Case Law Details
Bhaven Construction Vs Executive Engineer Sardar Sarovar Narmada Nigam Ltd.& Anr (Supreme Court)
Conclusion: Writ petition under Article 226/227 against an order under Sec 16(2) of an Arbitrator can be entertained only in exceptional cases, therefore, the High Court should not have used its inherent power to interject the arbitral process at this stage.
Held: The question arose for consideration was whether the arbitral process could be interfered under Article 226/227 of the Constitution, and under what circumstance. It was held that the Arbitration Act provides for a mechanism of challenge under Section 34. The opening phase of Section 34 reads as ‘Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and subsection (3)’. It is therefore, prudent for a Judge to not exercise discretion to allow judicial interference beyond the procedure established under the enactment. This power 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. This high standard set by this Court is in terms of the legislative intention to make the arbitration fair and efficient. The use of term ‘only’ as occurring under the provision serves two purposes of making the enactment a complete code and lay down the procedure. In the instant case, the officer had not been able to show exceptional circumstance or ‘bad faith’ on the part of assessee, to invoke the remedy under Article 227 of the Constitution. No doubt the ambit of Article 227 is broad and pervasive, however, the High Court should not have used its inherent power to interject the arbitral process at this stage. It was noticed that subsequent to the impugned order of the sole arbitrator, a final award was rendered by him on merits, which was challenged by the Officer in a separate Section 34 application, which was pending. Thus, High Court erred in utilizing its discretionary power available under Articles 226 and 227 of the Constitution herein. and therefore, the impugned Order of the High Court was set aside.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
1. This Civil Appeal raises an important question of law concerning arbitration law in India and special enactments enacted by States concerning public works contract.
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