Supreme Court Deprecates Practice Of Filing Applications In Disposed Of SLPs To Side-Step Arbitration Process

The Supreme Court has reiterated that the courts normally ought not interfere with arbitral proceedings, especially till the time an award is not passed.

The top court has deprecated the practice of filing applications in disposed of Special Leave Petitions (SLPs) in order to side-step the arbitration process, adding that the said applications must not be entertained by the court.

The bench of Justices Krishna Murari and Sanjay Karol was dealing with an application filed in an SLP disposed of by the court by referring the parties to arbitration under an MoU executed between them.

The applicant, the State of Uttar Pradesh, who was the respondent in the SLP, sought vacation of the status quo granted by the Arbitral Tribunal in the arbitration proceedings between the parties. It further sought to vacate the rights of the petitioner with respect to the disputed project.

The court reckoned that despite being issued a notice, the applicant did not appear before the Arbitral Tribunal and thus, the arbitration proceedings commenced without its presence. Further, during the arbitration proceedings, the Tribunal passed an order for maintaining status quo with respect to the disputed project till the disposal of the matter. However, despite the counsel for the applicant being present in the arbitral proceedings, it raised no objection to the same, the court observed.

The bench took note that now, after a lapse of several years, the applicant sought vacation of the status quo granted by the Tribunal.

While observing that the reliefs sought by the applicant were issues that were already pending adjudication before the Arbitral Tribunal, and that no arbitral award had been passed regarding the same, the court remarked, “The provisions of the Arbitration and Conciliation Act,1996, as well as a catena of judicial pronouncements of this Court have time and again stated that the courts normally ought not interfere with arbitral proceedings, especially till the time an award is not passed.”

The court added: “7. We are further of opinion that this practice of filing applications in disposed of SLPs in order to side-step the arbitration process should be discouraged, and such applications must not be entertained by this Court.”

The court thus dismissed the application.

“In light of the abovementioned discussion, the Miscellaneous Application and pending IAs stand dismissed. The Parties are at liberty to raise all issues on merits before the Ld. Arbitral Tribunal which will adjudicate the same in accordance with law. The Parties are further directed to appear before the Ld. Tribunal and place a copy of this order before the tribunal for resumption of the arbitration proceedings. Status-Quo as directed by the Aribtral Tribunal vide order dated 22.05.2015 to be maintained by the parties till the matter is disposed of by the Ld. Tribunal.”

Case Title: Narsi Creation Pvt Ltd and Anr. vs State of Uttar Pradesh and Ors.

Citation : 2023 LiveLaw (SC) 325

Arbitration and Conciliation Act, 1996 - Supreme Court has reiterated that the courts ought not to normally interfere with the arbitral proceedings, especially till the time an arbitral award is not passed-The top court has deprecated the practice of filing applications in disposed of Special Leave Petitions (SLPs) in order to side-step the arbitration process, adding that the said applications must not be entertained by the court.

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