Madhya Pradesh High Court
Madhya Pradesh State Agro Industies ... vs M/S Murliwala Agrotech Private Limited on 17 March, 2025
1
IN THE HIGH COURT OF MADHYA PRADESH
AT JABALPUR
BEFORE
HON'BLE SHRI JUSTICE SURESH KUMAR KAIT,
CHIEF JUSTICE
&
HON'BLE SHRI JUSTICE VIVEK JAIN
WRIT PETITION No. 9629 of 2023
MADHYA PRADESH STATE AGRO INDUSTIES DEVELOPMENT
CORPORATION LIMITED
Versus
M/S MURLIWALA AGROTECH PRIVATE LIMITED AND OTHERS
Appearance:
Shri Swapnil Ganguly and Arjun Bajpai - Advocates for the Petitioner.
Shri Utkarsh Agrawal - Advocate for the Respondent No.1.
ORDER
(Reserved on 25.02.2025)
(Pronounced on 17.03.2025)
Per: Hon'ble Shri Justice Vivek Jain, Judge
The present petition has been filed challenging the Order dated
14.04.2023 Annexure P-13 passed by the Arbitration Tribunal of Sole
Arbitrator. By the said Order, the Arbitration Tribunal has rejected the
application of the present Petitioner under Order 8 Rule 1-A of CPC and
Order 6 Rule 17 of CPC.
2. It is argued by learned counsel for the petitioner that by way of
application under Order 8 Rule 1-A of CPC, the petitioner who is
respondent in the arbitration proceedings sought to bring on record an
agreement dated 15.06.2012 (Annexure P-3) which has been executed
between the present petitioner, who is respondent in arbitration
proceedings and the present respondent No.2, who is claimant No.2 in the
arbitration proceedings.
3. It is contended that this agreement between the parties ought to
have been filed by the claimants themselves but the claimants suppressed
the said agreement while filing the claim before the Arbitration Tribunal
and the said agreement is necessary to be placed on record for proper
adjudication of all the issues that are actually arising between the parties
and an agreement which is between the same parties cannot be said to be
not relevant for the purpose of adjudication of claim and rival cases of the
parties finally and conclusively. Therefore, the Arbitration Tribunal ought
to have allowed the application under Order 8 Rule 1-A of CPC.
4. It is further argued that the present petitioner had filed an
application under Order 6 Rule 17 of CPC for amendment of the written
statement filed by the present petitioner before the Arbitration Tribunal.
The said amendment sought to incorporate various pleadings arising from
the agreement dated 15.06.2012 (Annexure P-3) which has been sought to
be placed on record by separate application under Order 8 Rule 1-A of
CPC. It is contended that the arbitral proceedings had not advanced to such
a stage where taking the agreement dated 15.06.2012 on record and
seeking consequential amendment of pleadings and written statements
would have prejudiced the other side irreparably. The said two
applications were actually filed only to advance the cause of justice so that
the issues arising during the course of arbitration proceedings could be
decided once and for all between the parties so that an unnecessary process
of setting aside of arbitral award and starting the arbitration proceedings
afresh could be avoided. In the event the concerned Court, during the
course of proceedings under Section 34 of Arbitration and Conciliation
Act, 1996 (in short, hereinafter referred to as Act of 1996), comes o a
conclusion that indeed the said agreement dated 15.06.2012 did go to the
route of controversy involved in the matter and that upon consideration of
the said agreement, different considerations would arise affecting the rival
contentions of the parties against each other, then there would be setting
aside of Award leading to multiplicity of proceedings.
5. Learned counsel for the petitioner has further argued that the bar
as contained in Section 5 of Arbitration and Conciliation Act cannot be
read to exclude the jurisdiction of the High Court under Article 227 of the
Constitution of India because judicial review is a part of basic structure of
Constitution of India as held by the Supreme Court in the case of L.
Chandra Kumar Vs. Union of India and Others reported in (1997) 3 SCC
261. It is contended that the petitioner is a wholly owned
undertaking/company of the State of Madhya Pradesh working for
promotion of Agro Industries in the State of Madhya Pradesh and also in
the business of production and distribution of Ready to eat meals i.e.
"nutritious meals" to Departments of the State under various projects in
public interest run by various Departments like Women and Child
Development Department.
