Petition Under Article 227 Not Maintainable Against Orders Of Tribunal When Remedies U/S 34 & 37 Of Arbitration Act Are Available: Allahabad HC

Brief Facts

Present petition under article 227 of the Indian Constitution has been filed by U.P. Awas Evam Vikas Parishad (petitioner) to challenge two orders passed by arbitral tribunal. The orders under challenge were passed on August 29, 2024 and September 21, 2024 respectively. In an order passed on August 29, 2024, the tribunal allowed an application filed by Universal Contractors and Engineers Pvt. Ltd.(respondent) to get a complete copy of the contract and final bill. In addition to that, the tribunal also permitted the respondent to change its name from M/s. Universal Contractors and Engineers Private Limited to M/s. Universal Contractors and Engineers Limited due to change in its status from private ltd. company to public limited company. Thereafter, an application was filed by the petitioner to recall theses orders which were rejected. Hence, the present petition was filed against that order.

Issue Before High Court

Whether a petition under Article 227 of the Indian Constitution is maintainable against an order of Arbitral Tribunal.

High Court's Analysis

The court referred to the Supreme Court judgment in SBP & Company v. Patel Engineering Ltd., (2005) 8 SCC 618 in which it was held that orders passed by an arbitral tribunal are not amenable to correction under article 226/227 of the constitution unless they are appealable under section 37 of the Arbitration Act. In the above judgment, the Supreme Court held as under:

“The party aggrieved by any order of the arbitral tribunal, unless has a right of appeal under Section 37 of the Act, has to wait until the award is passed by the Tribunal. This appears to be the scheme of the Act. The arbitral tribunal is after all, the creature of a contract between the parties, the arbitration agreement, even though if the occasion arises, the Chief Justice may constitute it based on the contract between the parties. But that would not alter the status of the arbitral tribunal. It will still be a forum chosen by the parties by agreement. We, therefore, disapprove of the stand adopted by some of the High Courts that any order passed by the arbitral tribunal is capable of being corrected by the High Court under Article 226 or 227 of the Constitution of India. Such an intervention by the High Courts is not permissible”.

The court further observed that judicial interference is limited in arbitral proceedings so that speedy resolution of the disputes could be ensured. The court further noted that section 5 and 37 of the act restricts the scope of judicial intervention in the arbitral matters. Section 5 provides that judicial intervention is justified to the extent allowed by the act whereas section 37 restricts the scope of appeal for orders passed by the tribunal to those which are expressly mentioned under this section. The court referred the Supreme Court judgment in Deep Industries Limited v. Oil and Natural Gas Corporation Limited, (2020) 15 SCC 706 wherein it was held as under:

“This being the case, there is no doubt whatsoever that if petitions were to be filed under Articles 226/227 of the Constitution against orders passed in appeals under Section 37, the entire arbitral process would be derailed and would not come to fruition for many years. At the same time, we cannot forget that Article 227 is a constitutional provision which remains untouched by the non-obstante clause of Section 5 of the Act. In these circumstances, what is important to note is that though petitions can be filed under Article 227 against judgments allowing or dismissing first appeals under Section 37 of the Act, yet the High Court would be extremely circumspect in interfering with the same, taking into account the statutory policy as adumbrated by us herein above so that interference is restricted to orders that are passed which are patently lacking in inherent jurisdiction”.

The court further noted that the arbitration act is a self-contained code which provides remedies to challenge orders passed by the arbitral tribunal like section 34 provides the mechanisms to challenge an award passed by the tribunal and section 37 provides for the orders against which an appeal can be filed. Therefore, a petition under article 226/227of the constitution cannot be maintained in light of effective remedies already available in the act. It was observed as under:

“In view of the aforesaid law laid down by the Hon'ble Supreme Court the petition filed under Article 227 of the Constitution of India challenging the order passed by the Arbitral Tribunal directing the petitioners to provide a copy of the contract between the parties and the final bill to the claimant, cannot be entertained. For the same reason, the order regarding change of name of the claimant also cannot be challenged by filing a petition under Article 227 of the Constitution of India”.

Conclusion

The court concluded that petition under article 227 of the constitution cannot be entertained against an order of the arbitral tribunal when efficacious remedies are already available in the arbitration act itself. Accordingly, the present petition was dismissed.

Case Title: U.P. Awas Evam Vikas Parishad, Thru. Housing Commissioner and Others v. Universal Contractors and Engineers Ltd., Thru. Authorized Signatory

Court:High Court, Allahabad

Case Reference: 2024:AHC-LKO:68529

Judgment Date: 03/10/2024