United India Insurance Company Limited Vs Odisha Hydra Power Corporation Ltd. (Supreme Court of India)
Summary: The Supreme Court of India considered a Special Leave Petition filed by United India Insurance Company Limited against Odisha Hydra Power Corporation Ltd., arising from the judgment and order dated 22 August 2024 passed by the District Judge, Khurda at Bhubaneswar, in Arbitration Appeal No. 09/2023. The matter concerned the scope of constitutional remedies against orders passed in arbitration proceedings under the Arbitration and Conciliation Act, 1996. The Bench comprising Justice Abhay S. Oka and Justice Ujjal Bhuyan condoned the delay in filing the petition and examined the principles governing judicial interference with arbitration-related orders.
During the hearing, the Supreme Court’s attention was drawn to paragraph 17 of its earlier decision in Deep Industries Limited v. Oil and Natural Gas Corporation Limited & Anr., (2020) 15 SCC 706. That judgment recognised that although petitions under Article 227 of the Constitution of India could be filed against judgments allowing or dismissing first appeals under Section 37 of the Arbitration and Conciliation Act, the High Court must exercise its supervisory jurisdiction with exceptional restraint. The statutory objective of expeditious arbitration proceedings requires courts to avoid interference except where the challenged orders are patently lacking in inherent jurisdiction.
The Supreme Court reiterated that when an arbitral award has been confirmed in proceedings under Section 34 and subsequently in an appeal under Section 37 of the Arbitration and Conciliation Act, 1996, even the Supreme Court must exercise caution while considering challenges under Article 136 of the Constitution. The Court emphasised the limited nature of judicial interference at successive stages of arbitration proceedings and the importance of respecting the statutory framework governing arbitral awards.
Considering that a constitutional remedy under Articles 226 and 227 remained available to the petitioner, the Supreme Court disposed of the Special Leave Petition by permitting United India Insurance Company Limited to approach the High Court to challenge the impugned judgment. The Court did not decide the substantive merits of the arbitration dispute or set aside the challenged judgment. Instead, it left the petitioner free to pursue the available constitutional remedy before the appropriate High Court.
The Supreme Court further clarified that if an adverse order were passed in the proposed proceedings under Articles 226 and 227, the petitioner would remain entitled to challenge that order before the Supreme Court in accordance with law. All pending applications were disposed of accordingly. The order reinforces that constitutional supervisory jurisdiction remains available in arbitration matters, but its exercise is subject to the stringent limitations recognised in Deep Industries.
Cases Discussed
Deep Industries Limited v. Oil and Natural Gas Corporation Limited & Anr. (Supreme Court of India; (2020) 15 SCC 706): The Supreme Court expressly referred to paragraph 17 of this judgment concerning the maintainability and restricted scope of petitions under Article 227 against decisions in appeals under Section 37 of the Arbitration and Conciliation Act, 1996. The precedent explains that the non obstante clause in Section 5 does not eliminate constitutional supervisory jurisdiction. However, High Courts must exercise exceptional caution, restricting interference to orders patently lacking in inherent jurisdiction so that the arbitral process is not unnecessarily delayed. The Court relied on these principles while granting liberty to the petitioner to approach the High Court.
FULL TEXT OF THE SUPREME COURT ORDER
Heard the learned counsel appearing for the petitioner.
Delay condoned.
Our attention is invited to a view taken by this Court in paragraph 17 of the decision in the case of Deep Industries Limited vs. Oil and Natural Gas Corporation Limited & Anr.1. Paragraph 17 reads thus:
“17. This being the case, there is no doubt whatsoever that if petitions were to be filed under Articles 226/227 of the Constitution against orders passed in appeals under Section 37, the entire arbitral process would be derailed and would not come to fruition for many years. At the same time, we cannot forget that Article 227 is a constitutional provision which remains untouched by the non obstante clause of Section 5 of the Act. In these circumstances, what is important to note is that though petitions can be filed under Article 227 against judgments allowing or dismissing first appeals under Section 37 of the Act, yet the High Court would be extremely circumspect in interfering with the same, taking into account the statutory policy as adumbrated by us hereinabove so that interference is restricted to orders that are passed which are patently lacking in inherent jurisdiction.”
When an arbitral award is confirmed in a petition under Section 34 and in an appeal under Section 37 of the Arbitration and Conciliation Act, 1996, even this Court while exercising jurisdiction under Article 136 of the Constitution of India has to be circumspect. As a remedy under Article 226/227 of the Constitution is available to the petitioner to challenge the impugned judgment, we dispose of the Special Leave Petition by permitting the petitioner to avail the remedy before the High Court under Article 226/227 of the Constitution. In the event, an adverse order is passed in the petition which may be filed by the petitioner under Article 226/227 of the Constitution, it will be always open for the petitioner to challenge the said order before this Court in accordance with law.
Pending applications stand disposed of accordingly.
1 (2020) 15 SCC 706
