Procedural Orders Cannot Be Considered As Interim Award Or Challenged U/S 34 Of Arbitration Act: Delhi High Court

Brief Facts:

The petition was filed under Section 34 of the Arbitration and Conciliation Act, 1996 challenging the order, by which an application under Order I Rule 10 CPC filed on behalf of the petitioner. The dispute arose with respect to a Service Contract Agreement executed on 25.09.2019. Rajesh Kumar Srivastava, who was the director of the petitioner executed the Service Contract Agreement and Rs.5,77,44,000/- was credited to respondent No.1. The petitioner terminated the agreement and revoked the authorities of Rajesh Kumar Srivastava after it came to know about the fraudulent activities done by him. Then, the arbitration clause was invoked, and the petitioner filed an application under Order I Rule 10 CPC to implead Rajesh Kumar Srivastava, in the Arbitration proceedings on the grounds that he is a necessary and proper party for the adjudication of the disputes. However, that application was rejected by the Arbitral Tribunal and stated that the allegations against Rajesh Kumar Srivastava required evidence and could not be resolved at the procedural stage.

Observation of the court:

The court noted that the present order must be confined to the decision of the Arbitral Tribunal while considering an application under Order I Rule 10. Also, the court held that the Arbitral Tribunal has not dealt with Issue No.8. So, It is open for the parties to lead evidence on Issue No.8 and the Arbitral Tribunal, after evidence is led by the parties on Issue No.8, would adjudicate on Issue No.8 to render its finding as to whether Rakesh Kumar Srivastava is a necessary party or not. Further, issue No.2, 3, 4, 7 & 9 also concerns Rakesh Kumar Srivastava and the decision on these issues will have a vital effect on issue No.8.

Moreover, the Court held that the dismissal of the application by the Arbitral Tribunal cannot be treated as conclusive adjudication of issue No.8 as evidence is yet to be led on several issues concerning Rakesh Kumar Srivastava before a final conclusion can be reached.

Further, the court disposed of the petitions and held that the court is not inclined to entertain petitions only on the ground that the impugned order cannot be constituted as an interim award which can be challenged under Section 34 of the act.

Case Title: COSLIGHT INFRA COMPANY PVT. LTD v. CONCEPT ENGINEERS & ORS.

Citation: 2024 LiveLaw (Del) 1283

Case Number: O.M.P. (COMM) 335/2023

Counsel for the Petitioner: Mr. Atul Sharma, Mr. Sanjay Gupta & Ms. Abhilasha Sharma, Advocates

Counsel for the Respondent: Ms. Radhika Goel, Advocate for Respondents No.1,2,3 Mr. Ashutosh Kumar Mishra, Advocate for Respondent No.4

Date of Judgment: 05.11.2024

Click Here To Read/Download The Order