Delhi High Court Dismisses Writ Petition, Permits Petitioner To Avail Remedy Under S. 37 Of Arbitration Act

Brief Facts:

A finance company (“Respondent), filed Arbitration Petitions under section 9 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) against Shri Balaji Enterprises (“Petitioner) which operates as a dealer of E-rickshaws. The Respondent sought interim relief, specifically the ex-parte appointment of a receiver for repossession of E-rickshaws. The grounds for repossession were based on the existence of a hire purchase agreement, along with an additional loan and hypothecation agreement. The agreements included a provision for arbitration as a remedy for resolving disputes arising from non-discharge of obligations. The Additional District Judge (“ADJ”), Rohini Court, Delhi allowed the application of the Respondent. Feeling aggrieved, the Petitioner filed a writ petition in the Delhi High Court (“High Court”) against the ADJ's order.

Observations by the High Court:

The High Court noted that it was a well-established principle that the court does not entertain writs when an equally efficacious alternative remedy is available to the aggrieved party, and the aggrieved person has not utilized that remedy. Citing the Supreme Court's ruling in Commissioner of Income Tax and Ors vs. Chhabil Das Agarwal [(2014) 1 SCC 603], the High Court held that the court is at the discretion to grant relief under Article 226. Further, it held that the court must refrain from interference if there is an adequate and efficacious alternative remedy available to the petitioner unless exceptional circumstances exist or there are sufficient grounds to invoke the extraordinary jurisdiction under Article 226. If the High Court is satisfied that an adequate or alternative relief is available, it can decline to exercise its jurisdiction under Article 226. The High Court stressed the importance of exhausting statutory remedies before resorting to writ jurisdiction for relief.

6. It is well settled that High Courts do not entertain writs in cases where an equally efficacious alternate remedy is available to the aggrieved party and the aggrieved person has approached the High Court without availing of the said remedy.

The High Court held that the Petitioner did not avail of the remedy provided under Section 37 of the Arbitration Act for challenging an ex-parte order. The High Court found no exceptional circumstances that justified bypassing the statutory remedy under Section 37 and noted that all contentions raised by the petitioner in the writ petition could be argued before the Appellate Court.

Consequently, the High Court dismissed the Writ Petition and any pending applications, granting liberty to the petitioners to approach the court under the Arbitration Act and file a Section 37 application before the Appellate Court.

Case Title: Shri Balaji Enterprises & Ors vs Reserve Bank Of India & Anr.

Citation: 2024 LiveLaw (Del) 134

Case No.: W.P.(C) 15601/2023 & CM APPL. 62452/2023

Advocate for the Petitioners: Mr Samman Vardhan Gautam and Mr Anshul Jain

Advocate for the Respondent: Mr. Satyakam

Click Here To Read/Download Order