The Delhi High Court recently held that a writ petition before the High Court under Article 227 of the Constitution is maintainable against a commercial court's refusal to entertain a plea against an arbitral award due to lack of jurisdiction [Ms CP Rama Rao Sole Proprietor vs. National Highways Authority Of India]
The Bench of Justice Yashwant Varma and Justice Ravinder Dudeja considered whether the District Judge's order would have to be treated as one refusing to set aside an arbitral award - against which an appeal would lie under Arbitration and Conciliation Act - and not a writ plea.
Dr. Amit George, amicus curiae, in this regard referred to a Supreme Court ruling in which it was held that a commercial court's refusal to entertain a plea citing lack of jurisdiction would not amount to refusal to set aside the arbitral award.
Similarly, the Bench in the present case found that that District Judge had refused to entertain the Section 34 petition - the challenge against arbitral award - only because a Section 11 petition for appointment of arbitrator in the matter had earlier been filed before the High Court.
As per Section 42 of the Arbitration and Conciliation Act, when an application with respect to an arbitration agreement has been made in a court, "that Court alone shall have jurisdiction over the arbitral proceedings and all sequent applications arising out of that agreement and the arbitral proceedings shall be made in that Court and in no other Court."
Considering the position of law, the Court said,
"That order [of Commercial Court] clearly cannot be described to be a refusal to set aside an award on grounds which are specified and spoken of in Section 34(2) of the Act."
In the present case, the amicus submitted that in the absence of the petitioner having a remedy to file appeal, it would be justified in seeking to invoke the High Court's power of superintendence under Article 227 of the Constitution.
The Bench agreed and said that not only is Article 227 power an extension of the High Court's jurisdiction to exercise judicial review, it permits exercise of its constitutional authority of superintendence and supervision to adjudicate the validity of orders passed by the District Courts.
The High Court then proceeded to consider whether the District Judge had formed a correct view on the maintainability of the Section 34 plea.
It observed that District Judge had taken an erroneous view to hold that once an application under Section 11 was made to the High Court, Section 42 was attracted.
"As has been unequivocally held by the Supreme Court, a petition under Section 11 for the constitution of an arbitral tribunal cannot be recognised as an application made to a court. The provisions of Section 42 would consequently be inapplicable," the Court ruled.
Therefore, the Court concluded that District Judge clearly erred in returning the petition for presentation before the High Court and hence set aside the order.
"The Section 34 petition shall consequently stand revived on the board of the concerned Commercial Court to be heard afresh and bearing in mind the observations made hereinabove," it added.
Advocates Angad Mehta, Rupin Bahl and Ansh appeared for the petitioner.
Advocates Manank Grover and Pratibha Vyas represented the National Highways Authority of India.
Dr. Amit George served as amicus curiae in the case. He was assisted by advocates Rishabh Dheer, Arkaneil Bhaumik and Dushyant Kishan Kaul.
[Read Judgment]