The Ozone Park (Top) Resident ... vs Avs Facilities Management Pvt. ...
2021 Latest Caselaw 3227 Del

                          $~42 (SB)
                          *     IN THE HIGH COURT OF DELHI AT NEW DELHI

                          %                                    Date of decision: 29th November, 2021

                          +      W.P.(C) 13488/2021 & CM APPL. 42541/2021 (For Exemption)
                                 CM APPL. 42542/2021 (For Stay)

                                 FRONTLINE RETAIL PVT. LTD.                          ..... Petitioner
                                                    Through:       Mr.Pradeep Mishra, Adv.
                                                    versus
                                 ADIDAS INDIA MARKETING PVT. LTD.                    ..... Respondent
                                                    Through:       Mr.Sachin Datta, Sr. Adv with
                                                                   Mr.Niraj Singh, Adv.
                          CORAM:
                          HON'BLE MR. JUSTICE YASHWANT VARMA

                          YASHWANT VARMA, J. (ORAL)

CM APPL. 42541/2021 (For Exemption) Allowed, subject to all just exceptions.

Application stands disposed of.

W.P.(C) 13488/2021 and CM APPL. 42542/2021 (For Stay )

1. Heard learned counsel for parties.

2. This petition impugns the order dated 13.10.2021 passed by the Arbitral Tribunal in proceedings pending before it and refusing a prayer made on behalf of the petitioner to be permitted to lead additional evidence. Although the petition is filed as being under Article 226 of the Constitution, learned counsel for the petitioner has also sought to invoke the powers of the Court as conferred by Article 227 of the Constitution and submits that a

Signature Not Verified Digitally Signed By:NEHA Signing Date:02.12.2021 14:37:10 grave and irreparable injustice shall be caused to the petitioner in case the order as passed by the Tribunal was permitted to exist.

3. Learned counsel for the respondent while opposing the writ petition has however drawn the attention of the Court to a recent decision handed down by three learned Judges of the Supreme Court in Bhaven Construction v. Executive Engineer, Sardar Sarovar Nigam Limited and Anr.1 and submits that as would be evident from a reading of the order impugned here, the Tribunal has clearly acted within its jurisdiction and that in any case the grounds of challenge would clearly not fall within the scope of an "exceptional rarity" as was explained in Bhaven Construction. In the aforesaid backdrop and in light of the principles enunciated in the decision of the Supreme Court noticed above, learned Senior Counsel contends that the writ petition warrants dismissal.

4. In Bhaven Construction the Supreme Court while recognizing the width and amplitude of the constitutional powers conferred upon the High Court by virtue of Article 227 of the Constitution, also emphasized the need for restraint and a judicial hands off attitude to be adopted by courts bearing in mind the underlying scheme of the Arbitration and Conciliation Act, 1996, the settled principles of un-breakability which apply as also the mandate of Section 5 which in unequivocal terms mandates that judicial authorities shall not intervene in arbitral proceedings except where so provided under the Act. Explaining the aforesaid position, their Lordships in paragraphs 18 to 24 of the report held thus:-

1 2021 SCC OnLine SC 8

Signature Not Verified Digitally Signed By:NEHA Signing Date:02.12.2021 14:37:10 "18. It is therefore, prudent for a Judge to not exercise discretion to allow judicial interference beyond the procedure established under the enactment. This power needs to be exercised in exceptional rarity, wherein on party is left remediless under the statute or a clear „bad faith‟ shown by one of the parties. This high standard set by this Court is in terms of the legislative intention to make the arbitration fair and efficient.

19. In this context we may observe Deep Industries Limited v. Oil and Natural Gas Corporation Limited, 2019 SCC OnLine SC 1602, wherein interplay of Section 5 of the Arbitration Act and Article 227 of the Constitution was analyzed as under:

"15. Most significant of all is the non obstante clause contained in Section 5 which states that notwithstanding anything contained in any other law, in matters that arise under Part I of the Arbitration Act, no judicial authority shall intervene except where so provided in this Part. Section 37 grants a constricted right of first appeal against certain judgments and orders and no others. Further, the statutory mandate also provides for one bite at the cherry, and interdicts a second appeal being filed (See Section 37(2) of the Act)

16. This being the case, there is no doubt whatsoever that if petitions were to be filed under Articles 226/227 of the Constitution against orders passed in appeals under Section 37, the entire arbitral process would be derailed and would not come to fruition for many years. 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. In these circumstances, what is important to note is that 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 by us herein above so that interference is restricted to orders that are passed which are patently lacking in inherent jurisdiction."

20. In the instant case, Respondent no. 1 has not been able to show exceptional circumstance or „bad faith‟ on the part of the Appellant, to invoke the remedy under Article 227 of the Constitution. No doubt the ambit of Article 227 is broad and pervasive, however, the High Court

Signature Not Verified Digitally Signed By:NEHA Signing Date:02.12.2021 14:37:10 should not have used its inherent power to interject the arbitral process at this stage. It is brought to our notice that subsequent to the impugned order of the sole arbitrator, a final award was rendered by him on merits, which is challenged by the Respondent No. 1 in a separate Section 34 application, which is pending.

21. Viewed from a different perspective, the arbitral process is strictly conditioned upon time limitation and modeled on the „principle of unbreakability‟. This Court in P. Radha Bai v. P. Ashok Kumar, (2019) 13 SCC 455, observed:

36.3. Third, Section 34(3) reflects the principle of unbreakability. Dr. Peter Binder in International Commercial Arbitration and Conciliation in UNCITRAL Model Law Jurisdictions, 2nd Edn., observed:

"An application for setting aside an award can only be made during the three months following the date on which the party making the application has received the award. Only if a party has made a request for correction or interpretation of the award under Article 33 does the time- limit of three moths begin after the tribunal has disposed of the request. This exception from the three-month time-limit was subject to criticism in the working group due to fears that it could be used as a delaying tactics. However, although "an unbreakable time-limit for applications for setting aside" was sought as being desirable for the sake of "certainty and expediency" the prevailing view was that the words ought to be retained "since they presented the reasonable consequence of Article 33".

According to this "unbreakability" of time-limit and true to the "certainty and expediency" of the arbitral awards, any ground for setting aside the award that emerge after the three-month time- limit has expired cannot be raised.

37. Extending Section 17 of the Limitation Act would go contrary to the principle of "unbreakability‟ enshrined under Section 34(3) of the Arbitration Act.

(emphasis supplied)

Signature Not Verified Digitally Signed By:NEHA Signing Date:02.12.2021 14:37:10

22. If the Courts are allowed to interfere with the arbitral process beyond the ambit of the enactment, then the efficiency of the process will be diminished.

23. The High Court did not appreciate the limitations under Articles 226 and 227 of the Constitution and reasoned that the Appellant had undertaken to appoint an arbitrator unilaterally, thereby rendering the Respondent no. 1 remediless. However, a plain reading of the arbitration agreement points to the fact that the Appellant herein had actually acted in accordance with the procedure laid down without any mala fides."

5. Bearing in mind the principles enunciated by the Supreme Court in Bhaven Construction and in the absence of the challenge in the present petition being liable to be viewed as falling in the genre of an exceptional rarity coupled with the absence of any allegation of bad faith, this Court finds no ground to entertain the challenge to the order passed by the Arbitral Tribunal.

6. The writ petition consequently fails and shall stand dismissed along with the pending application.

YASHWANT VARMA, J.

NOVEMBER 29, 2021 SU

Signature Not Verified Digitally Signed By:NEHA Signing Date:02.12.2021 14:37:10