6. Per contra, it is contended by learned counsel for the respondents
that the Writ Petition is not maintainable in view of the bar contained in
Section 5 of the Act of 1996 that bars judicial intervention during course
of arbitral proceedings and further that the Constitution Bench of the
Supreme Court in the case of SBP & Co. Vs. Patel Engineering Ltd. &
Another reported in (2005) 8 SCC 618 in para 47 (vi) has held that once
the matter reaches the Arbitrator, the High Court would not interfere in the
Orders passed by the Arbitrator during the course of Arbitration
Proceedings and only remedy would lie before the appropriate Court in
terms of Section 37 or Section 34 of Act of 1996. Therefore, the reliance
on the judgment in the case of L. Chandra Kumar (supra) is totally
misconceived.
7. Learned counsel for the respondents further submits that the
applications were filed by the petitioner after the commencement of trial
and as per the provisions of Order 6 Rule 17 of C.P.C. different
considerations arise for entertaining an application prior to commencement
of trial and after commencement of trial. Even otherwise, the arbitrator is
free to device his own procedure and therefore, in terms of Section 19 of
the Act of 1996, the Arbitrator is not bound by the provisions of Code of
Civil Procedure and the procedure would apply as agreed by the parties or
in absence of a agreed procedure, the arbitrator is free to conduct the
proceedings in the matter it considers appropriate. Thus, the arbitrator, it is
argued, is not bound by any strict rules or procedure of Code of Civil
Procedure, which is to achieve the basic purpose of arbitration i.e, timely
resolution of disputes between parties. Therefore, the Arbitrator has
correctly rejected the two applications submitted by the petitioner.
8. It is further argued by learned counsel for the respondents that
even in case the applications are considered as maintainable at the stage
after commencement of trial, then also, no due diligence was shown by the
petitioner in the said applications. No cogent reason was shown that why
the proposed pleadings could not be incorporated in the written statement
and the respondents while contesting the said applications before the
arbitrator had rightly raised an objection that the amendment application is
devoid of merits and is only a trick played by the present petitioner against
the present respondents who are the claimants before the Arbitrator.
9. Heard learned counsel for the parties and perused the record.
10. In the present case, the petitioner is a Company which is a
undertaking of Govt. of Madhya Pradesh and incorporated under the
provisions of Companies Act, 1956 and is engaged in development of
agriculture and agro industries in the State of Madhya Pradesh. It also
carries on the business of production and distribution of ready to eat meals
supplied to various departments of State Govt. as nutritious food under
various projects in public interest. It is the case between the parties that
certain shareholding agreements were executed between the present
petitioner and respondent No.1 to set up a state of Art ready to eat facility
in the State of Madhya Pradesh and the respondent No.1 was chosen as a
private partner. Certain memorandums of understanding and shareholding
agreements are stated to be executed between the parties. It is also the case
of the parties that as per the terms of the Memorandum of Understanding
signed between the petitioner and the respondent No.1, the respondent
No.2/Company was incorporated to carry out the work provided in the
tender and MOU dated 15.04.2004. Initially, the shareholding of petitioner
in the respondent No.2/Company was 11% but subsequently, it was
increased to 30%. The rest shareholding was held by the respondent No.1.
11. Various disputes arose between the petitioner on one side and
respondents No.1 & 2 on the other side in relation to the shareholding
agreements and the MOU executed between the petitioner and the
respondent No.1 or by the petitioner with both the respondents. The claims
of the respondents before the Arbitrator relate to various amounts arising
out of wrongful withholding of rightful payments due to the respondents
for the ready to eat meals supplied by the respondent no.2. The claims also
relate to deductions made by the petitioner from the payments made to the
respondent No.2 or to the respondent No.1 for various financial years. The
disputes are also in the matter of the petitioner acquiring additional 19%
shareholding in the respondent No.2/Company at concessional prices
which was less than the Book value of the shares. In the said manner,
various claims have been set up by the respondents against the present
petitioner arising out of various transactions in the matter of allotment of
shares in the respondent No.2 as well as payment of supplies made by the
respondent No.2 to various Departments of the State through the petitioner
and outstanding payments and deductions from such payments said to be
made by the petitioner. All these claims have been raised in detail and
contained in the Statement of claim filed before the Arbitrator.
12. From a perusal of the claim application filed by the respondents
before the Arbitrator, it is clear that the claims of the respondents before
the Arbitrator relate to the period from 2007-08 till the year 2017-18. The
respondents, in their statement of claim have relied on various MOU's and
agreements arising out of which the transactions have taken place so also
various bills of food supplied by the respondent No.2 to the petitioner.
