Kerala High Court
M.I. Mohammed vs M/S. Hll Life Care Ltd on 26 March, 2025
1
OPC 316/24
2025:KER:26487
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE BASANT BALAJI
WEDNESDAY, THE 26TH DAY OF MARCH 2025 / 5TH CHAITHRA, 1947
OP(C) NO. 316 OF 2024
AOP NO.127 OF 2021 OF ASSISTANT SESSIONS COURT/PRINCIPAL SUB COURT
/ COMMERCIAL COURT, ERNAKULAM
PETITIONER/S:
M.I. MOHAMMED,AGED 66 YEARS
GOVERNMENT CONTRACTOR, MANATH BUILDING, THRIKKAKARA P.O.,
KOCHI, PIN - 682021
BY ADVS.K.BABU THOMAS
MARYKUTTY BABU
DRISYA DILEEP
RESPONDENT/S:
1 M/S. HLL LIFE CARE LTD.
A GOVERNMENT OF INDIA ENTERPRISE, B-14A, SECTOR - 62, NOIDA,
UTTAR PRADESH, REPRESENTED BY ITS CHAIRMAN & MANAGING
DIRECTOR, PIN - 201307
2 THE DEPUTY VICE PRESIDENT
HLL BHAVAN, HLL LIFE CARE LTD., HLL INFRA TECH SERVICES
LTD., GOLDEN JUBILEE BLOCK, POOJAPPURA P.O.,
THIRUVANNTHAPURAM, PIN - 695012
3 THE ENGINEER-IN-CHARGE
HLL BHAVAN, HLL LIFE CARE LTD., HLL INFRA TECH SERVICES
LTD., GOLDEN JUBILEE BLOCK, POOJAPPURA P.O.,
THIRUVANNTHAPURAM., PIN - 695012
BY ADVS. AJU MATHEW
NIKHILESH KRISHNAN(D/1236/2001)
ABU MATHEW(K/742/2000)
THIS OP (CIVIL) HAVING COME UP FOR ADMISSION ON 26.03.2025, THE COURT
ON THE SAME DAY DELIVERED THE FOLLOWING:
2
OPC 316/24
2025:KER:26487
JUDGMENT
(Dated this the 26th day of March 2025)
This original petition is filed against Ext P12 order dated
29.11.2023 in A.O.P. No.127/2021, on the files of the Principal
Sub Court, Ernakulam. The petitioner herein is the respondent in
the Arbitration proceedings.
2. The petitioner and respondents entered into a contract
on agreement dated 31/07/2013, for the construction of a
Multidisciplinary Research Laboratory and Animal House at
Medical College, Thiruvananthapuram, valued at Rs.
23,90,36,760/-. The contract stipulated an 18-month completion
period, ending on 02/06/2015. However, the project was not
completed until 15/05/2018. The petitioner has initiated
arbitration proceedings, claiming that the respondents' delays
were the sole cause of the extended project timeline.
2025:KER:26487
3. With the contract's expiry on 02/06/2015, the contractual
rates became unenforceable. Subsequently, on 31/12/2015, the
petitioner formally notified the respondents, demanding for
payment at prevailing market rates for the work extended beyond
the contract period, due to the respondents' delays. The
respondents, while compelling the petitioner to complete the
project, contested the petitioner's entitlement to market rates. The
respondents' default on admitted payment obligations
necessitated the filing of W.P.(C) No. 36322 of 2018 before this
court and by judgment dated 14/12/2018, directed the respondents
to settle the admitted sums within three months. Their failure to
comply with the order resulted in contempt proceedings, W.P.(C)
No. 3199/2024, pending which partial payments were made.
