Judicial interference under Article 227 is limited in arbitration matters, especially when a comprehensive mechanism exists under the Arbitration and Conciliation Act for addressing non-arbitrability questions.

JUDGMENT

[VIA VIDEO CONFERENCING]

Amit Bansal, J. (Oral)

C.M. No.25855/2021 (for exemption)

1. Allowed, subject to just exceptions and as per extant Rules.

2. The application is disposed of.

CM(M) 525/2021 & CM No.25854/2021 (for stay)

3. The present petition under Article 227 of the Constitution of India has been filed impugning the order dated 23rd June, 2021 passed by the Ms. Bimla Makin, District Judge (Retd.), Sole Arbitrator, whereby the application dated 15th March, 2021 filed by the petitioner for quashing of arbitration proceedings on account of there being no arbitrable dispute and for holding that the Arbitrator has no jurisdiction to deal with the dispute between the parties, was dismissed.

4. The brief facts giving rise to the present petition are set out hereinafter. A Memorandum of Understanding (MoU) was executed between the petitioner and the respondent on 11th August, 2016, whereby the respondent agreed to purchase an apartment from the petitioner in Gurgaon, and which MoU contained an arbitration clause. A tripartite agreement was entered into between the respondent, HDFC and the petitioner on 15th October, 2016 whereby the respondent took a loan from HDFC to finance the apartment and to create a mortgage. Disputes arose between the parties, which led to filing of an application under Section 11 of the Arbitration and Conciliation Act, 1996 (A&C Act) on behalf of the respondent. Vide order dated 29th January, 2021, a Sole Arbitrator was appointed by this Court to adjudicate the disputes between the parties. The petitioner raised the issue of non-arbitrability of the disputes before the Sole Arbitrator, which was rejected by the Sole Arbitrator vide impugned order dated 23rd June, 2021.

5. The counsel for the petitioner has drawn my attention to Claim No. 3 of the Statement of Claim filed by the respondent before the Sole Arbitrator to contend that the relief claimed therein is towards foreclosure of the loan taken by the respondent with HDFC and therefore, the dispute is not arbitrable. It is further contended that since HDFC is a necessary party to the foreclosure process, and since HDFC is not a party to the arbitration agreement, no arbitration proceedings can take place. The counsel for the petitioner has relied upon the judgment of the Supreme Court in Vidya Drolia and Ors. Vs. Durga Trading Corporation, (2021)2 Supreme Court Cases 1, to contend that a right in rem is not amenable to arbitration. It is further contended that the petitioner does not have any other remedy against the said decision of the Sole Arbitrator as it is not within the ambit of challenge under Section 34 of the A&C Act.

6. The counsel appearing on advance notice on behalf of the respondent submits that the present petition under Article 227 of the Constitution of India is not maintainable. He draws attention to Section 16 of the A&C Act to contend that an Arbitral Tribunal has the right to rule on its own jurisdiction and where the Arbitral Tribunal rejects the pleas raised with regard to negating its jurisdiction, the arbitral proceedings will have to be continued, resulting in an award. In terms of Section 16 (6), the party aggrieved by the aforesaid decision of the Arbitral Tribunal will have the right to challenge it in accordance with Section 34 of the A&C Act.

7. The counsel for the respondent has placed reliance upon a recent judgment of the Supreme Court in Bhaven Construction vs. Executive Engineer, 2021 SCC OnLine SC 8 to contend that writ jurisdiction under Articles 226 and 227 of the Constitution of India cannot be ordinarily invoked against arbitration proceedings. He further submits that the same contenti