13. When the disputes between the parties relate to matters of non-
payment of various amounts towards the meals supplied by respondent
No.2 to the petitioner, then the agreement (Annexure P-3) executed
between the petitioner and the respondent No.2 for supply of such meals
effective from 01.10.2012 till 31.03.2017 cannot be said to be a totally
irrelevant document not having any bearing on just, effective and complete
adjudication of the dispute pending before the Arbitrator. It is a different
matter whether upon consideration of such agreement, any positive or
negative impact on the claims of rival parties would be made or not but it
cannot be said at this stage, that once the disputes between the parties
relate to period from 2007-08 till 2017-18 then an agreement between the
same parties and valid in some of that period in the matter of supply of
mid-day meals is alien to the disputes and claims between the parties. If
such an agreement is considered by the Arbitrator, it would be only in the
interest of both the parties because subsequent objections and challenges
to the arbitral award would be avoided and multiplicity of proceedings
would be avoided.
14. Recently, the Supreme Court in the case of Life Insurance
Corporation Vs. Sanjeev Builders reported in 2022 (16) SCC 1 had the
occasion to consider this legal position and after considering the legal
position held as under:-
71. Our final conclusions may be summed up thus:
71.1. Order 2 Rule 2CPC operates as a bar against a subsequent suit
if the requisite conditions for application thereof are satisfied and the
field of amendment of pleadings falls far beyond its purview. The plea
of amendment being barred under Order 2 Rule 2CPC is, thus,
misconceived and hence negatived.
71.2. All amendments are to be allowed which are necessary for
determining the real question in controversy provided it does not
cause injustice or prejudice to the other side. This is mandatory, as is
apparent from the use of the word "shall", in the latter part of Order
6 Rule 17CPC.
71.3. The prayer for amendment is to be allowed:
71.3.1. If the amendment is required for effective and proper
adjudication of the controversy between the parties.
71.3.2. To avoid multiplicity of proceedings, provided
(a) the amendment does not result in injustice to the other side,
(b) by the amendment, the parties seeking amendment do not seek
to withdraw any clear admission made by the party which confers
a right on the other side, and
(c) the amendment does not raise a time-barred claim, resulting in
divesting of the other side of a valuable accrued right (in certain
situations).
71.4. A prayer for amendment is generally required to be allowed unless:
71.4.1. By the amendment, a time-barred claim is sought to be
introduced, in which case the fact that the claim would be time-
barred becomes a relevant factor for consideration.
71.4.2. The amendment changes the nature of the suit.
71.4.3. The prayer for amendment is mala fide, or
71.4.4. By the amendment, the other side loses a valid defence.
71.5. In dealing with a prayer for amendment of pleadings, the court
should avoid a hypertechnical approach, and is ordinarily required to
be liberal especially where the opposite party can be compensated by
costs.
71.6. Where the amendment would enable the court to pin-pointedly
consider the dispute and would aid in rendering a more satisfactory
decision, the prayer for amendment should be allowed.
71.7. Where the amendment merely sought to introduce an additional
or a new approach without introducing a time-barred cause of action,
the amendment is liable to be allowed even after expiry of limitation.
71.8. Amendment may be justifiably allowed where it is intended to
rectify the absence of material particulars in the plaint.
71.9. Delay in applying for amendment alone is not a ground to
disallow the prayer. Where the aspect of delay is arguable, the prayer
for amendment could be allowed and the issue of limitation framed
separately for decision.
71.10. Where the amendment changes the nature of the suit or the
cause of action, so as to set up an entirely new case, foreign to the
case set up in the plaint, the amendment must be disallowed. Where,
however, the amendment sought is only with respect to the relief in the
plaint, and is predicated on facts which are already pleaded in the
plaint, ordinarily the amendment is required to be allowed.
71.11. Where the amendment is sought before commencement of trial,
the court is required to be liberal in its approach. The court is
required to bear in mind the fact that the opposite party would have a
chance to meet the case set up in amendment. As such, where the
amendment does not result in irreparable prejudice to the opposite
party, or divest the opposite party of an advantage which it had
secured as a result of an admission by the party seeking amendment,
the amendment is required to be allowed. Equally, where the
amendment is necessary for the court to effectively adjudicate on the
main issues in controversy between the parties, the amendment should
be allowed. (See Vijay Gupta v. Gagninder Kr. Gandhi [Vijay
Gupta v. Gagninder Kr. Gandhi, 2022 SCC OnLine Del 1897] .)
