Full Judgment Text
$~89
* IN THE HIGH COURT OF DELHI AT NEW DELHI
%
Date of Decision : 03.02.2025
W.P.(C) 1347/2025
GROSON ENGINEERS .....Petitioner
+
Through: Mr. Chetan Joshi, Advocate.
versus
M/S RAJIV AGGARWAL & ANR. .....Respondents
Through: None.
CORAM:
HON'BLE MR. JUSTICE SACHIN DATTA
SACHIN DATTA, J. ( Oral )
1. The present petition has been filed by the petitioner being aggrieved
with the orders dated 09.05.2024 and 31.12.2024 passed by the learned
Arbitrator, who is seized of the arbitral proceedings between the parties.
2. The arbitral proceedings are ongoing under the aegis of Delhi
International Arbitration Centre (DIAC). The arbitral proceedings have been
occasioned on account of non-payment/ non-clearance of the bills of the
petitioner, raised upon the respondent.
3. An order dated 09.05.2024 came to be passed by the learned
Arbitrator dismissing the petitioner’s application for “disclosure of
documents in the possession of the respondent”. Vide order dated
31.12.2024, the learned Arbitrator dismissed the petitioner’s application
seeking permission to call additional witness.
4. It is a settled law that courts under Article 226 of the Constitution of
Signature Not Verified
W.P.(C) 1347/2025 Page 1 of 7
Digitally Signed
By:ABHISHEK THAKUR
Signing Date:07.02.2025
00:14:09
India can interfere with the arbitral process only when the circumstances are
exceptional or perverse. The Supreme Court in Bhaven Construction vs
Executive Engineer, Sardar Sarovar Narmada Nigam Limited and Anr .,
(2022) 1 SCC 75 while limiting judicial interference under Article 226 or
227 of the Constitution of India to ‘exceptional rarity’ held as under:
“12. We need to note that the Arbitration Act is a code in itself. This
phrase is not merely perfunctory, but has definite legal consequences.
One such consequence is spelled out under Section 5 of the Arbitration
Act, which reads as under
“5. Extent of judicial intervention.—Notwithstanding anything
contained in any other law for the time being in force, in matters
governed by this Part, no judicial authority shall intervene except
where so provided in this Part.”
(emphasis supplied)
The non obstante clause is provided to uphold the intention of the
legislature as provided in the Preamble to adopt Uncitral Model Law
and Rules, to reduce excessive judicial interference which is not
contemplated under the Arbitration Act.
13. The Arbitration Act itself gives various procedures and forums to
challenge the appointment of an arbitrator. The framework clearly
portrays an intention to address most of the issues within the ambit of the
Act itself, without there being scope for any extra statutory mechanism to
provide just and fair solutions.
xxx xxx xxx
18 . In any case, the hierarchy in our legal framework, mandates that a
legislative enactment cannot curtail a constitutional right. In Nivedita
Sharma v. COAI [Nivedita Sharma v. COAI, (2011) 14 SCC 337: (2012)
4 SCC (Civ) 947] , this Court referred to several judgments and held :
(SCC p. 343, para 11)
“11. We have considered the respective arguments/submissions. There
cannot be any dispute that the power of the High Courts to issue
directions, orders or writs including writs in the nature of habeas
corpus, certiorari, mandamus, quo warranto and prohibition under
Article 226 of the Constitution is a basic feature of the Constitution
Signature Not Verified
W.P.(C) 1347/2025 Page 2 of 7
Digitally Signed
By:ABHISHEK THAKUR
Signing Date:07.02.2025
00:14:09
and cannot be curtailed by parliamentary legislation — L. Chandra
Kumar v. Union of India [L. Chandra Kumar v. Union of India,
(1997) 3 SCC 261 : 1997 SCC (L&S) 577] . However, it is one thing
to say that in exercise of the power vested in it under Article 226 of
the Constitution, the High Court can entertain a writ petition against
any order passed by or action taken by the State and/or its
agency/instrumentality or any public authority or order passed by a
quasi-judicial body/authority, and it is an altogether different thing to
say that each and every petition filed under Article 226 of the
Constitution must be entertained by the High Court as a matter of
course ignoring the fact that the aggrieved person has an effective
alternative remedy. Rather, it is settled law that when a statutory
forum is created by law for redressal of grievances, a writ petition
should not be entertained ignoring the statutory dispensation.”