4. Due to the disputes between the parties, the petitioner
demanded payment of Rs. 7,11,41,406/- towards unpaid value of
works carried out, vide letter dated 12/06/2019. As per clause 25
2025:KER:26487
of the agreement, a Dispute redressal committee of 3 members
was constituted by the respondents but, the said demand of the
petitioner was denied by decision dated 24/01/2020. Thus,
invoking the arbitration clause in the agreement, the petitioner
addressed to the first respondent by Ext.P1 letter dated
31/01/2020, demanding a panel of 3 former Judges of this Court
enabling the petitioner to nominate any one of them to be
appointed as the sole arbitrator for resolution of disputes, to which
the first respondent has supplied a panel in reply, comprising 3
former Judges of this Court vide Ext.P2 letter dated 7.3.2020.
Thereafter, the petitioner vide Ext.P3 letter dated 10.03.2020, sent
a panel of 3 Engineers for his nomination to be appointed as the
sole arbitrator to which the first respondent intimated his
disagreement to the panel of Engineers, vide Ext.P4 letter dated
11.03.2020 and insisted the selection from one among the
proposed retired Judges of this Court.
2025:KER:26487
5. Further, the petitioner, in accordance with the agreed
procedure, nominated Hon. Justice Mr. M. Ramachandran, a
retired Judge of this Court, as the sole arbitrator. This nomination
was communicated by the petitioner's letter dated 13/03/2020
(Ext.P5). As per the pre-existing agreement, the first respondent's
role was limited to intimate the petitioner's nomination, as
mutually agreed. Consequently, the first respondent issued Ext.P6
letter dated 16/03/2020 to Hon. Justice Mr. M. Ramachandran,
confirming his appointment as the sole arbitrator and outlining
the petitioner's claim of Rs. 9,20,37,814/.
6. The Sole Arbitral Tribunal concluded the proceedings
and issued Ext.P7 award dated 18/08/2021 in favour of the
petitioner. The award directed the respondents to pay
Rs.7,31,89,098/- within three months and also mandated the
release of a retention amount of Rs.1,10,45,050/- upon the
petitioner's submission of a representation within one month.
2025:KER:26487
However, the respondents' counterclaims for liquidated damages
were rejected.
7. The respondents challenged Ext P7, by filing O.P.
(Arbn.) No. 127 of 2021 on 14/12/2021 under Section 34 of the
Arbitration and Conciliation Act, 1996 (for short 'the Act') before
the Commercial Court (Principal Sub Judge), Ernakulam, to
which the petitioner filed a counter-affidavit on 16/08/2022
(Ext.P8). The respondents filed an amendment application Ext.P9
as I.A. No. 5 of 2023 dated 23/05/2023 in the said O.P. (Arbn.),
which was allowed, and they subsequently filed the amended O.P.
(Arbn.) No. 127 of 2021 (Ext. P10) on the same date.
8. According to the petitioner, an express written
agreement to waive the bar under Section 12(5) of the Act was
formed when, after the dispute arose, the petitioner, by Ext. P1
letter dated 31/01/2020, requested a panel of former Judges for
selection of the sole arbitrator. The respondents' acceptance and
2025:KER:26487
provision of the panel via Ext.P2 on 07/03/2020, constituted the
requisite agreement under the proviso to Section 12(5). Further,
the petitioner's nomination of the sole arbitrator from the provided
panel reinforces the existence of this very written waiver
agreement.
9. In response to the amended O.P. (Arbn.) No. 127 of
2021, the petitioner filed a counter-affidavit dated 18/10/2023 as
Ext.P11 wherein the petitioner emphasized the lawful nomination
of the sole arbitrator and contended that the respondent was only
discharging a post office function as mutually agreed. The
petitioner relied on Voe Stalpine Scheinen GMB H v. Delhi
Metro Rail Corporation Ltd., (2017) 4 SCC 665), to assert that
the bar under Section 12(5) of the Act is not triggered in the
present case when a panel is provided by the appointing authority
and the contractor nominates the arbitrator, even if the appointing
authority who is ineligible to act as an arbitrator and
2025:KER:26487
consequently, ineligible to appoint an arbitrator does so.
10. Subsequently, the Sub Court, Ernakulam, by Ext. P12
order dated 29/11/2023 in A.O.P. No. 127 of 2021, declared Ext.