15. The Supreme Court therefore, held that amendment has to be
construed liberally once it is to avoid multiplicity of proceedings and when
it is necessary to adjudicate on the main issue to controversy, it may be
allowed and delay alone is not sufficient to discard amendment if it is
relevant to the controversy.
16. Another objection was raised that a trial had commenced and
therefore, the amendment has to be considered strictly. From a perusal of
the proceedings before the Arbitration Tribunal, it is seen that the
petitioner filed reply/written statement on 18.11.2022 and on 19.02.2023,
the issues were finalized by the Arbitrator. On the next date, after
finalization of issues i.e. 11.03.2023, the petitioner submitted before the
Arbitrator that they will file application for amendment and another
application for taking documents on record. By that date, no evidence
affidavits were filed before the Arbitrator and on the next date i.e.
24.03.2024, the petitioner filed applications for amendment of written
statement under Order 6 Rule 17 CPC so also for taking additional
document on record under Order 8 Rule 1-A CPC. On the same date,
affidavits of evidence were filed by both parties.
17. Therefore, it is a case that where submission of affidavits by the
claimant before the Tribunal, and the applications for production of
documents under Order 8 Rule 1-A and application under Order 6 Rule 17
of CPC, all were filed before the Arbitration Tribunal on the same date.
Therefore, it cannot be said that by allowing of the questioned amendment,
the position of the parties would be irretrievably altered or prejudiced. The
case was then fixed for cross examination vide order dated 14.4.2023 by
the Arbitrator.
18. In view of the above we have no hesitation in holding that
technically though it may be debatable that there was commencement of
trial but since the applications for amendment and for taking additional
documents on record were filed on the same date which was the date of
submission of affidavit evidence by the claimants, it cannot be said to be
the case where some grave prejudice could be caused to the claimants by
delay. This is more so when on the previous date, the present petitioner
had informed the Arbitration Tribunal that it requires to file an application
for amendment and another application for taking additional documents on
record and the Arbitration Tribunal gave liberty to the petitioner to file
application, if any, before the next date of hearing. The operative part of
the order dated 11.03.2023 is as under:-
"Both the claimant and the respondent are directed to file
affidavit in lieu of evidence three days before next date of hearing. The
respondent shall also file applications, if any, three days before the
next date of hearing. Subject to the disposal of the applications to be
filed by the respondent, if any, additional evidence shall be taken, if
need arise. Meanwhile, recording of oral evidence shall not be
postponed.
Put up on 24th March, 2023 at 5:30 PM for compliance of the
order."
19. We have already held above that the amendment was
necessary for proper, complete and effective adjudication of all the
disputes between the parties.
20. Therefore, in our considered opinion the application for
amendment in written statement ought to have been allowed by the
Arbitration Tribunal.
21. Coming to application under Order 8 Rule 1-A CPC, a
right is given to the defendant to produce a document which ought to
be produced by him in earlier stage in evidence at the hearing of the
suit, although with leave of this Court. The present case is a fit case
where the leave ought to have been granted by the Arbitration
Tribunal because the contractual dispute between the parties as
already noted above were for the period 2007-08 to 2017-18 and the
agreement in question which was sought to be placed on record is of
the year 2012 between the same parties and relates to the same set of
transactions. Therefore, it was a fit case to exercise the jurisdiction
conferred under Order 8 Rule 1-A CPC. Though it is true that the
Arbitration Tribunal is not bound by the strict rules of procedure as
contained in Code of Civil Procedure, yet if certain rules are en-
grafted in CPC to give fair chance to the parties then, guidance can
been taken from the said rules to do complete justice between the
parties.
22. It is the settled law that Rules or procedure are handmaids
of justice and not the masters of justice. It is true that the Arbitration
Tribunal is given right to devise it own procedure as per Section 19
of Act of 1996, however, the said right cannot be interpreted in the
manner to subvert fair chance to the parties for complete
adjudication of the dispute pending before the tribunal. The strict
rules of procedure under CPC would be relaxed in arbitration
proceedings so as to ensure speedy resolution of dispute without
being bound by strict rules of procedure and strict rules of evidence
under the evidence Act, however, some rules are engrafted in CPC to
give fair chance to the parties, then, the arbitration tribunal can
always rely on those rules so as to ensure fair chance to the parties.