(emphasis supplied)
It is therefore, prudent for a Judge to not exercise discretion to allow
judicial interference beyond the procedure established under the
enactment. This power needs to be exercised in exceptional rarity,
wherein one party is left remediless under the statute or a clear “bad
faith” shown by one of the parties. This high standard set by this Court is
in terms of the legislative intention to make the arbitration fair and
efficient.
19. In this context we may observe Deep Industries Ltd. v. ONGC [Deep
Industries Ltd. v. ONGC, (2020) 15 SCC 706] , wherein interplay of
Section 5 of the Arbitration Act and Article 227 of the Constitution was
analysed as under : (SCC p. 714, paras 16-17)
“16. Most significant of all is the non obstante clause contained in
Section 5 which states that notwithstanding anything contained in any
other law, in matters that arise under Part I of the Arbitration Act, no
judicial authority shall intervene except where so provided in this
Part. Section 37 grants a constricted right of first appeal against
certain judgments and orders and no others. Further, the statutory
mandate also provides for one bite at the cherry, and interdicts a
second appeal being filed [see Section 37(2) of the Act].
17. 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
Signature Not Verified
W.P.(C) 1347/2025 Page 3 of 7
Digitally Signed
By:ABHISHEK THAKUR
Signing Date:07.02.2025
00:14:09
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 hereinabove so that interference is restricted to orders that are
passed which are patently lacking in inherent jurisdiction.”
(emphasis supplied)
20. In the instant case, Respondent 1 has not been able to show
exceptional circumstance or “bad faith” on the part of the appellant, to
invoke the remedy under Article 227 of the Constitution. No doubt the
ambit of Article 227 is broad and pervasive, however, the High Court
should not have used its inherent power to interject the arbitral process
at this stage. It is brought to our notice that subsequent to the impugned
order of the sole arbitrator, a final award was rendered by him on
merits, which is challenged by Respondent 1 in a separate Section 34
application, which is pending.”
5. A Division Bench of this Court in Sadbhav Engineering Ltd. vs
Micro and Small Enterprises Facilitation Council and Ors ., 2025 SCC
OnLine Del 319 has held that when an alternate efficacious remedy is
available under Arbitration and Conciliation Act, 1996, courts shall not
interfere and interdict such proceeding/s under Article 226 of the
Constitution of India. The relevant portion of the said judgment reads as
under:
“6…………...It is trite that once the proceedings under the Arbitration
Act have commenced and are underway, Courts would not interfere and
interdict such proceedings, particularly, when appropriate and
efficacious remedies are indeed available under the Arbitration Act. In
this context, it would be apposite to refer to the judgment of the Supreme
Court in SBP & Co. v. Patel Engineering Limited, (2005) 8 SCC 618 and
the same judgment has been followed by the Supreme Court in its recent
judgment - Sterling Industries v. Jayprakash Associates Ltd., (2021) 18
SCC 367. The relevant paragraphs of Sterling Industries (supra) quoting
the judgment of the Supreme Court in SBP & Co. (supra) reads thus:
Signature Not Verified
W.P.(C) 1347/2025 Page 4 of 7
Digitally Signed
By:ABHISHEK THAKUR
Signing Date:07.02.2025
00:14:09
“3. This Court in SBP & Co. v. Patel Engg. Ltd. [SBP & Co. v. Patel
Engg. Ltd., (2005) 8 SCC 618] in para 45 held as follows:
45. It is seen that some High Courts have proceeded on the basis that
any order passed by an Arbitral Tribunal during arbitration, would be
capable of being challenged under Article 226 or 227 of the
Constitution. We see no warrant for such an approach. Section 37
makes certain orders of the Arbitral Tribunal appealable. Under
Section 34, the aggrieved party has an avenue for ventilating its
grievances against the award including any in between orders that
might have been passed by the Arbitral Tribunal acting under Section
16 of the Act. 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, a 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. Such an intervention by the
High Courts is not permissible.