P7 award as null and void and the petitioner contended that the
respondents are liable for compensation. Hence, aggrieved by Ext
P12 order, the present O.P. (C) is filed invoking Article 227 of the
Constitution of India.
11. The counsel for the respondent has raised a preliminary
objection that the Original Petition filed under Article 227 of the
Constitution of India, is not maintainable against Ext.P12 order
whereby the award Ext.P7 is set aside under Section 34 of the Act.
12. Heard both sides.
13. The petitioner was awarded Rs.73,189,099/- by Ext P7
award dated 18.08.2021 in Arbitration Case No.2 of 2020. The
award stipulated payment within three months, with a 10% annual
interest rate applicable thereafter. The respondents challenged
2025:KER:26487
this award under Section 34 of the Act before the Commercial
Court, Ernakulam in A.O.P. No. 127 of 2021. The Commercial
Court, vide Ext.P12, declared the arbitration award non-Est and
set it aside. The petitioner now challenges the Commercial
Court's order through this O.P.(C.), asserting the absence of any
other effective legal remedy.
14. Counsel for the petitioner Sri. Babu Thomas K.
submitted that the respondent has filed the AOP placing reliance
on Section 12(5) of the Act, which reads as follows:
"12. Grounds for challenge:
(1). xxx
(2) xxxx
(3) xxxx
(4) xxxx
(5) Notwithstanding any prior agreement to the contrary,
any person whose relationship, with the parties or counsel
or the subject matter of the dispute, falls under any of the
categories specified in the Seventh Schedule shall be
ineligible to be appointed as an arbitrator:
Provided that parties may, subsequent to disputes having
arisen between them, waive the applicability of this sub-
section by an express agreement in writing."
2025:KER:26487
15. Under Section 34(2) of the Act, a court's power to set
aside an award is strictly limited to the grounds specified therein.
The petitioner argues that the Commercial Court's decision,
purportedly based on Section 12(5) of the Act, related to arbitrator
impartiality, falls outside the permissible grounds for challenge
under Section 34. Consequently, the petitioner contends that the
order is not appealable under Section 37, which applies only to
orders under Section 34. Therefore, the petitioner asserts that their
only recourse is to invoke the supervisory jurisdiction of this court
under Article 227 of the Constitution of India.
16. The respondents, conversely, maintain that Section 34
is the sole provision empowering a court to set aside an arbitral
award. Among other grounds enumerated under Section 34 of the
Act, they specifically rely on Section 34(2)(b)(ii).
"34. Application for setting aside arbitral award. -
(1) Recourse to a Cour against an arbitral award may be
made only by an application for setting aside such award
2025:KER:26487
in accordance with sub-section (2) and sub-section (3).
(2) An arbitral award may be set aside by the Court only
if-
(a) the party making the application furnishes proof
that-
(i) a party was under some incapacity; or
(ii) the arbitration agreement is not valid under the
law to which the parties have subjected it or, failing any
indication thereon, under the lam for the time being in
force; or
(iii) the party making the application was not given
proper notice of the appointment of an arbitrator or of the
arbitral proceedings or was otherwise unable to present
his case; or
(iv) the arbitral award deals with a dispute not
contemplated by or not falling within the terms of the
submission to arbitration, or it contains decisions on
matters beyond the scope of the submission to arbitration:
Provided that, if the decisions on matters submitted
to arbitration can be separated from those not so
submitted, only that part of the arbitral award which
contains decisions on matters not submitted to arbitration
may be set aside; or
(v) the composition of the arbitral tribunal or the
arbitral procedure was not in accordance with the
agreement of the parties, unless such agreement was in
conflict with a provision of this Part from which the
parties cannot derogate, or, failing such agreement, was
not in accordance with this Part; or
(b) the Court finds that-
(i) the subject matter of the dispute is not capable
of settlement by arbitration under the law for the time
being in force, or
(ii) the arbitral award is in conflict with the public
policy of India.
