[Arbitration Act] Party Can't Challenge Procedural Order Passed By Arbitrator Under Section 9: Delhi High Court
The Delhi High Court bench of Justice Prathiba M. Singh has held that a party is not permitted to challenge a procedural order passed by an arbitrator under Section 9 of the Arbitration and Conciliation Act, 1996. The bench held that: “…it is observed that by filing a petition under Section 9 of the Act, 1996 the Petitioner is merely attempting to avoid the appellate...
The Delhi High Court bench of Justice Prathiba M. Singh has held that a party is not permitted to challenge a procedural order passed by an arbitrator under Section 9 of the Arbitration and Conciliation Act, 1996.
The bench held that:
“…it is observed that by filing a petition under Section 9 of the Act, 1996 the Petitioner is merely attempting to avoid the appellate provision under Section 37 of the Act, 1996 which clearly stipulates as to which orders are appealable.”
Brief Facts:
The matter pertained to disputes which arose from arbitration proceedings initiated by Indag Rubber Limited (“Respondent”) against Jagdish Tyres Pvt. Ltd (“Petitioner”). During the arbitration proceedings, the Petitioner wished to file an amended statement of defence that included bank statements related to the transactions between the parties. However, the arbitrator framed issues for the case and directed further proceedings without considering the amended statement of defence. Feeling aggrieved, the Petitioner approached the Delhi High Court (“High Court”) and filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”).
Contentions of the Parties
Jagdish Tyres Pvt. Ltd. (Petitioner):
- It was unfairly denied the opportunity to file its amended statement of defence.
- Submitted the amended statement with bank statements on April 6, 2024, but due to a technical error, the arbitrator did not receive it.
Indag Rubber Limited (Respondent):
- The Petitioner has not been diligent in attending the arbitration proceedings.
- Petitioner has a habit of attending proceedings late and questions whether the email with the amended statement was ever actually sent.
Observations by the High Court:
The High Court referred to an email submitted by the Petitioner as evidence of its attempt to file an amended statement of defence. The High court found inconsistencies between the submitted email and the actual reply sent which suggested that the Petitioner was not acting diligently before the arbitrator.
The High Court held that Section 9 of the Arbitration Act does not allow challenges to procedural orders passed by the arbitrator. Section 9 is meant for seeking interim measures, not contesting procedural decisions. Further, the High Court held that Section 37 of the Arbitration Act restricts appeals to specific orders passed by the arbitrator or the court. It held that procedural orders are not included in the list of appealable orders under Section 37.
Further, the High Court referred to the decision of the Supreme Court in Deep Industries Ltd. v. ONGC [(2020) 15 SCC 706] where it was held that appeals are restricted to certain orders, and courts cannot intervene in procedural matters through alternative petitions.
The High Court held that the Petitioner's attempt to challenge the procedural order through a Section 9 petition was a way to circumvent the proper appeal process outlined in Section 37. The High Court imposed a cost of Rs.10,000/- on the Petitioner.
Case Title: Jagdish Tyres Pvt. Ltd. Vs Indag Rubber Limited
Citation: 2024 LiveLaw (Del) 691
Case Number: O.M.P.(I) (COMM.) 165/2024
Advocate for the Petitioner: Mr. Prashant Kenjale & Ms. Srishty Pande
Advocate for the Respondent: Mr. Kamal Kumar, Mr Aasheesh Gupta, Mr Gyaltsen Barfungpa and Ms Charu Bansal
Date of Judgment: 21st May, 2024