xxx xxx xxx
46. 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 or under
Article 226 of the Constitution 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, of course, a right of appeal
is available to them under Section 37 of the Act even at an earlier
stage.”
7. That apart, as rightly and aptly observed by the learned single Judge,
the Supreme Court in Bhaven Construction v. Executive Engineer,
Sardar Sarovar, (2022) 1 SCC 75 has succinctly held that an order in
exercise of powers under section 16 of the Arbitration Act can be
assailed only by way of challenge to the final award under the provisions
of section 34 of the said Arbitration Act. Thid would proscribe any other
Signature Not Verified
W.P.(C) 1347/2025 Page 5 of 7
Digitally Signed
By:ABHISHEK THAKUR
Signing Date:07.02.2025
00:14:09
remedy to the aggrieved party.”
6. Further, this Court in Surender Kumar Singhal and Ors. vs Arun
Kumar Bhalotia and Ors ., 2021 SCC OnLine 2708 laid down
circumstances in respect to the scope and ambit of interference under Article
226 of the Constitution of India with order/s passed by the arbitral tribunal.
The said circumstances read as under:
“25. A perusal of the above-mentioned decisions, shows that the
following principles are well settled, in respect of the scope of
interference under Article 226/227 in challenges to orders by an arbitral
tribunal including orders passed under Section 16 of the Act.
(i) An arbitral tribunal is a tribunal against which a petition under
Article 226/227 would be maintainable;
(ii) The non-obstante clause in section 5 of the Act does not apply
in respect of exercise of powers under Article 227 which is a
Constitutional provision;
(iii) For interference under Article 226/227, there have to be
‘exceptional circumstances’;
(iv) Though interference is permissible, unless and until the order
is so perverse that it is patently lacking in inherent jurisdiction, the
writ court would not interfere;
(v) Interference is permissible only if the order is completely
perverse i.e., that the perversity must stare in the face;
(vi) High Courts ought to discourage litigation which necessarily
interfere with the arbitral process;
(vii) Excessive judicial interference in the arbitral process is not
encouraged;
(viii) It is prudent not to exercise jurisdiction under Article
226/227;
(ix) The power should be exercised in ‘exceptional rarity’ or if
there is ‘bad faith’ which is shown;
(x) Efficiency of the arbitral process ought not to be allowed to
diminish and hence interdicting the arbitral process should be
completely avoided.”
7. Applying the aforesaid principles, this Court does not find any
grounds to interfere with the ongoing arbitral proceedings or with the
Signature Not Verified
W.P.(C) 1347/2025 Page 6 of 7
Digitally Signed
By:ABHISHEK THAKUR
Signing Date:07.02.2025
00:14:09
interlocutory orders passed therein.
8. In case the petitioner is aggrieved by any order that is passed by the
Arbitral Tribunal, or with the final arbitral award, the same is required to be
assailed by the petitioner within the confines of, and as permitted under the
Arbitration and Conciliation Act, 1996 (A&C Act). It is open for the
petitioner to pursue appropriate remedies in this regard. Needless to say, all
rights and contentions of the petitioner in this regard are expressly reserved.
9. In the circumstances, the present petition is dismissed.
SACHIN DATTA, J
FEBRUARY 3, 2025/ r, sl
Signature Not Verified
W.P.(C) 1347/2025 Page 7 of 7
Digitally Signed
By:ABHISHEK THAKUR
Signing Date:07.02.2025
00:14:09