2026 Supreme(Gau) 1393

THE GAUHATI HIGH COURT (HIGH COURT OF ASSAM, NAGALAND, MIZORAM & ARUNACHAL PRADESH)
MRIDUL KUMAR KALITA, J. 
Lokesh Anand Singhal, S/o. Sri Ashok Anand Singhal and Smt. Shilpi Anand Singhal - Petitioner
Versus
Pride Realty, A Partnership Firm, Represented by its partner Sri Manoj Kumar Jalan - Respondent
CRP(IO) No. 276 of 2026
Decided On : 31-07-2026

High Court's supervisory jurisdiction under Article 227 in arbitration matters is extremely circumspect; refusal to stay a Section 9 order pending Section 37 appeal is not perverse if it relates to merits and no apparent illegality exists.

Headnote:(A) Arbitration and Conciliation Act, 1996 - Sections 5, 9, 9(2), 21, 37 and 37(1)(b) - Partnership Act, 1932 - Section 12 - Code of Civil Procedure, 1908 - Order 41 Rule 5 and Section 151 - Constitution of India - Article 227 - Interplay of Section 5 of the Arbitration Act and Article 227 - The High Court, while exercising supervisory jurisdiction under Article 227, must be extremely circumspect in interfering with orders passed in appeals under Section 37 of the Arbitration Act, as the statutory policy limits judicial intervention - Refusal to stay an order under Section 9 pending appeal under Section 37 is not perverse if the appellate court finds that the pleas raised relate to merits and should be decided in the main appeal - Commencement of arbitral proceedings under Section 21 is triggered by receipt of notice invoking arbitration, and once commenced, Section 5 restricts judicial intervention - No violation of Section 9(2) if arbitration is deemed to have commenced within 90 days of interim order. (Paras 32-38)

(B)

Facts of the case:
The petitioners challenged an order dated 20.05.2026 passed by the learned District Judge, Kamrup (M), Guwahati in Misc. (J) Case No. 28/2026, which refused to stay the operation of an order dated 17.02.2026 passed by the learned Civil Judge (Senior Division) No.1, Kamrup (M) under Section 9 of the Arbitration and Conciliation Act, 1996 in Misc. (Arbitration) Case No. 205/2024. The underlying dispute arose from a partnership firm where the petitioner No.1 alleged financial irregularities and approached the bank to freeze the firm’s current account. The firm invoked the arbitration clause. The Section 9 court restrained the petitioner from interfering with day-to-day affairs and from freezing the account. The petitioners appealed under Section 37 and sought stay of the Section 9 order, which was refused by the appellate court. The present petition under Article 227 impugned that refusal.

(C)

Issues: (i) Whether the appellate court’s refusal to stay the Section 9 order pending appeal under Section 37 was perverse or warranted interference under Article 227. (ii) Whether there was violation of Section 9(2) of the Arbitration Act due to non-commencement of arbitral proceedings within 90 days. (iii) Whether the High Court should exercise its constitutional jurisdiction in light of Section 5 of the Arbitration Act.

(D)

Findings of Court:
The High Court held that the arbitral proceedings were deemed to have commenced upon receipt of notice invoking arbitration under Section 21, and therefore there was no violation of Section 9(2). The appellate court’s observation that the stay application raised issues of merit to be decided in the appeal was not perverse. The High Court agreed that interfering at this stage would amount to usurping the appellate court’s function. In view of Section 5 and the principle of circumspection laid down in precedent, the petition under Article 227 was not maintainable as no patent lack of inherent jurisdiction or perversity was shown. The appeal before the District Judge was fixed for final hearing on the same day, further justifying non-interference. (Paras 32-38) (E)

Ratio Decidendi: The High Court’s jurisdiction under Article 227 is not barred by Section 5 of the Arbitration Act, but must be exercised with extreme caution. An appellate court’s refusal to grant stay of an interim order under Section 9, based on the ground that the issues raised go to the merits of the appeal, does not amount to perversity or illegality warranting constitutional interference. The commencement of arbitral proceedings under Section 21 is effective from the date of receipt of the notice invoking arbitration, and that triggers the restrictions under Section 5. (F)

Result: The Civil Revision Petition (I/O) was dismissed with no order as to costs. (Paras 39-40)