Jurisdiction Under Articles 226/227 Of Constitution Cannot Be Invoked When Order Passed By Arbitral Tribunal Is Procedural: Delhi High Court

Brief Facts

Lalit Mohan, the petitioner, filed a writ petition under articles 226/227 of the constitution in which the order of the arbitral tribunal passed on September 7, 2024 was challenged. This order was passed during the arbitral proceedings going on between the petitioner and , M/S National Agricultural Co. Federation of India Ltd. (NAFED), the respondent.

On the request of counsel of the petitioner, the arbitral proceedings were adjourned till the NCLT decides on the insolvency proceedings initiated under section 94 of the IBC. It was indicated by the arbitral tribunal that it would sign the award after the decision is rendered by the NCLT in the insolvency proceedings.

The petitioner argued that since interim moratorium under section 96 of the IBC would come into operation after the filing of a petition under section 94 of the IBC. It was contended that the interim moratorium would also encompass the signing of award by the arbitral tribunal .Therefore,the tribunal should be restrained from signing the award otherwise it would violate section 96 of the IBC.

Court's Analysis

The court observed that the jurisdiction of the High Court under article 226 and 227 of the constitution is limited with respect to procedural order passed by the arbitral tribunals.

The court further referred to multiple judgments delivered by the Delhi High Court in C.S Construction Company Private Limited and Another v. Excelling Geo and Engineering Consultant and Others (2024) and Emerald Industries v. Tata Aldesa JV (2024) wherein it was clearly established that the scope of interference in the arbitration matters is very limited.

The court further noted that no final decision pertaining to singing of the award had been made by the tribunal. It just indicated that the tribunal would see the feasibility of signing the award after the decision of the NCLT in the insolvency petition. It does not demonstrate that the final decision in relation to singing of the award was pronounced.

The court further observed that since no final order had been passed by the tribunal, the interference of this court under article 226 in the arbitration proceedings is unwarranted.

Case Title: LALIT MOHAN v. M/S. NATIONAL AGRICULTURAL CO. FEDERATION OF INDIA LTD. (NAFED)

Case Reference: W.P.(C) 13833/2024, CM APPL. 57948-57949/2024

Court: Delhi High Court

Judgment Date: 01/10/2024

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