In Srei Infrastructure Finance Ltd. v. Tuff Drilling (P) Ltd., (2018) 11
SCC 470, it was held as under :-
26. There cannot be a dispute that the power exercised by the
Arbitral Tribunal is quasi-judicial. In view of the provisions of the
1996 Act, which confers various statutory powers and obligations
on the Arbitral Tribunal, we do not find any such distinction
between the statutory tribunal constituted under the statutory
provisions or Constitution insofar as the power of procedural
review is concerned. We have already noticed that Section 19
provides that the Arbitral Tribunal shall not be bound by the
rules of procedure as contained in the Civil Procedure Code.
Section 19 cannot be read to mean that the Arbitral Tribunal is
incapacitated in drawing sustenance from any provisions of the
Code of Civil Procedure. This was clearly laid down in Nahar
Industrial Enterprises Ltd. v. Hong Kong and Shanghai Banking
Corpn. [Nahar Industrial Enterprises Ltd. v. Hong Kong and
Shanghai Banking Corpn., (2009) 8 SCC 646 : (2009) 3 SCC (Civ)
481] . In para 98(n), the following was stated: (SCC p. 693)
"(n) It is not bound by the procedure laid down under the Code.
It may however be noticed in this regard that just because the
Tribunal is not bound by the Code, it does not mean that it
would not have jurisdiction to exercise powers of a court as
contained in the Code. "Rather, the Tribunal can travel beyond
the Code of Civil Procedure and the only fetter that is put on its
powers is to observe the principles of natural justice." (See ICICI
LTD. v. Grapco Industries Ltd. [ICICI LTD. v. Grapco Industries
Ltd., (1999) 4 SCC 710] )
27. We thus are of the view that principles underlying Order 9 Rule
9 can very well be invoked by the arbitrator. There is nothing on
record to indicate that parties have agreed to the contrary. The
issue, which has arisen for consideration has engaged attention of
different High Courts from time to time. The Patna High Court
in Senbo Engg. Ltd. v. State of Bihar [Senbo Engg. Ltd. v. State of
Bihar, 2003 SCC OnLine Pat 1189 : AIR 2004 Pat 33] , had
occasion to consider the order terminating the proceedings under
Section 25(a). The Patna High Court after considering the
provision has held that the Arbitral Tribunal has power to review
on sufficient cause being shown. In para 32, the following has been
laid down: (SCC OnLine Pat)
"32. I find the submissions of Mr Chatterjee well founded.
Mr Chatterjee has relied upon the provisions of the Act itself
(that is to say, the internal aids to interpretation) in support
of the point that on sufficient cause being shown, the
Arbitral Tribunal has full authority and power to recall an
order under Section 25(a) of the Act. I think that one would
arrive at the same conclusion on the basis of some external
aids to interpretation."
(emphasis supplied)
23. Now coming to the vehement objection raised regarding
bar under Section 5 of Act of 1996. Reliance has been placed on
judgment of Supreme Court in the case of S.B.P. & Company
(supra) more particularly, para 47 (vi) thereof, wherein it has been
held that even the the High Court would not interfere with the orders
passed by the Arbitrator or the Arbitral Tribunal during the course of
the arbitration proceedings and the only remedy with the parties
would be approaching the Court under Section 37 & 34 of the Act of
1996. It was argued that the said provision has been interpreted by
the Supreme Court in the case S.B.P. & Company (supra) to mean
that even the proceeding under writ jurisdiction are barred. Before
dealing with this aspect we deal with the position that if we hold that
any judicial intervention even of the Constitutional Court under
Article 226/227 is held to be part then the consequences thereof. As
per Section 34(4) of the Act of 1996, the Court hearing challenge to
award of the Arbitrator has the power to adjourn the proceedings for
a time determine by it in order to give the Arbitral Tribunal an
opportunity to resume the proceedings so as to eliminate the grounds
for setting aside the Arbitral Award. Section 34(4) is as under:-
"(4) On receipt of an application under sub-section (1), the Court may,
where it is appropriate and it is so requested by a party, adjourn the
proceedings for a period of time determined by it in order to give the
arbitral tribunal an opportunity to resume the arbitral proceedings or to
take such other action as in the opinion of arbitral tribunal will eliminate the
grounds for setting aside the arbitral award"
24. The aforesaid provision would imply that if at the time of
hearing challenge to the final award the court comes to the conclusion that
the Arbitration Tribunal had indeed erroneously rejected an application or
had denied fair chance to other side to any of the parties, then, before
passing a final order in Section 34 proceeding, court would direct the
tribunal to conduct the proceeding in the manner directed by the Court and
to pass a fresh order or award so as to eliminate the ground of challenge or
the ground of setting aside the award. Therefore, no doubt a remedy is
there to the parties to take recourse to Section 34(4) but that will only
complicate and multiply the proceedings. In ordinary suits or other cases,
the appellate court is always having the power to remand the matter to the
Court of first instance if there is failure of justice by any error in procedure
or certain additional evidence was required to be taken but has not been
taken or any other grounds on which remand can be made as per law.