2025:KER:26487
[Explanation 1.For the avoidance of any doubt, it is
clarified that an award is in conflict with the public policy
of India, only if,-
(1) the making of the award was induced or
affected by fraud or corruption or was in violation of
section 75 or section 81; or
(ii) it is in contravention with the fundamental
policy of Indian law; or
(iii) it is in conflict with the most basic notions of
morality or justice.
Explanation 2.-For the avoidance of doubt, the test as
to whether there is a contravention with the fundamental
policy of Indian law shall not entail a review on the merits
of the dispute.
xxx xxx xxx"
17. The respondents argued that Section 12(5) of the Act,
read with the Seventh Schedule, prohibits individuals specified
therein from being appointed as arbitrators. Citing TRF Limited
v. Energo Engineering Projects Limited [(2017) 8 SCC 377],
they asserted that once the arbitrator has become ineligible by
operation of law, he cannot nominate another as an arbitrator and
the arbitrator becomes ineligible as per the prescription
contained under Section 12(5) of the Act.
2025:KER:26487
18. Consequently, they contended that any award
stemming from such a prohibited nomination, violates the
fundamental policy of Indian law, justifying its being set aside
under Section 34. The Commercial Court, acting on the
petitioner's application under Section 34, upheld this argument
and set aside the arbitral award based on Section 12(5)
ineligibility.
19. Section 37 of the Act deals with appeal, which reads
as follows:
"37. Appealable orders.-(1) An appeal shall lie
from the following orders (and from no others) to the
Court authorised by law to hear appeals from original
decrees of the Court passing the order, namely:-
[(a) refusing to refer the parties to arbitration
under section 8;
(b) granting or refusing to grant any measure
under section 9;
(c) setting aside or refusing to set aside an
arbitral award under section 34.]
(2) An appeal shall also lie to a Court from an order
of the arbitral tribunal-
(a) accepting the plea referred to in sub-section
(2) or sub-section (3) of section 16: or
(b) granting or refusing to grant an interim
2025:KER:26487
measure under section 17.
(3) No second appeal shall lie from an order
passed in appeal under this section, but nothing in this
section shall affect or take away any right to appeal to
the Supreme Court."
20. The respondents emphasized that Section 34 of the
Act, exclusively governs the setting aside of arbitral awards.
They argued that when a court sets aside an award following a
Section 34 application, the sole avenue for appeal is under
Section 37(1)(c), as further clarified by Section 37(3).
21. They rejected the petitioner's assertion that the
Commercial Court's decision was based on Section 12(5). While
acknowledging that Section 12(5) was the ground for setting
aside the award, they maintained that the act of setting aside was
unequivocally under Section 34. Therefore, it is concluded that
the petitioner's recourse to an Original Petition under Article 227
of the Constitution of India is improper, and that the sole remedy
2025:KER:26487
lies in an appeal under Section 37 of the Act.
22. Reference is invited to SBP & Co. vs. Patel
Engineering (2005 (8) SCC 618), wherein it is held that when
the remedy to challenge the order of arbitrator is available under
the Act, then filing of writ is disapproved. Once the matter
reaches the Arbitral Tribunal or the sole arbitrator, the High
Court would not interfere with the orders passed by the Arbitral
Tribunal during the course of the arbitration proceedings and the
parties could approach the Court only in terms of Section 37 or
Section 34 of the Act.
23. Moreover, the object of minimising 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 against every
order made by the Arbitral Tribunal. Therefore, it is necessary to
indicate that once the arbitration has commenced in the Arbitral
2025:KER:26487
Tribunal, parties have to wait until the award is pronounced
unless, a right of appeal is available to them under Section 37 of
the Act even at an earlier stage. Thus, it can safely be concluded
that the remedy available to the party aggrieved, is to challenge
the award in accordance with Sections 34 or 37 of the Act and
intervention by the High Courts under Article 227 of the
Constitution of India, is not permissible.
