W.P.(C)/10561/2024 of HINDUSTAN ALLOYS PVT. LTD. Vs MAA SHEETLA VENTURES LIMITED

IN THE HIGH COURT OF DELHI AT NEW DELHI

+W.P.(C) 10561/2024, CM APPL. 43391-43392/2024HINDUSTAN ALLOYS PVT. LTD.

.....Petitioner

Through:Mr. Hitesh Bhardwaj, Advocate

versus

MAA SHEETLA VENTURES LIMITED

.....Respondent

Through:Mr. Ishan Dewan, Mr. V. Siddharth,Ms.GunjanArora,Mr.AkshayGupta,Ms.AyushiMishra,Advocates.

CORAM:

HON'BLE MR. JUSTICE SANJEEV NARULA

O R R%31.07.2024

1.The Petitioner has filed statement of claim before Sole Arbitratorwho is conducting the arbitration proceedings under the aegis of the DelhiInternational Arbitration Centre (DIAC). In the said arbitration proceedings,the Respondent was earlier proceeded ex-parte and issues were framed on20[th]December, 2023. Subsequently, the ex-parte order was set aside by theSole Arbitrator and the Respondent was allowed to file their statement ofdefence, which they did on 16[th]February, 2024.

2.During the course of the proceedings, the Petitioner filed anapplication under Section 19 read with Section 27 of the Arbitration andConciliation Act, 1996[1]and Rules 25.3 and 25.4(c) of the DIAC Rules,

1 “Arbitration Act”

W.P.(C) 10561/2024Page 1 of 6

2023[2], seeking reopening of the Petitioner’s evidence and summoning ofadditional witnesses, or for issuance of directions to the Respondent toproduce relevant documents from its custody or to give approval to takeassistance of the Court in taking evidence. The said application has beendecided through order dated 24[th]July, 2024[3], whereby the Arbitral Tribunal,after considering the facts of the case, has declined this request.

3.By way of the present writ petition under Article 226 and 227 of theConstitution of India, the Petitioner assails this Impugned Order. Mr. HiteshBhardwaj, counsel for Petitioner, contends that since there is no alternateremedy available under the Arbitration Act to assail such an order, thepresent writ petition should be entertained. To support his contentions,reliance is placed on the judgment of this Court in ‘Surender KumarSinghal & Ors. vs. Arun Kumar Bhalotia & Ors.’[4].

4.On merits, Mr. Bhardwaj argues that the Arbitral Tribunal hascommitted an error by ignoring the mandate of Section 27 of the ArbitrationAct. The Arbitral Tribunal has failed to appreciate the fact that after thePetitioner had led their evidence, the need arose for examination ofadditional witnesses and production of certain documents which were incustody of the Respondent and also with the other third parties, such as theGST Department.

5.In the opinion of the Court, while there cannot be any quarrel on theproposition regarding maintainability of writ petition against an orderpassed by the Arbitral Tribunal, it is well-established position of law thatthe Court’s scope of interference under Articles 226 & 227 of the

2 “DIAC Rules”

3 “Impugned Order”

W.P.(C) 10561/2024Page 2 of 6

Constitution of India is extremely circumspect.

6.ThisCourthas,in‘EasyTripPlannersLtdvsOne97’[5]Communications Ltd., while considering the decision of an arbitraltribunal on an interlocutory application filed by party under Order VIIRule 14 of the Code of Civil Procedure, 1908[6]to bring on record additionaldocuments, has declined to interfere the said proceedings. In doing so, theCourt also referred to the decision of the Supreme Court in ‘BhavenConstruction v. Executive Engineer Sardar Sarovar Narmada NigamLtd.’[7], wherein the Supreme Court has rendered certain observationsregarding the scope of jurisdiction under Article 226 of the Constitution ofIndia. The relevant portion of this Court’s judgment is extracted hereunder:

“14.Mr. Rajshekhar Rao also drew my attention to paras 18, 20 and 22of the decision in Bhaven Construction v. Executive Engineer SardarSarovar Narmada Nigam Ltd., which read thus:

“18.In any case, the hierarchy in our legal framework, mandates that alegislative enactment cannot curtail constitutional right. In NiveditaSharma v. COAI, 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 toissue directions, orders or writs including writs in the nature ofhabeascorpus,certiorari,mandamus,quowarrantoandprohibition under Article 226 of the Constitution is basic featureof the Constitution and cannot be curtailed by parliamentarylegislation — L. Chandra Kumar v. Union of India. However, it isone thing to say that in exercise of the power vested in it underArticle 226 of the Constitution, the High Court can entertain writpetition against any order passed by or action taken by the Stateand/or its agency/instrumentality or any public authority or orderpassed by quasi-judicial body/authority, and it is an altogetherdifferent thing to say that each and every petition filed under

4 MANU/DE/0561/2021; 2021 SCC OnLine Del 3708

5 2022 SCC OnLine Del 2186

6 “CPC”

7 (2022) 1 SCC 75

W.P.(C) 10561/2024

Article 226 of the Constitution must be entertained by the HighCourt as matter of course ignoring the fact that the aggrievedperson has an effective alternative remedy. Rather, it is settled lawthat when statutory forum is created by law for redressal ofgrievances, writ petition should not be entertained ignoring thestatutory dispensation.”