However, under the Scheme of Act of 1996, the Court does not have
competence and authority to remand the matter to the same arbitrator
unless there is consent of the parties.
25. This issue was recently considered by the Supreme Court in the
case of Mutha Construction Vs. Strategic Brand Solutions (I) Pvt. Ltd.
2022 LiveLaw (SC) 163 (SLP(C) No. 1105/2022). It has been held by the
Supreme Court in the aforesaid case by considering the judgments in the
case of Kinnari Mullick v. Ghanshyam Das Damani, (2018) 11 SCC
328, I-Pay Clearing Services (P) Ltd. v. ICICI Bank Ltd., (2022) SCC
OnLine 4 that with the consent of both the parties the matter can be
remanded back to the arbitrator for passing a fresh award, therefore, in the
case of erroneous procedure adopted by the Arbitral Tribunal during
course of hearing of arbitration proceedings the remedy of remand is not
available unless there is consent of parties and the recourse under Section
34(4) would only lead to delay and multiplicity of the proceedings because
any order passed under Section 34(4) may also be made subject matter of
challenge. It is in the interest of the parties that if the law can be
interpreted in the manner that such errors of procedure can be corrected by
the High Court in exercise of judicial review then it will be in the interest
of justice.
26. The question of jurisdiction under articles 226/227 was considered in the
case of Deep Industries Ltd. v. ONGC [Deep Industries Ltd. v. ONGC, (2020)
15 SCC 706, wherein the Hon'ble Supreme Court 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 hereinabove so that
interference is restricted to orders that are passed which are patently lacking in inherent
jurisdiction."
(emphasis supplied)
27. The aforesaid issue was also recently raised before the Bombay
High Court in the case of P. Manikandan v. CBI, 2024 SCC OnLine
(Bom) 3808 wherein the Division Bench of Bombay High Court has
considered the case of S.B.P. & Company (supra) so also the earlier
Constitution Bench judgment of equal strength in the case of L. Chandra
Kumar (supra) wherein Constitution Bench has laid down the contours of
limits of judicial review under Article 227 of the Constitution of India. The
Bombay High Court while dealing with the issue has dwelled on the aspect
that in the case of S.B.P. & Company (supra) the actual issue before the
Hon'ble Supreme Court was not to define the contours of scope of judicial
review of the High Court under Article 227 of the Constitution of India but
the questions before the Constitution Bench were different and the
questions for consideration before the Constitution Bench were the nature
of power under Section 11(6) of the Act of 1996 and no issue was posed
before the Supreme Court as to exclusion of judicial review of the High
Court under Articles 226/227 of Constitution of India at the interlocutory
stage of Arbitral proceedings.
28. The Division Bench of Bombay High Court further held that in
the said case that in the case of L.Chandra Kumar (supra) a specific
question before the Constitution Bench was the scope of jurisdiction of the
High Court under Article 227 of Constitution of India and whether
exclusion of powers of judicial review of the High Court can be inferred.
The Supreme Court in the aforesaid case held in favour of power of
judicial review. The Bombay High Court further considered the position
that the earlier judgment of equal strength in the case of L. Chandra
Kumar (supra) was not considered by the later Constitution Bench in the
case of S.B.P. & Co. (supra) while holding restriction on the power of
judicial review of the High Court under articles 226/227 over the
interlocutory orders of Arbitration Tribunal. Bombay High Court has held
as under:-
24. In the wake of the test laid down by Supreme Court in Dhanwanti Devi (supra)
we are of the considered view that the ratio of L. Chandrakumar (supra) would
apply. Its an authority directly on the point which is well addressed, analyzed and
answered by reasoned judgment. As against this, in S.B.P (supra) the issue was
nature of the function of The Chief Justice or its designate under Section 11 of the
Act. Whether the jurisdiction of the High Court under Article 226 or 227 was
excluded or not was not the direct question which fell for consideration before the
Bench. The observations in paragraph no. 44 to 46 which we have already
reproduced above, cannot be said to be ratio for proposition with which we are
concerned. The purport of observation in paragraph no. 45 (vi) is to minimize the
interference of High Court at interlocutory stages.