24. In Hameed Kunju vs. Nizam [(2017) 8 SCC 611],
the Hon'ble Supreme Court held that any petition under Article
227 of Constitution of India should be dismissed in limine where
there is statutory provision of appeal. In other words, the High
Court should decline to entertain the petition under Article 227
on the ground of availability of an alternative remedy of appeal.
Reliance for the same has also been placed in Hindustan Coca
Cola Beverage Private Ltd vs. Union of India and others,
[(2014) 15 SCC 44[ and in another case titled Ansal Housing
2025:KER:26487
and Construction Limited vs. State of Uttar Pradesh and
others [(2016) 13 SCC 305[, wherein the apex court goes along
the very same footing that when the statute provides for statutory
appeal, the said remedy is to be availed by the litigating parties
and it shall not be bypassed by availing the remedy under Article
227 of the Constitution.
25. This court in Alexander Luke Vs. M/s Aditya Birla
Money Ltd., (2024 KHC 107), has held that a plain reading of
the provisions of the statute, especially Sections 6 and 10(3) of
the Commercial Courts Act, would lead us to the inescapable
conclusion that the court for the purpose of consideration of a
commercial dispute even if it arises under the Act, would be the
commercial court and the appeal would, therefore, lie only to the
Commercial Appellate Court, that is, the District Court. If that
be so, the remedy available to an aggrieved person is to approach
the appellate forum under Section 37 of the Act and not under
2025:KER:26487
Article 227 of the Constitution of India.
In the result, this O.P.(C) stands dismissed as not
maintainable.
Sd/-
BASANT BALAJI
JUDGE
dl/
2025:KER:26487
APPENDIX OF OP(C) 316/2024
PETITIONER EXHIBITS
Exhibit P1 TRUE COPY OF LETTER OF THE PETITIONER TO THE
FIRST RESPONDENT DATED 31-1-2020
Exhibit P2 TRUE COPY OF LETTER OF THE 1ST RESPONDENT
SUPPLYING PANEL OF 3 FORMER JUDGES DATED 7-3-2020
Exhibit P3 TRUE COPY OF LETTER OF THE PETITIONER CONTAINING
NAMES OF 3 ENGINEERS DATED 10-3-2020
Exhibit P4 TRUE COPY OF LETTER OF THE 1ST RESPONDENT DATED
11-3-2020
Exhibit P5 TRUE COPY OF LETTER OF THE PETITIONER NOMINATING
HON. JUSTICE MR. M. RAMACHANDRAN AS THE SOLE
ARBITRAL TRIBUNAL DATED 13-3-2020
Exhibit P6 TRUE COPY OF LETTER OF THE FIRST RESPONDENT TO
HON. JUSTICE MR. M. RAMACHANDRAN DATED 16-3-2020
Exhibit P7 TRUE COPY OF AWARD PASSED BY THE SOLE ARBITRAL
TRIBUNAL DATED 18-8-2021
Exhibit P8 TRUE COPY OF COUNTER AFFIDAVIT IN O.P. (ARBN)
NO.127 OF 2022 DATED 16-8-2022
Exhibit P9 TRUE COPY OF I.A. NO. 5 OF 2023 IN O.P. (ARBN)
NO.127 OF 2021 DATED 23-5-2023
Exhibit P10 TRUE COPY OF AMENDED O.P. (ARBN) NO.127 OF 2021
DATED 23-5-2023
Exhibit P11 TRUE COPY OF COUNTER AFFIDAVIT IN THE AMENDED
O.P. (ARBN) NO.127 OF 2021 DATED 18-10-2023
Exhibit P12 TRUE COPY OF ORDER PASSED IN O.P. (ARBN) NO.127
OF 2021 BY THE COMMERCIAL COURT, ERNAKULAM DATED
29-11-2023
RESPONDENT EXHIBITS
Exhibit R3(a) True copy of the rejoinder affidavit of the
respondent to counter affidavit of the petitioner
to the amended OP (Arbn) No. 127 of 2021 on the
2025:KER:26487
file of the Commercial Court, Ernakulam
