Article 227 Jurisdiction Inapplicable to Rejection of Section 16 Challenges Absent Patent Lack of Inherent Jurisdiction

The dispute arises from a 1948 partnership firm (Respondent No. 5), where the Appellant held a 25% share

In 2012, the Appellant filed Title Suit No. 38/2012 alleging mismanagement

A Section 8 application under the Arbitration and Conciliation Act, 1996 (the Act) was initially rejected by the Trial and High Courts because certain defendants (Respondents 1-3) were non-signatories to the partnership deed

However, on 21.11.2024, the Supreme Court, with the consent of the parties present, referred the entire dispute to a Sole Arbitrator

During arbitral proceedings, Respondents 1-3 (non-signatories) sought deletion from the array of parties, which the Tribunal rejected on 04.08.2025 based on the Supreme Court’s referral

Respondents 1-3 challenged this via a Revision Petition under Article 227 of the Constitution. The Gauhati High Court stayed the arbitral notices and held the Revision Petition maintainable, citing a "patent lack of inherent jurisdiction" in the Tribunal's order

The court applied Section 5 of the Arbitration and Conciliation Act, 1996, which mandates minimal judicial intervention

It relied on the doctrine of kompetenz-kompetenz under Section 16, empowering the Tribunal to rule on its own jurisdiction

The court cited SBP Co. v. Patel Engineering Ltd., which disapproved of High Courts correcting arbitral orders under Article 227 during the pendency of proceedings

It further applied the "narrow band of perversity" and "patent lack of inherent jurisdiction" tests from Deep Industries Ltd. v. ONGC and Punjab State Power Corpn. Ltd. v. Emta Coal Ltd.

Finally, it referenced Cox and Kings Ltd. v. SAP India Pvt. Ltd. regarding the joinder of non-signatories under the "Group of Companies" doctrine

The Court reasoned that the Act is a self-contained code designed for expeditious dispute resolution with minimal interference

It found that while Article 227 is a part of the basic structure, its exercise in arbitral matters must be "extremely circumspect" and restricted to cases of "patent lack of inherent jurisdiction" that "stare one in the face"

The Court observed that the High Court failed to record any specific finding of perversity or inherent lack of jurisdiction in the Tribunal's order

Furthermore, the Court held that determining whether non-signatories are "veritable parties" is a complex factual inquiry that falling squarely within the Tribunal’s domain under Section 16

The Court criticised Respondents 1-3 for not seeking a review of the original Supreme Court referral order despite being parties to that appeal

The Revision Petition was dismissed. The Court directed the Arbitral Tribunal to independently decide the status of Respondents 1-3 regarding the arbitration proceedings, uninfluenced by this judgment, and to complete the proceedings expeditiously