Pending Arbitrations do Not End with Death of a Party, Rules SC

Recently, the Supreme Court was called upon to address a crucial question at the intersection of arbitration law and constitutional remedies whether a legal heir claiming rights in a disputed property can challenge an arbitral award by invoking the Court’s supervisory jurisdiction, or must follow the statutory mechanism under the Arbitration and Conciliation Act, 1996.

The dispute arose from a 2007 agreement for sale executed between the appellant’s uncle and the respondent. After the uncle’s death, arbitration proceedings were initiated against a person alleged to be his legal representative, culminating in an award directing execution of the sale deed. The Appellant later claimed lack of knowledge of the proceedings, challenged the status of the alleged legal representative, and asserted his own share in the property based on a prior partition decree. The High Court rejected his challenge, holding that the remedy lay under the Arbitration Act.

The Appellant argued that the award was invalid as he was not heard and could not invoke Section 34 since he was not a party, thereby justifying recourse to Article 227. The Respondent countered that a legal heir falls within the scope of “party” under the Act and must avail the statutory remedy under Section 34 of the Arbitration Act.

The Court emphasised that the Arbitration Act is a self-contained code and judicial interference must remain limited. It observed that “The appropriate relief for a legal representative to challenge an arbitral award is under Section 34 of the Arbitration Act and not under Article 227 of the Constitution/Section 115 of the CPC.” It further reiterated that “Judicial interference beyond the scope and procedure enumerated under Section 34, must be exercised in ‘exceptional rarity’…”

Clarifying the position of legal representatives, the Court held that “Upon the death of a party, legal representatives step into the shoes of a party for the purposes of the Act.” And added that “Denying a legal representative the right to challenge an award under Section 34, would defeat the very object of the Arbitration Act…”

The Supreme Court upheld the High Court’s view, dismissed the appeal, and granted liberty to the appellant to pursue remedies under the Arbitration Act, with limitation running from the date of the judgment.

Case Title: V.K. John v. S. Mukanchand Bothra (D) through LRs & Ors

Case No.: Arising out of SLP (C) No. 16162 of 2023

Coram: Hon’ble Mr. Justice Sanjay Karol and Hon’ble Mr. Justice Vipul M. Pancholi

Advocate for the Appellant: Adv. Abraham Markos, Adv. Atul Shankar Vinod, Adv. Dileep Pillai, Adv. Kannan Gopal Vinod, AOR M. P. Vinod

Advocate for the Respondent: Sr. Adv. (A.C.) Chakradhari Sharan Singh, Adv. Chandan Malav, Adv. Gauri Rajput.

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