It is therefore, prudent for Judge to not exercise discretion to allowjudicial interference beyond the procedure established under theenactment. This power needs to be exercised in exceptional rarity,wherein one party is left remediless under the statute or clear “badfaith” shown by one of the parties. This high standard set by this Courtis in terms of the legislative intention to make the arbitration fair andefficient.

20. In the instant case, Respondent 1 has not been able to showexceptional circumstance or “bad faith” on the part of the appellant, toinvoke the remedy under Article 227 of the Constitution. No doubt theambit of Article 227 is broad and pervasive, however, the High Courtshould not have used its inherent power to interject the arbitral processat this stage. It is brought to our notice that subsequent to the impugnedorder of the sole arbitrator, final award was rendered by him onmerits, which is challenged by Respondent 1 in separate Section 34application, which is pending.

22. The High Court did not appreciate the limitations under Articles226 and 227 of the Constitution and reasoned that the appellant hadundertaken to appoint an arbitrator unilaterally, thereby renderingRespondent 1 remediless. However, plain reading of the arbitrationagreement points to the fact that the appellant herein had actuallyacted in accordance with the procedure laid down without any malafides.”

xxx...xxx…xxx

16.Bhaven Construction envisages the availability of remedy underArticles 226 and 227 of the Constitution of India in rare and exceptionalcases, which, essentially, are delimited to two exigencies; the first, wherethe order suffers from “bad faith”, and, the second, where, if thechallenge is not permitted, the party would not be rendered remediless.Where, therefore, remedy, against the order under challenge, isotherwise available to the party, in rare and exceptional cases and withinthe narrow confines of the jurisdiction that the said provisions confer,High Courts could exercise jurisdiction under Articles 226 and 227.

17. The degree of circumspection that Bhaven Construction expects of thewrit court is, however, unmistakable even from the said decision. Thegoverning principle is, apparently, that the arbitral litigant should not beleft rudderless in the arbitral ocean. It is predicated on the right to legalredress, which is, to all intents and purposes, fundamental. BhavenConstruction, therefore, is more in the nature of cautionary note, and isnot intended to provide haven for launching challenge, in writproceedings, against every interlocutory arbitral order.

18. The obvious reason why Bhaven Construction would not help thepetitioner is because, even as per SBP, the party is not remediless inventilating its grievances against the interim order passed by the ArbitralTribunal. The remedy would, however, lie against the interim award or thefinal award that the arbitral tribunal would choose to pass. It wouldalways be open to the aggrieved litigant to vent its ire against the interimorder as one of the grounds on which it seeks to assail the interim or finalarbitral award, under Section 34. Till then, however, SBP requires thelitigant to bide his time.

19. It is only, therefore, that the remedy available to the litigant isdeferred to later stage of proceedings, so as to ensure that the arbitralstream continues to flow unsullied and undisturbed by any eddies that mayimpede its path.”

7.Thus, Bhaven Construction (supra), clearly indicates that whileexercising writ jurisdiction, the Court must consider the nature of challengeand also of the nature of the impugned order. Moreover, in the opinion ofthis Court, this already circumspect scope of interference under Article 226becomes even narrower when it is an order of the Arbitral Tribunal inrelation to the conduct of arbitration proceedings that is called into question.In keeping with the aforenoted observations of this Court in Easy TripPlanners Ltd. (supra), the Court is of the opinion that writ petition, cannotbeentertainedagainsteveryinterlocutoryorderdealingwithcasemanagement. Such orders are within the domain and discretion of theArbitral Tribunal, and would include orders considering the request ofparties to summon witnesses, production on documents, etc. Remedy against

W.P.(C) 10561/2024

such orders would lie against the interim award or the final award that theArbitral Tribunal would choose to pass. Needless to say, it is always open toaggrieved litigants to raise challenge under Section 34 of the ArbitrationAct, however, till then, the aggrieved party will have to await the saiddecision.

8.In view of the above, the Court finds no basis to entertain the presentpetition, and accordingly, the petition is disposed of, along with pendingapplications.

JULY 31, 2024ab

SANJEEV NARULA, J

W.P.(C) 10561/2024