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After Commencement Of Arbitration, Parties Must Wait Until Award Is Pronounced To File Challenge Unless Appeal Is Available At Earlier Stage: Kerala HC
Soumya Chakrabarti
3 April 2025 1:15 PM
The Kerela High Court Bench of Justice Basant Balaji has held that once the arbitration has commenced, parties have to wait until the award is pronounced unless a right of appeal is available to them under Section 37 of the Act, even at an earlier stage. Brief Facts of the case: The present dispute arose with respect to an agreement, for the construction of a Multidisciplinary...
The Kerela High Court Bench of Justice Basant Balaji has held that once the arbitration has commenced, parties have to wait until the award is pronounced unless a right of appeal is available to them under Section 37 of the Act, even at an earlier stage.
Brief Facts of the case:
The present dispute arose with respect to an agreement, for the construction of a Multidisciplinary Research Laboratory and Animal House at Medical College, Thiruvananthapuram. The contract stipulated an 18-month completion period, ending on 02.06.2015 but the project was not completed until 15.05.2018. After the expiry of the contract, the contractual rates became unenforceable. Thus, the petitioner formally notified the respondents, demanding for payment at prevailing market rates for the work extended beyond the contract period, due to the respondents' delays. Then, the court directed the respondents to settle the admitted sums within three months. However, their failure to comply with the order resulted in contempt proceedings, during which partial payments were made.
Then, a Dispute redressal committee was formed by the respondent, and it denied the petitioner's demand of Rs. 7,11,41,406/- towards unpaid value of works carried out. Aggrieved by this decision, the petitioner invoked arbitration, and a sole arbitrator was appointed. The Sole Arbitral Tribunal passed an award in favour of the petitioner. Then, the respondent challenged the award under Section 34 of the Arbitration & Conciliation Act, 1996 and the court declared the award as null and void. Aggrieved by this, the petitioner challenged the judgment of the court under Article 227 of the Constitution.
Observation of the Court:
The court held that the petitioner's recourse to an Original Petition under Article 227 of the Constitution of India is improper, and that the sole remedy lies in an appeal under Section 37 of the Act. The court also relied on the judgment in SBP & Co. vs. Patel Engineering (2005), wherein the court has held that when the remedy to challenge the order of arbitrator is available under the Act, then filing of writ is disapproved.
Further, the court noted that the object of minimising judicial intervention while the matter is in the process of being arbitrated upon, will certainly be defeated, if the High Court could be approached under Article 227 against every order made by the Arbitral Tribunal. Therefore, it is necessary to indicate that once the arbitration has commenced in the Arbitral Tribunal, parties have to wait until the award is pronounced unless, a right of appeal is available to them under Section 37 of the Act even at an earlier stage.
Moreover, the court held that the remedy available to the party aggrieved, is to challenge the award in accordance with Sections 34 or 37 of the Act and intervention by the High Courts under Article 227 of the Constitution of India, is not permissible. Finally, the court dismissed the petition.
Case Title: M.I. MOHAMMED versus M/S. HLL LIFE CARE LTD.
Citation: 2025 LiveLaw (Ker) 227
Case Number: OP(C) NO. 316 OF 2024
Counsel for the Petitioner: Adv K.Babu Thomas, Marykutty Babu, Drisya Dileep
Counsel for the Respondent: Four Pillars Chambers headed by Advocate Nikhilesh Krishnan, assisted by Abhishek Bhushan Singh, Aju Mathew, and Abu Mathew, Advocates.
Date of Judgment: 26.03.2025