Writ Court Interfering With Every Procedural Order In Arbitral Proceedings Is Contrary To Aim Of A&C Act: Gujarat HC

The Gujarat High Court while dismissing a writ petition filed under Article 226 and 227 of the Constitution observed that the Writ Court can exercise their power only in cases where the only if the order in questions is “completely perverse”, or the order in questions is crippled with “bad faith” or the order in questions falls in the category of “rarest of rare circumstances”.

The bench of Justice Mauna M. Bhatt further held that if the Writ Court exercises its jurisdiction in curing every procedural lapse in arbitral proceedings, the same would amount to opening Pandora's box, which would be contrary to the principle of minimum judicial intervention.

Factual Matrix

Tata Power Renewable Energy Limited (“Original Claimant/ TPREL”) vide Power Purchase Agreement (“PPA”) dated 23.10.2019, was required to install and commission 250 MW of power plant, which was to be operational by 22.01.2021. The said deadline was extended to 22.06.2021. Per clause 7.3.3 of the Implementation and Support Agreement, TPREL was required to lay down 33 KV power cables, connecting its 50 MW Power Plants. TPREL also required an internal pooling station to be installed.

A dispute arose pertaining to the breach of the contract, and the Hon'ble Gujarat High Court referred the parties to arbitration u/s 11(6) of the A&C Act, before the Ld. Sole Arbitrator, TPREL filed its Statement of Claim (“SoC”) seeking damages to the tune of approximately ₹150 crores. The GPCL filed its Statement of Defence (“SoD”) denying the allegations and refuting the claim in toto. In responding to the SoD, TPREL filed an affidavit in Rejoinder. Subsequently, the terms of reference for the settlement of the dispute were framed, and both parties were directed by the Ld. Sole Arbitrator to file their Evidence Affidavit.

The TPREL's case is that they had fully installed the 250 MW power plant, and it was operating as of 21.06.2021. Due to GPCL's fault, TPREL could not sell power, as the power evacuation infrastructure was not available. TPREL filed an application on 21.10.2024 to file an amended version of the evidence affidavit of CW-2 and additional documents. The Ld. Sole Arbitrator vide order dated 30.11.2024 allowed the revised affidavit and documents to be brought on record.

During discovery, TPREL discovered the communications dated 27.12.2021 and 16.03.2022, which suggested that the power evacuation was not possible till 15.03.2022. The said documents were suppressed in the SoD by GPCL. Pursuant to this, GPCL filed an application u/s 23(3) to amend their SoD in order to bring the new documents on record. The Ld. Sole Arbitrator vide order dated 25.04.2025 dismissed the Section 23(3) petition of GPCL. Hence, GPCL assails the impugned order qua a Writ Petition under Article 226 and 227 of the Constitution.

Submissions:

The counsel for the Petitioner made the following submissions:

• There was malafide intention on the part of TPREL in making an incorrect submission on the oath certificate concerning the 250 MW power plant, which was fully commissioned and ready for commercial operation as on 21.06.2021.
• GPCL was under a bona fide belief that no misstatement on oath would be made by the original claimant after producing the oath certificate.
• Qua the communication dated 27.12.2021 and 16.03.2022, which were provided to GPCL for the first time, power evacuation from the power plant was not possible till 15.03.2022. Furthermore, TPREL presented an incorrect case before the Ld. Therefore, the sole arbitrator, GPCL, preferred the application u/s 23(3 ) of the A&C Act.
• The Ld. Sole Arbitrator placed a futile reliance on Order VI Rule XVII of the CPC. Wording used in Section 23(3) of the A&C Act suggests a wider interpretation and scope for amendment than Order VI Rule XVII of the CPC.

The counsel for the Respondent made the following submissions:

• Petition under Article 226/227 may not be entertained, as the same is invoked as a parallel supervisory mechanism to circumvent the legislative safeguards provided u/s 34 and 37 of the A&C Act.
• The Ld. Sole Arbitrator was correct in observing that there was a gross delay in filing the amendment application, and GPCL had not exercised due diligence in the matter.
• Mere reading of Section 19 of the A&C Act would not absolve the Tribunal from adopting the principles of CPC. Order VI Rule XVII of the CPC has to be read in conformity with Section 23 of the A&C Act.
• Whenever an amendment is sought to be introduced after the commencement of the trial, the test of "due diligence" as referred to in the proviso of Order VI Rule XVII is the settled standard test for evaluating belated amendments.

Analysis of the Court

The bench at the outset observed that a writ petition under Article 226/227 of the Constitution can be entertained to challenge orders passed by the Arbitral Tribunal. The Supreme Court in Serosoft Solutions Pvt. Ltd. v. Dexter Capital Advisors Pvt. Ltd. (2025) had observed that the Writ Court can exercise jurisdiction only if the order in question is “completely perverse”, or the order in question is crippled with “bad faith”, or the order in questions falls in the category of “rarest of rare circumstances”.

The bench observed that the impugned judgment does not pass the test of either being “perverse” or having been passed in “bad faith” to warrant the Writ Court to exercise judicial interference. The order was passed by the Ld. Sole Arbitrator takes a plausible view, and even no stretch of imagination can compel the impugned order to be treated as “exceptional” or “rare”, such that it would shock the conscience of a prudent person.

The bench observed that the Ld. The Sole Arbitrator has passed the impugned order relying upon Section 23 of the A&C Act, read with Order VI Rule XVII of the CPC. After the application of the provision to the facts of the case, the Ld. Sole Arbitrator took the view that the application u/s 23(3) warrants dismissal. Therefore, the impugned order cannot be termed as an order leading to the failure of justice. Furthermore, if the Writ Courts are to exercise their jurisdiction to supervise or rectify every procedural lapse of the arbitral tribunal, the same would result in opening a Pandora's box.

Therefore, in the above terms, the Writ Court dismissed the writ petition.

Case Name: Gujarat Power Corporation Limited v. Tata Power Renewable Energy Limited

Case Number: R/Special Civil Application No. 6910 of 2025

Counsel For The Petitioner: Mr Kamal Trivedi, Ld.Advocate General With Mr Anal S Shah(3988), Ld.Advocate With Mr Vinay Bairahra, Ld.Advocate With Mr Pranjal Buch, Ld.Advocate

Counsel For The Respondent: Mr Mihir Thakore, Ld.Senior Advocate With Mr Shaan M Munshaw(10825), Ld.Advocate With Mr Shryeshth Sharma, Ld.Advocate With Mr Aakash Lamba, Ld.Advocate With Mr Kunal Veer, Ld.Advocate

Click Here To Read/Download The Order

Citation: 2025 LiveLaw (Guj) 143