The Recurring QuestionOne question has consistently tested the boundaries of judicial intervention in arbitration, namely, whether a party dissatisfied with an order of an Arbitral Tribunal, typically one rejecting a jurisdictional objection under Section 16 of the Arbitration and Conciliation Act, 1996 (herein after referred to as “the Act”), run to the High Court under Article 227 of...
The Recurring Question
One question has consistently tested the boundaries of judicial intervention in arbitration, namely, whether a party dissatisfied with an order of an Arbitral Tribunal, typically one rejecting a jurisdictional objection under Section 16 of the Arbitration and Conciliation Act, 1996 (herein after referred to as “the Act”), run to the High Court under Article 227 of the Constitution instead of waiting for the final award? The Supreme Court has answered this question repeatedly over two decades, most recently in Manash Kamal Bezboruah v. M/s Bokahola Tea Company (P) Ltd. Yet High Courts continue to entertain such petitions with troubling regularity. Against this backdrop, this article examines the Supreme Court's evolving jurisprudence and the limited room it leaves for supervisory intervention during arbitral proceedings.
The Statutory Design Against Judicial Intervention
A non-obstante provision under section 5 states that, “notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part.” This reflects the Act's underlying objective of minimising judicial intervention, consistent with the UNCITRAL Model Law on International Commercial Arbitration, 1985.
Complementing Section 5 is Section 16, India's codification of the doctrine of Kompetenz-Kompetenz, which provides that, “The arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that purpose, (a) an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract; and (b) a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.”
This formulation mirrors Article 16(1) of the UNCITRAL Model Law, which empowers the tribunal to rule on a plea to its jurisdiction “either as a preliminary question or in an award on the merits.” An order of the Tribunal rejecting a Section 16 plea, i.e. one that allows the arbitration to proceed, is not independently appealable under Section 37. Only an order upholding the plea and terminating proceedings is appealable. This was affirmed in IFFCO Ltd. v. Bhadra Products, which held that a party aggrieved by rejection of its jurisdictional objection must await the final award and challenge it under Section 34.
The Genesis of Restraint
The Constitution Bench decision in SBP & Co. v. Patel Engineering Ltd. remains the foundational authority on the issue. The Bench disapproved the practice adopted by certain High Courts of treating every order of an Arbitral Tribunal as amenable to correction under Article 226 or 227 of the Constitution. It reasoned that the Tribunal is a forum chosen by the parties through contract, and that permitting writ interference against every interlocutory order would defeat the Act's objective of minimising judicial intervention. In unequivocal terms, the Court observed:
“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. Such an intervention by the High Courts is not permissible.”
Para 44 (P.K. Balasubramanyan, J.)
Consistent with this reasoning, the Court made it clear that parties must await the final award unless a right of appeal is expressly conferred under Section 37 at an earlier stage.
When Does Perversity Justify Article 227 Intervention?
“A patent lack of inherent jurisdiction requires no argument whatsoever, it must be the perversity of the order that must stare one in the face.”
- Rohinton Fali Nariman, J.
The recent line of decisions on Section 16 challenges under Article 227 reveals a consistent pattern. Read together, these decisions explain when supervisory jurisdiction may be exercised and, more importantly, when it may not.
The first principle emerges from Manash Kamal Bezboruah (supra). Justice Vijay Bishnoi held that, before entertaining a challenge to a Section 16 order, the High Court must first record a reasoned prima facie finding of a patent lack of inherent jurisdiction after hearing the party resisting interference. Perversity must therefore be identified and recorded, not simply assumed.
The second principle concerns the nature of the dispute. In State of Telangana v. IHHR Hospitality, Justice P. Sam Koshy declined to interfere with the arbitrator's finding on limitation, observing that limitation is “a mixed question of facts and law” that is better examined under Section 34. A mistaken finding on limitation may amount to an error, but it does not by itself deprive the Tribunal of jurisdiction.
The third principle relates to procedural decisions taken during the arbitration. In Shahnaz Hussain v. Suresh Dhanuka, Justice Manoj Jain upheld the arbitrator's refusal to frame an additional issue, holding that such decisions fall within the Tribunal's procedural discretion. As the Court observed, interference under Article 227 remains “very constricted.”
The fourth principle concerns disputes relating to the arbitration agreement itself. In Sudhir Joshi v. Rajesh Khandelwal, Justice N.J. Jamadar held that whether each loan transaction contained a separate arbitration clause involved disputed questions of fact that could not be resolved in writ proceedings. Relief under Article 227, the Court reiterated, is confined to cases involving a patent lack of inherent jurisdiction.
Viewed together, these decisions ask the same question. Does the alleged defect concern the Tribunal's authority to decide the issue, or does it concern only the correctness of the decision? This distinction offers a practical guide for High Courts dealing with challenges to Section 16 orders under Article 227. Before interfering, the Court should consider four questions:
1. Has it recorded a reasoned prima facie finding of a patent lack of inherent jurisdiction after hearing the party resisting interference?
2. Does the challenge involve a disputed question of fact, a procedural decision, or a mixed question of fact and law that the statute leaves to the Tribunal?
3. Did the Tribunal have the authority to decide the issue in the first place? If it did, an error in exercising that authority remains an error within jurisdiction.
4. Does Section 34 provide an effective remedy after the award is made?
Only where the Tribunal lacked the authority to decide the issue at all does the narrow window for intervention under Article 227 open.
Entertainability Versus Maintainability
A further and more nuanced distinction emerged in M/s Tarini Prasad Mohanty v. M/s Sunflag Iron and Steel Co. Ltd., where the Supreme Court drew a clear line between the maintainability and entertainability of a writ petition. While maintainability concerns the court's power to receive the lis at all, entertainability is a matter of judicial discretion.
“Though elementary, it needs to be restated that 'entertainability' and 'maintainability' of a writ petition are distinct concepts… The objection as to 'maintainability' goes to the root of the matter… the question of 'entertainability' is entirely within the realm of discretion of the high courts, writ remedy being discretionary.”
- Dipankar Datta, J.
Accordingly, even where an Article 227 petition against an arbitral order is technically maintainable because the constitutional power cannot be completely ousted, a High Court must still consider whether, in light of Section 5's policy of minimal judicial intervention and the availability of a remedy under Section 34, the case warrants the exercise of its discretionary jurisdiction.
The cumulative effect of the above stated line of authorities is that Article 227 survives as a theoretical safety valve but functions, in practice, as an almost dormant remedy against Section 16 orders. A High Court entertaining such a petition is now expected to record, after hearing the parties, a prima facie finding of patent lack of inherent jurisdiction or perversity apparent on the face of the record before proceeding further. Failing that, the petition ought to be dismissed in limine. For a Tribunal seized of jurisdictional objections, particularly the recurring fact pattern of non-signatories resisting impleadment, the statutory remedy remains, and is intended to remain, Section 34, invoked only once the Tribunal becomes functus officio upon rendering its final award.
Author Mridul Mishra is a final year B.B.A. LL.B. (Hons.) student at Faculty of Law, Integral University & Himanshu Mishra is a fourth year B.A. LL.B. (Hons.) student at Faculty of Law, Jamia Millia Islamia. Views are personal.