25. It is pertinent to note that the judgment of Supreme Court in L. Chandra
kumar (supra) has not been referred in the said matter which is indicative of the
fact that the proposition with which we are concerned was not the predominantly
the issue before the Supreme Court in the later judgment. Therefore, with all
respect we are of the considered view that we are bound by law laid down in L.
Chandra kumar (supra). The later judgment of the Supreme Court would be of no
avail to respondent to sustain objection.
26. It is relevant to notice that L. Chandra kumar (supra) has been followed in the
matter of Bhaven Construction v. Executive Engineer Sardar Sarovar Narmada
Nigam Ltd., (2022) 1 SCC 75. The following is the relevant paragraph:
18. In any case, the hierarchy in our legal framework, mandates that a
legislative enactment cannot curtail a Constitutional right. In Nivedita
Sharma v. Cellular Operators Association of India, (2011) 14 SCC 337,
this Court referred to several judgments and held:
"11. We have considered the respective arguments/submissions.
There cannot be any dispute that the power of the High Courts to
issue directions, orders or writs including writs in the nature of
habeas corpus, certiorari, mandamus, quo warranto and
prohibition under Article 226 of the Constitution is a basic feature
of the Constitution and cannot be curtailed by parliamentary
legislation - L. Chandra Kumar v. Union of India, (1997) 3 SCC
261. However, it is one thing to say that in exercise of the power
vested in it under Article 226 of the Constitution, the High Court
can entertain a writ petition against any order passed by or action
taken by the State and/or its agency/instrumentality or any public
authority or order passed by a quasi-judicial body/authority, and it
is an altogether different thing to say that each and every petition
filed under Article 226 of the Constitution must be entertained by
the High Court as a matter of course ignoring the fact that the
aggrieved person has an effective alternative remedy. Rather, it is
settled law that when a statutory forum is created by law for
redressal of grievances, a writ petition should not be entertained
ignoring the statutory dispensation.
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 one 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.
Thus, though there cannot be exclusion of the judicial review by the High Court certain
riders are imposed. It is imperative to examine the matters on merit in the wake of those
riders.
29. We are in complete agreement with the Division Bench of
Bombay High Court for the reason that the issue in the case of S.B.P. &
Company (supra) was not the scope of writ jurisdiction of the High Court
and the earlier Constitution Bench of equal strength which had specifically
decided the scope of judicial review of High Court in the case of L.
Chandra Kumar (Supra) was not taken into consideration and therefore,
the earlier view will prevail as the later judgment while taking different
view has not considered the earlier view, therefore, we hold that the
present writ petition against the interlocutory order passed by the
arbitration tribunal is maintainable before this Court. We are also fortified
in our view by the judgement of the Supreme Court in Bhaven Construction
v. Sardar Sarovar Narmada Nigam Ltd., (2022) 1 SCC 75, wherein
considering section 5 of the Act of 1996, it has been held that no enactment can
curtail a constitutional right, but interference under Article 226/227 of the
Constitution of India in arbitral proceedings should be in exceptional cases.
30. We have already held above that the rejection of applications
under Order 8 Rule 1-A of CPC and under Order 6 Rule 17 CPC for taking
additional documents on record and consequential amendment in the
written statement would amount to failure of justice and may also lead to
multiplicity of proceedings at later stage.
31. In view of the above, while setting aside the impugned order
dated 14.4.2023 passed by sole arbitrator, the applications filed by the
petitioner under Order 8 Rule 1-A CPC and Order 6 Rule 17 of CPC stand
allowed. The respondents would be at liberty to take consequential steps in
rebuttal.
32. There is stay on the proceedings before the arbitrator in this Writ
Petition and the stay order is prevailing since 28.06.2023. We also direct
that the time since 28.06.2023 till the date of this order will not be counted
for the purpose of calculation of time limit to conclude the arbitration
proceedings.
33. The petition stands allowed and disposed of in the above terms.
(SURESH KUMAR KAIT) (VIVEK JAIN)
CHIEF JUSTICE JUDGE
veni
