Can Recall Section 11 A&C Act Order, If It Suffers From Patent And Manifest Error: Delhi High Court
The Delhi High Court has ruled that the power exercised by the High Court under Section 11 of the Arbitration and Conciliation Act, 1996 (A&C Act) is not merely an administrative function but a judicial power, and that the Court does not cease to be a Court of Record while exercising power under Section 11. Thus, the bench of Justice Yashwant Varma held that the High Court...
The Delhi High Court has ruled that the power exercised by the High Court under Section 11 of the Arbitration and Conciliation Act, 1996 (A&C Act) is not merely an administrative function but a judicial power, and that the Court does not cease to be a Court of Record while exercising power under Section 11.
Thus, the bench of Justice Yashwant Varma held that the High Court can recall the order passed by it under Section 11 of the A&C Act if it suffers from a patent and manifest error apparent on the face of the record.
The High Court was dealing with an application seeking recall of its order where a Section 11 application seeking arbitral reference was dismissed on the ground that Corporate Insolvency Resolution Process was initiated against the respondent.
Noting that no proceedings under the Insolvency and Bankruptcy Code, 2016 had been instituted against the respondent, the High Court held that the order passed under the Section 11 application suffered from a patent and manifest error apparent on the face of the record and thus, the High Court can recall its order.
Pertinently, the Delhi High Court in Kush Raj Bhatia versus M/S DLF Power & Services Ltd. (2022) had ruled that High Courts cannot review an order passed under Section 11 of the A&C Act as the A&C Act does not contain any provision for review. The bench of Justice Neena Bansal Krishna had held that once an application for the appointment of the arbitrator has been heard and rejected, the same cannot be re-opened by an indirect method i.e., through a review petition.
The petitioner- Always Remember Properties Pvt Ltd. filed an application seeking recall of the order passed by the Delhi High Court where the petitioner's application under Section 11 of the A&C Act, seeking reference of the dispute to arbitration, was dismissed. The High Court, in its order sought to be recalled, had ruled that since Corporate Insolvency Resolution Process was initiated against the respondent- Reliance Home Finance Ltd., the moratorium under Section 14(1)(a) of the Insolvency and Bankruptcy Code, 2016 (IBC) had come into effect and thus, the dispute between the parties could not be referred to arbitration.
The respondent Reliance Home Finance submitted before the High Court that despite the fact that no Insolvency Resolution Process was initiated against it, the High Court cannot undertake a substantive review of the order passed by it under Section 11 of the A&C Act.
To this, the petitioner Always Remember Properties argued that the power exercised by the High Court under Section 11 of the A&C Act, as a nominee of the Chief Justice, cannot be construed as merely administrative in nature. The petitioner added that the power exercised by the High Court under Section 11 continues to be judicial in character. It referred to the decision of the Supreme Court in M. M. Thomas versus State of Kerala & Anr. (2000), where the Apex Court had held that it is the duty and power of the High Court to correct any order passed by it which involves any apparent error.
Referring to the decision of the Supreme Court in United India Insurance Company Limited versus Antique Art Exports Pvt Ltd. (2019), the High Court ruled that the power exercised under Section 11 of the A&C Act is a judicial power and not merely an administrative function. Thus, it held that the Court does not cease to be a Court of Record while exercising power under Section 11.
While noting that the order passed under Section 11 was not sought to be reviewed on merits rather on account of the factual mistake contained in the order, the Court observed that since no proceedings under the IBC had been instituted against the respondent, the order passed under the Section 11 application suffered from a patent and manifest error apparent on the face of the record.
The Court thus recalled the order passed by it under Section 11.
Case Title: Always Remember Properties Private Limited versus Reliance Home Finance Limited & Anr.
Citation: 2022 LiveLaw (Del) 1188
Counsel for the Petitioner: Mr. Sandeep Sethi, Sr. Adv. with Mr. Darpan Wadhwa, Mr. Gaurav Mishra, Mr. Daman Popli, Ms. Ria Chanda and Ms. Neetu Devrani, Advs.
Counsel for the Respondent: Mr. Pranjit Bhattacharya and Mr. Rishi Agrawala, Advs.