Himachal Pradesh High Court

M/S V. Kare Biotech vs Kare Biotech on 21 June, 2022

Bench: Satyen Vaidya

                         Reportable/Non-reportable




     IN THE HIGH COURT OF HIMACHAL PRADESH SHIMLA




                                                           .
                    ON THE 21st DAY OF JUNE, 2022





                          BEFORE
               HON'BLE MR. JUSTICE SATYEN VAIDYA





         CIVIL MISC. PETITION MAIN (ORIGINAL) NO. 130 OF
                               2022.





    Between:-
    1.    M/S V. KARE BIOTECH, VILLAGE DHANG
          NIHALI, TEHSIL NALAGARH, DISTRICT
          SOLAN, H.P. THROUGH ITS PARTNER

          GURCHARAN SINGH KAPOOR SON OF

          SH.    SARDAR     SINGH    KAPOOR,
          RESIDENT OF GURUNANAK MOHALLA
          NABHA, DISTRICT PATIALA, PUNBJAB.

    2.    SH. GURCHARAN SINGH KAPOOR SON



          OF SH. SARDAR SINGH KAPOOR, AGED
          62.




    3.    INDERJOT  SINGH   SON    OF   S.
          GURCHARAN SINGH KAPOOR, AGE 39.





    4.    SH. RUPINDERJOT SINGH KAPOOR SON
          OF GURCHARAN SINGH KAPOOR, AGE





          33.

          ALL  RESIDENTS  OF   GURUNANAK
          MOHALLA, NABHA, DISTRICT PATIALA,
          PUNJAB

                                                 ....PETITIONERS.
    (BY MR. SUBHASH SHARMA, ADVOCATE)


    AND




                                          ::: Downloaded on - 21/06/2022 20:04:43 :::CIS
                               ...2...




                                                       .
    1.   HEMANT   AGGARWAL    SONOF   SH.





         MAHESH RAI AGGARWAL, RESIDENT OF
         HOUSE  NO.   1571, SECTOR   38-B,
         CHANDIGARH.160036.





    2.   ARVIND AGGARWAL SON OF SH. V. P.
         AGGARWAL, RESIDENT OF HOUSE NO.
         1560, SECTOR 38-B, CHANDIGARH.





                                      ....RESPONDENTS.


    (MR. SANJEEV KUTHIALA, SR. ADVOCATE

    WITH MS. ANAIDA KUTHIALA, ADVOCATE)

    RESERVED ON : 17th JUNE, 2022.
    DECIDED ON : 21st JUNE, 2022.



              This petition coming on for orders this day, the

    Court passed the following: -




                         ORDER

By way of instant petition, the petitioners have

assailed order dated 18.12.2021 passed by the learned

Arbitrator, whereby the application of the petitioners

herein under Order 11, Rules 1 & 2 read with Section 151

of the Code of Civil Procedure (for short "CPC) was

dismissed.

...3...

2. Respondents herein are the claimants before

the learned Arbitrator, who have already submitted their

claim. Before entering into defence, petitioners herein

moved an application under Order 11, Rules 1 & 2 read

with Section 151 of the CPC seeking reply of the

respondents herein to the interrogatories formulated on

behalf of the non-claimants/petitioners herein.

3. Impugned order reveals that the above noted

application of the petitioners herein was rejected by the

learned Arbitrator broadly on two grounds. Firstly, that

the application was not maintainable before filing of

written statement and secondly, that without the written

statement of the petitioners herein on record, the

application was premature as the relevance of the

interrogatories could not be adjudged.

4. The first question that arises in the case is,

whether an order passed on miscellaneous application

during arbitral proceeding will be open to challenge

...4...

before this court under Article 227 of the Constitution of

India?

5. I have heard learned counsel for parties and

have also perused the available records.

6. Petitioners herein at the very out set and in the

first instance have submitted that the Arbitration and

Conciliation Act, 1996 (for short "1996 Act") does not

provide for any remedy to challenge the impugned order

and thus faced with the situation, petitioners had no

other alternative efficacious remedy except to approach

this Court by way of instant petition. Additionally, it has

been submitted that Article 227 of the Constitution of

India vests this Court with power of superintendence over

all courts and tribunals. The forum of Arbitrator is also a

tribunal and hence the jurisdiction of this Court under

Article 227 of the Constitution of India cannot be said to

be ousted.

