Order U/S.14(2) Arbitration & Conciliation Act Can Be Challenged Under Article 227: Allahabad High Court [Read Order]

The Allahabad High Court on Wednesday ruled that an order passed under Section 14(2) of the Arbitration and Conciliation Act, 1996 can be challenged under Article 227 of the Constitution of India, and that Section 115 of the Code of Civil Procedure cannot be viewed as a bar against the court’s extraordinary supervisory jurisdiction.

Justice Sunita Agarwal ruled, “The supervisory jurisdiction of the High Court under Article 227 of the Constitution, therefore, is unfettered and unrestricted power to remedy the glaring mistake committed by the sub-ordinate court. The availability of adequate alternative remedy to the applicant would not bar the jurisdiction of the High Court as a rigid or inflexible rule.”

Section 14 (2) confers jurisdiction on the Court to decide on the termination of the mandate of an arbitrator if the controversy remains concerning any of the grounds referred to in Section 14(1)(a).

Section 115 C.P.C. confers jurisdiction on a superior court to revise the order passed in a case decided by a sub-ordinate court, where no appeal lies against the order and where the sub-ordinate court has committed jurisdictional error in not exercising the jurisdiction vested in it or exercised a jurisdiction which is not vested in it by law or has acted in exercise of such jurisdiction illegally and with material irregularity.

The court was hearing a petition challenging an order passed by the District Judge, Bareilly whereby the petitioner’s application under Section 14(2) of the Act was rejected on the ground that during the pendency of the arbitration proceedings, the civil court would have no jurisdiction to entertain the said application in view of the nature of objections raised therein.

The respondents, represented by Senior Advocate Navin Sinha assisted by Advocate Priyanka Midha, had asserted that the impugned order is revisable under Section 115 of the Code of Civil Procedure and that in view of the available statutory remedy, the petition under Article 227 should not be maintainable.

The petitioner, represented by Advocate Anoop Trivedi, had, on the other hand, submitted that the jurisdiction under Article 227 cannot be limited by any Act of legislature. He further made reference to the order passed in December, 2016 in Mahanagar Telephone Nigam Ltd. v. M/S. Applied Electronics Ltd., wherein a Division Bench of the Apex Court had raised doubts over the correctness of the judgment in ITI Ltd. vs. Siemens Public Communications Network Ltd., which had held that the applicability of Civil Procedure Code is not prohibited in arbitration appeal proceedings under Section 37 of the Arbitration and Conciliation Act, 1996.

Accepting these contentions, the court highlighted the scope of its powers under Section 115 CPC as well as Article 227 of the Constitution of India, and asserted that the curtailment of revisional jurisdiction of the High Court under Section 115 of the Code does not take away and could not have taken away the constitutional jurisdiction of the High Court.

The court asserted that mere availability of remedy of revision would not bar the jurisdiction of the High Court to examine the petition on merits so to satisfy itself as to whether an occasion has arisen to invoke supervisory jurisdiction under Article 227 within its permissible limits.

It, however, cautioned that while exercising their jurisdiction, High Courts must follow the regime of law. It explained, “Thus, it can be seen that the powers of the High Court under Section 115 C.P.C. and Article 227 of the Constitution are analogous subject to their own limitations and can be exercised in a case of jurisdictional error committed by the sub-ordinate court…

…The rider is that the High Courts would keep in mind the limitations of the supervisory jurisdiction and refrain from exercising it casually or as a Court of Appeal.”

The court further noted that the question of maintainability had been raised by the respondents after a period of two years of the petition having been entertained and affidavits having been exchanged between the parties.

The preliminary objection raised by Mr. Sinha regarding maintainability of the petition under Article 227 were therefore rejected, with the court ruling, “Having noticed the scope of enquiry under Section 115 C.P.C. and Article 227 of the Constitution and the fact that the supervisory power in both jurisdictions to be exercised by the High Court are akin to each other and that the objection regarding the maintainability of this petition on the ground of alternative remedy of revision has been taken after two years of its institution, this Court is of the considered view that this petition under Article 227 of the Constitution cannot be thrown on the ground of entertainability i.e. only for the order impugned being revisable.”

The matter was then directed to be placed before the appropriate Bench.

Read the Order Here