judgment of the Supreme Court, even that of the Constitutional Court.

It was also submitted that the petitioner has no other effective remedy for the injustice and hardship caused by the interlocutory orders and the conduct/modus operandi of the arbitrator. The remedy provided for in Article 34 operates in a restricted area and does not resolve the current grievances.

The petitioner also claims that the arbitrator is biased, which can be demonstrated from the proceedings of Request for Arbitration No. 10 of 2020. There are shocking circumstances demonstrating the malice and bias of the arbitrator which may be considered by the High Court under its mandate. supervisory powers which go even beyond the provisions of Article 14 of the Act.

Comments:

The court noted that in the case of M/s. SBP and Co. (supra), the Supreme Court held that “the objective of minimizing judicial intervention while the matter is under adjudication will certainly be defeated if the High Court could be approached under the Article 227 of the Constitution of India or under Article 226 of the Constitution of India against any order made by the arbitral tribunal. It is therefore necessary to indicate that once the arbitration has commenced before the arbitral tribunal, the parties must wait for the award to be made unless, of course, they have a right of appeal under Article 37 of the law, even at an earlier date. scene.”

He further added that under our constitutional system, the Supreme Court and the High Courts are the sole repositories of powers of judicial review. Such power, including the power to rule on the validity of statutes, measures taken and orders adopted by individuals and organizations falling within the expression “State” in Article 12 of the Constitution, has no been entrusted only to the constitutional courts, that is to say the High Courts. and the Supreme Court.

The court also observed that following the test laid down by the Supreme Court in Dhanwanti Devi (supra), we are of the view that the ratio of L. Chandrakumar (supra) would apply. It is an authority directly on the point that is well addressed, analyzed and responded to with reasoned judgment.

“On the other hand, in M/s. SBP (supra), the issue was the nature of the office of the Chief Justice or his designee under section 11 of the Act. Whether the jurisdiction of the High Court under Article 226 or 227 was excluded or not was not the direct question which required to be considered before the court,” the court noted.

“It is pertinent to note that the judgment of the Supreme Court in the case of L. Chandra kumar (supra) has not been referred in the said case, which indicates that the proposition with which we are concerned was not primarily the question submitted to the hearing. Supreme Court in the subsequent judgment. Therefore, with all due respect, we hold that we are bound by the law laid down in L. Chandra Kumar (supra). The subsequent judgment of the Supreme Court would not allow the respondent to sustain his objection,” the court noted.

Based on the above, the court observed that our jurisdiction under Section 227 is not excluded to consider the validity of the interlocutory orders for which applications are made in paragraphs 37(a) to 37(g). ).

“The petitioner’s grievance touches upon principles of natural justice which cannot be ignored merely because arbitration is pending. The question whether or not Article 14 would be invoked or whether, by virtue of its supervisory jurisdiction, this Court can grant relief would be decided on merits. But even for prayer clause 37(h), it would be unfair to close the doors of the petitioner,” he adds.

Finally, the court observed that preliminary objections are denied only to the extent that the writ petition is maintainable. The question must be examined on its merits.

Case Title: Shri Guru Gobind Singhji Institute of Engineering and Technology v. M/s. Kay Vee Enterprises (PETITION WRITTEN NO. 9868 / 2024)

Citation: 2024 LiveLaw (Bom) 635

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