IMPORTANT POINT
Limited scope of High Court's interference under Article 227 of the Constitution of India

JUDGMENT (Oral)

CM APPL. 17212/2024 (Exemption)

Allowed, subject to all just exceptions.

W.P.(C) 4209/2024

1. The Petitioner has approached this Court challenging the Order dated 01.02.2024, passed by the Arbitrator rejecting an application under Section 16 of the Arbitration and Conciliation Act, 1996 on the ground that the dispute is not arbitrable for the reason that the contract entered between the parties was void ab initio. Relevant portion of the impugned Order reads as under:

"19. In the present case, the Tribunal is of the opinion that evidence has to be led by the parties on the following aspects: a) Whether declaration form INC- 20A was fiIed on 01/09/2021 by claimant. b) Whether the agreement dated 19/06/2021 was signed by the competent parties and is a valid agreement. c) Whether the respondent has taken the benefit of this agreement. d) Whether Section 10A of Companies Act is mandatory. e) Whether the agreement requires registration as per the Section 17 of the Registration Act.

20. The issues raised in para 3 to 7 of this application are based on merit of this case and hence require detailed evidence to be led by the parties.

21. As the parties are required to lead evidence on certain issues taken in the present application and its reply by the claimant, the same cannot be decided on the basis of documents filed on record by the parties or by taking limited evidence. Hence, in view of the discussion made above, the present application is dismissed. The Tribunal shall continue with the Arbitral Proceedings as per Section 16(5) of the Arbitration & Conciliation Act. 1996."

2. A perusal of the abovementioned Order shows that the Arbitrator has yet not fully closed the issue and has decided to adjudicate on the issue after evidence is led on the same issue.

3. The scope of interference while exercising jurisdiction under Article 227 of the Constitution of India under the Arbitration and Conciliation Act is well settled. The power of the High Court for exercising its jurisdiction under Article 227 of the Constitution of India has been succinctly explained by the Apex Court in Estralla Rubber v. Dass Estate Private Limited, 2001 (8) SCC 97, has observed as under:

"6. The scope and ambit of exercise of power and jurisdiction by a High Court under Article 227 of the Constitution of India is examined and explained in a number of decisions of this Court. The exercise of power under this article involves a duty on the High Court to keep inferior courts and tribunals within the bounds of their authority and to see that they do the duty expected or required of them in a legal manner. The High Court is not vested with any unlimited prerogative to correct all kinds of hardship or wrong decisions made within the limits of the jurisdiction of the subordinate courts or tribunals. Exercise of this power and interfering with the orders of the courts or tribunals is restricted to cases of serious dereliction of duty and flagrant violation of fundamental principles of law or justice, where if the High Court does not interfere, a grave injustice remains uncorrected. It is also well settled that the High Court while acting under this article cannot exercise its power as an appellate court or substitute its own judgment in place of that of the subordinate court to correct an error, which is not apparent on the face of the record. The High Court can set aside or ignore the findings of facts of an inferior court or tribunal, if there is no evidence at all to justify or the finding is so perverse, that no reasonable person can possibly come to such a conclusion, which the court or tribunal has come to.

7. This Court in Ahmedabad Mfg. & Calico Ptg. Co. Ltd. v. Ram Tahel Ramnand, [(1972) 1 SCC 898: AIR 1972 SC 1598] in AIR para 12 has stated that the power under Article 227 of the Constitution is intended to be used sparingly and only in appropriate cases, for the purpose of keeping the subordinate courts and tribunals within the bounds of their author