7. On the other hand, Shri Sanjeev Kuthiala,

Senior Advocate, assisted by Ms. Anaida Kuthiala,

...5...

Advocate, representing the respondents has opposed the

contention so raised on behalf of the petitioners with all

vehemence.

8. It will be gainful to summarize the framework

of 1996 Act for the purposes of finding answer as to

maintainability of this petition.

9. The preamble of 1996 Act reads as under: -

r "PREAMBLE.

WHEREAS the United Nations Commission on International Trade Law (UNCITRAL)has adopted the UNCITRAL Model Law on International

Commercial Arbitration in 1985;

AND WHEREAS the General Assembly of the United

Nations has recommended that all countries give due consideration to the said Model Law, in view of

the desirability of uniformity of the law of arbitral procedures and the specific needs of international

commercial arbitration practice;

AND WHEREAS the UNCITRAL has adopted the UNCITRAL Conciliation Rules in 1980;

AND WHEREAS the General Assembly of the United Nations has recommended the use of the said Rules in cases where a dispute arises in the context of international commercial relations and

...6...

the parties seek an amicable settlement of that

dispute by recourse to conciliation;

AND WHEREAS the said Model Law and Rules make significant contribution to the establishment of a

unified legal framework for the fair and efficient settlement of disputes arising in international commercial relations;

AND WHEREAS it is expedient to make law respecting arbitration and conciliation, taking into account the aforesaid Model Law and Rules;"

10. United Nations Commission on International

Trade Law (UNCITRAL) adopted a Model Law in 1985 on

International Commercial Arbitration. The General

Assembly of the United Nations recommended member

states to give due consideration to the model law to have

uniformity in arbitration procedure which resulted in

passing of the 1996 Act. The Act is a complete Code in

itself and consolidates and amends the law relating to

Domestic Arbitration, International Commercial

Arbitrations and enforcement of foreign arbitral award.

Part-I of 1996 Act contains Sections 2 to 43. Section 5

...7...

thereof starts with a non obstante clause and strictly

prohibits intervention by any judicial authority in matters

governed by Part-I of 1996 Act except where so provided

in such part. The intent of legislature is loud and clear.

By making the 1996 Act as a complete Code and

incorporation of provision like Section 5 thereof arbitral

proceedings were not only kept independent but free

from any unnecessary delays also.

11. That being the backdrop, powers of this court

under Article 227 of the Constitution of India have to be

evaluated. Though section 5 of "1996 Act" cannot be a

clog on powers of constitutional courts, nevertheless

such powers may also not be readily available.

12. In Deep Industries Limited vs. Oil and

Natural Gas Corporation Limited and Another,

(2020)15 SCC 706, Hon'ble Supreme Court of India

while dealing with a slightly different fact situation, where

proceedings under Article 227 of the Constitution were

...8...

instituted assailing the order passed in first appeal under

Section 37 of 1996 Act, it was held as under: -

"16. 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)

17. 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

...9...

passed which are patently lacking in inherent

.

jurisdiction."

13. Recently, in Bhaven Construction through

authorised Signatory Premjibhai K. Shah vs.

Executing Engineer, Sardar Sarovar Narmada

Nigam Limited and Another, (2022)1 SCC 75, a three

principle.

r to Judges Bench of Supreme Court has reiterated the same

14. However, the answer to question posed

hereinabove, in the fact situation of instant case, finds

complete answer in SBP & Co. vs. Patel Engineering

Ltd. and another, (2005)8 SCC 618, wherein the

Constitutional Bench of Supreme Court of India in has

observed 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

...10...

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."

...11...

15. Thus, the contention raised on behalf of the

petitioners that they are remediless under the 1996 Act is

liable to be rejected. A party to arbitration proceedings

has a remedy to challenge the award passed in such

proceedings under Section 34 of the 1996 Act. One of the

grounds for assailing arbitral award under the aforesaid

provision is that such award is in conflict with public

policy of India. The term "public policy of India" carries

within it innumerable facets. It is altogether a different

thing to say that there is no immediate remedy available

to the petitioners than to say that they have no remedy