M/S. Manav Enterprises vs M/S. Rathi Steel & Power Ltd.
2013 Latest Caselaw 4996 Del

*     IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                  Order pronounced on: October 30, 2013
+                        CM(M) No.1176/2013
      M/S MANAV ENTERPRISES                        ..... Petitioner
                   Through  Mr.Chetan Sharma, Sr. Adv. with
                            Mr.Santosh Chaurihaa, Mr.Ashutosh
                            Dubey and Ms.Mohini, Advs.
                         versus
      M/S RATHI STEEL & POWER LTD                           ..... Respondent
                    Through  None.

      CORAM:
      HON'BLE MR. JUSTICE MANMOHAN SINGH
MANMOHAN SINGH, J. (ORAL)

CM No.17192/2013

Exemption allowed, subject to all just exceptions.

The application is disposed of.

CM(M) No.1176/2013 & CM No.17193/2013

1. The petitioner has filed the present petition under Article 227 of the Constitution of India for setting aside the order dated 30 th September, 2013 passed by the learned Arbitrator in the arbitration proceedings between the petitioner and respondent on the application of the petitioner under Section 16 of the Arbitration and Conciliation Act, 1996 questioning the authority, scope and jurisdiction of the Arbitral Tribunal conducting the arbitration proceedings.

2. Mr.Chetan Sharma, learned Senior counsel appearing on behalf of the petitioner, has mainly argued that the appointed arbitrator is an employee of

the respondent and working as General Manager (Commercial), deriving monetary benefits on regular basis and has every reason for being biased in view of his position and interest. The learned Arbitrator was actively involved in the business transaction as that of confirmation of delivery of goods and payment to the petitioner.

3. The second submission of Mr.Chetan Sharma is that there is no privity of contract between the parties and the petitioner did not sign any documents. It is the manipulations of claimant/respondent to use the same for extraneous purposes against the parties which has been done by the respondent in the present case. The purchase order No.30 which is in dispute is an unilateral order wherein an order was communicated to the respondent on phone and the material was supplied and the number of the order was communicated later on. It is the respondent who has not put forward the terms of the purchase order which is clear from the purchase order itself as the terms of the supply of the material contains in the first page only and only first page was communicated to the respondent. It is submitted that the petitioner never agreed for any such terms of arbitration nor the petitioner has signed any documents in this regard nor such situation ever arises before the petitioner during the transaction with the respondent/claimant.

4. As far as the submission of the learned counsel for the petitioner is concerned, no doubt the petitioner may have some merit in the petition as alleged. But, the petitioner is not able to satisfy the Court with regard to the maintainability of the present petition in view of the settled law on this aspect. In the case of SBP & Co. Vs. Patel Engineering Ltd. and Anr., (2005) 8 SCC 618 which was subsequently followed in the case of SBP &

Co. Vs. Patel Engineering Ltd. and Anr., 2009 (10) SCC 293. Relevant paras 45, 46 and 47 of SBP & Co. (supra) read as under:

"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 of India. 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 his 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, the 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 of India. Such an intervention by the High Courts is not permissible.

46. The object of minimizing 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 of the Constitution of India or under Article 226 of the Constitution of India 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.

47. We, therefore, sum up our conclusions as follows:

(vi) Once the matter reaches the arbitral tribunal or the sole arbitrator, the High Court would not interfere with orders passed by the arbitrator or the arbitral tribunal during the course of the arbitration proceedings and the parties could approach the court only in terms of Section 37 of the Act or in terms of Section 34 of the Act."

5. In view of the settled law as mentioned above, the present petition filed under Article 227 of Constitution of India, is not maintainable. However, the petitioner is at liberty to raise its grievances before the appropriate forum as well as the appropriate stage. The petition is therefore dismissed.

(MANMOHAN SINGH) JUDGE OCTOBER 30, 2013