The Allahabad High Court observed that Article 226/227 is a constitutional provision which remains untouched by the non-obstante clause of Section 5 of the Act, and 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.
Brief Facts:
The dispute between Sanjeev Kumar Agarwal (petitioner) and Sudhir Mohan Agrawal (respondent) regarding the assets of a firm located in Etmadpur, Agra, was referred to arbitration on September 13, 2022. During the arbitration proceedings, the petitioner sought to examine a deed of sole conversion executed on April 1, 2005, and filed an application on May 19, 2023, to summon a witness. A summons was issued on the same day. Subsequently, the petitioner applied Section 27 of the Arbitration Act to enforce the summons. However, the Commercial Court in Agra rejected this application, stating that the petitioner had not obtained prior approval from the tribunal before filing. The petitioner has challenged this order under Article 227 of the Indian Constitution.
Contentions of the Applicant:
The learned counsel appearing on behalf of the petitioner submitted that the court was not justified in rejecting the application as the term prior approval under section 27 is not used. It was further contended that the term approval means ratification, which can obtained later. Further, the counsel relied on the decision in the case of Deep Industries Limited v. Oil and Natural Gas Corporation Limited to argue that the petition under Article 227 is maintainable and not barred by section 5 of the arbitration act.
Contentions of the Respondent:
The learned counsel appearing on behalf of the respondent submitted that the present writ petition is not maintainable in view of section 5 of the Act, and the petitioner has equally efficacious remedy under sections 34 and 37 of the Act. At this stage, the present writ petition is not maintainable.
Observations of the Court:
The court referred to the decision in the case of Bajaj Hindustan Limited vs. State of Uttar Pradesh, wherein it was held that the word approval includes ratification, and the ratification can also be obtained after the act, and it is not mandatory that it has to be taken before any action being taken. The court further noted that the word prior approval is conspicuous by its absence under section 27 of the act; therefore, the application could not be dismissed on this ground. The court stated that the order 'approval' includes ratifying the action or approval can be granted later, but on that basis, it would not mean that before filing the application under section 27, prior approval is mandatory.
Further, it was observed by the court that Section 5 of the arbitration act does not affect constitutional provisions like Article 227, and it remains unaffected by the non-obstante clause in Section 5. Further, the court referred to the decision in the case of Bajaj Hindustan Limited, wherein it was held that, at the same time, we cannot forget that Article 227 is a constitutional provision which remains untouched by the non-obstante clause of Section 5 of the Act.
The decision of the Court:
The court allowed the petition and quashed the impugned order.
Case Title: Sanjeev Kumar Agarwal vs Sudhir Mohan Agrawal
Coram: Hon’ble Mr Justice Piyush Agrawal
Case No.: Matters under Article 227 of 2024
Advocate for the Petitioner: Rishabh Agarwal, Tarun Agrawal
Read Judgment @LatestLaws.com
Picture Source :
