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IN THE HIGH COURT OF KERALA AT ERNAKULAM
A.MUHAMED MUSTAQUE, A.C.J., S.MANU, J.
M/s Shriram Transport Finance Co.Ltd – Appellant
Versus
Saneesha M.S., W/o Vishnudas – Respondent
WA No. 1288 of 2024
Decided on : 03-09-2024
Arbitration - Interim Measures - Arbitration and Conciliation Act, 2015 - Section 17, Section 37 - The court clarified that the arbitral tribunal cannot enforce its own orders directly and that any enforcement must be through a civil court, emphasizing the separation of powers between private arbitration and public law remedies.
Fact of the Case:
An appeal was filed against an interim order by an arbitral tribunal that attached property belonging to a third party, leading to a challenge under Article 226 of the Constitution.
Finding of the Court:
The court found that the arbitral tribunal overstepped its authority by directly enforcing an attachment order without civil court intervention, thus nullifying the order.
Issues: Whether a third party can challenge an interim order of an arbitral tribunal under Article 226 of the Constitution and the proper remedy available for such a challenge.
Ratio Decidendi: The arbitral tribunal lacks the authority to enforce its own orders; enforcement must occur through a civil court, and the tribunal's actions cannot infringe upon fundamental rights.
Result: The court nullified the arbitral tribunal's order of attachment and clarified the enforcement process must involve a civil court.
Key Points: - The arbitral tribunal cannot enforce its own orders; enforcement must occur through a civil court (!) . - A third party aggrieved by an attachment order can challenge it under Article 226, but cannot challenge the interim order directly under Section 37 of the Arbitration Act (!) (!) . - The court held that the arbitral tribunal overstepped its authority by directly enforcing an attachment order without civil court intervention, thus nullifying the order (!) . - Interim orders issued by the arbitral tribunal are enforceable only through civil court processes, such as invoking Section 94 of the Code of Civil Procedure (!) (!) . - The writ petitioner is not deprived of any remedy as the Code of Civil Procedure safeguards third-party interests against enforcement of such orders (!) .
JUDGMENT :
A. Muhamed Mustaque, Acg.C.J.
This appeal is filed by M/S. Shriram Transport Finance Co.Ltd. They raised a dispute against Sooraj P.C and Beena Chidambaran before the arbitrator. Adv.Sheen Jose has been appointed as arbitrator. Arbitrator passed an interim order invoking Section 17 of the Arbitration and Conciliation (Amendment) Act 2015. By that order, a property comprised in Sy.No.152/4-7-2 in Kottuvally Village, Paravur Taluk has been attached. In the order itself, the arbitral tribunal has given the intimation of attachment to the Sub Registrar, Paravur and Village Officer etc. Consequent upon attachment being recorded by the Sub Registrar and Village Officer, the writ petitioner- Saneesha M S, who claims to be the owner of the property, has approached this Court challenging the interim order passed by the arbitral tribunal invoking Article 226 of the Constitution of India.
2. The learned Single Judge, who heard the matter, had allowed the challenge. The learned Single Judge, noting that the property attached does not belong to the debtors, who were before the arbitral tribunal, but belonged to the writ petitioner-Saneesha M S, had ordered that the award cannot be sustained against the real owner. This is questioned before this Court in an intra-court appeal.
3. The learned counsel for the appellant submits that no challenge can be sustained against the interim order passed under the Arbitration and Conciliation Act invoking Article 226 of the Constitution of India and the remedy lies before the Civil Court under Section 37 of the Arbitration and Conciliation Act.
4. The learned counsel for the respondents submits that since an order has been passed without impleading the writ petitioner-Saneesha M S, she is precluded from raising a challenge against the order invoking Section 37 of the Arbitration and Conciliation Act and since no other remedy is available under law, the writ petition is maintainable.
5. We are now called upon to decide a peculiar issue on intersection of private law and public law remedy.
6. Section 17 of the Arbitration and Conciliation Act confers power on arbitral tribunal to issue interim measures. Sub Section 2 of Section 17 of the Arbitration and Conciliation Act states that such an order issued by the arbitral tribunal shall deem to be an order of the court for all practical purposes and further states that it shall be enforcible under the Code of Civil Procedure. This power is akin to power conferred on civil court under Section 9 of the Arbitration and Conciliation Act, where a civil court is also competent to issue interim measures before or during the arbitral proceedings at any time before the enforcement of the award in accordance with Section 36 of the Arbitration and Conciliation Act.
7. What is the remedy available to the third party to challenge an order of the arbitral tribunal is the question that foremost arises for consideration. It may not be proper for us to conclude now that the remedy lies under Section 37 of the Arbitration and Conciliation act, as we are now dealing with the issue arising out of a challenge under Article 226 of the Constitution of India. Whether a challenge can be made under Section 37 of the Arbitration and Conciliation Act or not is a matter to be decided in appropriate forum. We leave open that question. We are certainly sure that Article 226 of the Constitution of India is not a remedy to challenge an interim measure ordered under Section 17 of the Arbitration and Conciliation Act. The arbitral tribunal, though has to follow the statutory provisions, cannot be considered as State within Article 12 of the Constitution of India nor the award can be subjected to judicial review bypassing statutory remedy. However, there is a limited scope to interfere with such an order if such a tribunal under the guise of the statutory power, acting under the statutory provisions to issue interim measures encroaching upon the fundamental rights of the citizen. A Single Ju
The arbitral tribunal cannot enforce its own orders; enforcement must be through a civil court, ensuring the protection of third-party rights.
The executing court for arbitral orders operates ministerially, adhering strictly to the order's enforceability without reviewing the arbitral decision's merits, ensuring minimal judicial interferenc....
Point of law: No power vested with the Arbitrator to act as a Civil Court and enforce the order. This is quite clear from sub section (2) of Section 17 which specifies that the order so passed by the....
Arbitration – Interim Award - when the dispute is a commercial dispute as defined under the Commercial Court Act, the Civil Court competent to enforce the interim order is the Commercial Court.
Arbitral orders must be enforced through civil courts, as per the Arbitration and Conciliation Act, 1996.
Judicial intervention in arbitration is restricted; parties can only challenge interim orders in specific circumstances post-award under the Arbitration Act.
The court may exercise jurisdiction under Section 9 of the Arbitration and Conciliation Act if the remedy under Section 17 is found to be inefficacious.
The court may exercise jurisdiction under Section 9 of the Arbitration and Conciliation Act if the remedy under Section 17 is found to be inefficacious, particularly regarding third parties not party....
Section 12 sets out grounds of challenge to person appointed as arbitrator and duty of an arbitrator appointed, to disclose any disqualification he may have.
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