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IN THE HIGH COURT OF DELHI
Yashwant Varma, J.
Frontline Retail Pvt. Ltd. - Appellant
Versus
Adidas India Marketing Pvt. Ltd. - Respondent
W.P.(C) 13488 of 2021 & CM Appl. 42541 of 2021 (for Exemption) CM Appl. 42542 of 2021 (for Stay)
Decided On : 29-11-2021
Judicial intervention in arbitration is permissible only in exceptional cases, emphasizing the importance of maintaining the integrity and efficiency of arbitral processes.
Headnote:(A) Constitution of India - Articles 226 and 227 - Arbitration and Conciliation Act, 1996 - Petition challenging Arbitral Tribunal's refusal to permit additional evidence - The court emphasized the need for judicial restraint in arbitration matters, affirming that challenges must demonstrate exceptional circumstances for intervention. (Paras 3, 4, 20, 5)
(B) Arbitrations - Judicial intervention - High Courts must adhere to the principle of unbreakability in arbitration statutes, limiting interference to instances of clear jurisdictional issues or bad faith. (Paras 4, 20-22)
Facts of the case:
The appellant sought to challenge the refusal of the Arbitral Tribunal to allow additional evidence in arbitration proceedings, arguing that failure to do so would cause irreparable injustice. The respondent contended that the tribunal acted within its jurisdiction and that the grounds for interference were not exceptional.
Findings of Court:
The court found no basis for judicial intervention under Articles 226 and 227, reiterating the importance of respecting the arbitration process and its timelines. No exceptional or bad faith circumstances were presented.
Issues: The court addressed whether the grounds for questioning the tribunal's decision met the threshold for judicial interference and the applicability of the principles elucidated in prior Supreme Court judgments.
Ratio Decidendi: The court ruled that unless exceptional circumstances or bad faith are demonstrated, judicial interference in arbitration should be minimal, thereby upholding the integrity of the arbitral process.
Result: Writ petition dismissed.
| Table of Content |
|---|
| 1. impugning the arbitral tribunal's order (Para 2) |
| 2. opposition to petition based on supreme court precedent (Para 3) |
| 3. judicial restraint in arbitration matters (Para 4) |
| 4. no ground for entertaining challenge (Para 5) |
| 5. writ petition dismissed (Para 6) |
JUDGMENT
Yashwant Varma, J. (Oral)
CM APPL. 42541/2021 (For Exemption)
Allowed, subject to all just exceptions.
Application stands disposed of.
W.P.(C) 13488/2021 and CM APPL. 42542/2021 (For Stay)
1. Heard learned counsel for parties.
2. This petition impugns the order dated 13.10.2021 passed by the Arbitral Tribunal in proceedings pending before it and refusing a prayer made on behalf of the petitioner to be permitted to lead additional evidence. Although the petition is filed as being under Article 226 of the Constitution, learned counsel for the petitioner has also sought to invoke the powers of the Court as conferred by Article 227 of the Constitution and submits that a grave and irreparable injustice shall be caused to the petitioner in case the order as passed by the Tribunal was permitted to exist.
3. Learned counsel for the respondent while opposing the writ petition has however drawn the attention of the Court to a recent decision handed down by three learned Judges of the Supreme Court in Bhaven Construction v. Executive Engineer, Sardar Sarovar Nigam Limited and Anr., 2021 SCC OnLine SC 8 and submits that as would be evident from a reading of the order impugned here, the Tribunal has clearly acted within its jurisdiction and that in any case the grounds of challenge would clearly not fall within the scope of an "exceptional rarity" as was explained in Bhaven Construction. In the aforesaid backdrop and in light of the principles enunciated in the decision of the Supreme Court noticed above, learned Senior Counsel contends that the writ petition warrants dismissal.
4. In Bhaven Construction the Supreme Court while recognizing the width and amplitude of the constitutional powers conferred upon the High Court by virtue of Article 227 of the Constitution, also emphasized the need for restraint and a judicial hands off attitude to be adopted by courts bearing in mind the underlying scheme of the Arbitration and Conciliation Act, 1996, the settled principles of un-breakability which apply as also the mandate of Section 5 which in unequivocal terms mandates that judicial authorities shall not intervene in arbitral proceedings except where so provided under the Act. Explaining the aforesaid position, their Lordships in paragraphs 18 to 24 of the report held thus:
"18. 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 on 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.
19. In this context we may observe Deep Industries Limited v. Oil and Natural Gas Corporation Limited, 2019 SCC OnLine SC 1602, wherein interplay of Section 5 of the Arbitration Act and Article 227 of the Constitution was analyzed as under:
"15. Most significant of all is the non obstante clause contained in Section 5 which states that notwithstanding anything contained in any other law, in matters that arise under Part I of the Arbitration Act, no judicial authority shall intervene except where so provided in this Part. Section 37 grants a constricted right of first appeal against certain judgments and orders and no others. Further, the statutory mandate also provides for one bite at the cherry, and interdicts a second appeal being filed (See Section 37(2) of the Act)
16. 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 arb
