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Delhi High Court: Petition Under Article 227 Is Not Maintainable Against An Interim Order Passed By The Arbitrator If It Can Be Challenged U/S 34 Of The A&C Act

2 Sep 2022 6:06 AM GMT
Delhi High Court: Petition Under Article 227 Is Not Maintainable Against An Interim Order Passed By The Arbitrator If It Can Be Challenged U/S 34 Of The A&C Act

Facts of the case:

In a domestic arbitration between Siddhast Intellectual Property Innovations Pvt. Ltd. (Siddhast) and Controller General of Patents, Designs & Trademarks, (CGPDT), while filing its Statement of Defence, CGPDT had also filed its Statement of Counter-claims against Respondent No. 1 - Siddhast along with an application under Order 1 Rule 10 CPC to implead a French company Questel SAS as Respondent No. 2 in its Counter-Claims only on the basis of a "Consortium Agreement" between Siddhast and Questel SAS though there was no written agreement between Questel SAS and CGPDT. Ld. Sole Arbitrator allowed the application; hence, the petitioner filed the present petition under Article 227 of the Constitution of India which was dismissed for not being maintainable as the impugned interim order passed by the Arbitrator could be challenged u/s 34 of the A&C Act, 1996 after passing of the award. Ld. Counsel for the petitioner had argued that provisions of Order 1 Rule 10 CPC were not applicable in arbitral proceedings and Questel SAS could not be impleaded for being non-signatory to the agreement between the petitioner and CGPDT. It was further argued that by impleading a multinational company, nature of the present domestic arbitration would convert into international arbitration; hence, the sole Arbitrator who had been appointed by the High Court of Delhi u/s 11 of the A&C Act shall forfeit his mandate as only Supreme Court of India can appoint the arbitrator(s) in an international arbitration. It was further argued that CGPDT had not objected to the appointment of the sole arbitrator by the High Court of Delhi on the ground that an international company was involved in the case. The Counsel for the petitioner further expressed its apprehension during oral arguments that the net effect of impleadment of Questel SAS in the Counter Claims only would be that its Statement of Claims shall be liable to be rejected u/s 19 of the Partnership Act, 1932 for not seeking permission from Questel SAS before filing the SoC against CGPDT as such preliminary objection had been raised by CGPDT in its SoD alleging Questel SAS to be its partner.

However, all these arguments failed to impress the Hon'ble High Court which was of the opinion that the Supreme Court in SBP & Co v. Patel Engineering Ltd. and

Bhaven Construction v. Executive Engineer, Sardar Sarovar Narmada Nigam Ltd. has held that even while no statutory provision could be permitted to derogate from the constitutional power of the High Courts, vested in them by Article 227 of the Constitution of India, nonetheless, the power vested in them by the said provision is discretionary in nature and 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.

High Court further observed that Ld. Counsel for the Petitioner did cogitate on the issue of whether, if such an interpretation was to be accepted, any interlocutory arbitral order would at all exist, which could be challenged under Article 227 of the Constitution of India. However, the High Court opined that it was a deliberation which could be left for another day.


Citation: 2022 LiveLaw (Del) 830

Counsel for the Petitioner: Mr. Anukul Raj with Ms. Nikita Raj and Mr. Anubhav Deep Singh, Advs.

Counsel for the Respondent: Mr. Praveen Kumar Jain with Mr. Naveen Kumar Jain, Mr. Sachin Kumar Jain, Ms. Rashmi Kumari, Mr. Rahul Lakhera and Ms. Shalini Jha, Advs.

Click here to read/download order

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