The High Court may exercise its supervisory constitutional jurisdiction to terminate arbitral proceedings where the underlying dispute concerns non-arbitrable matters, such as the restructuring of companies and minority shareholder oppression, which fall within the exclusive jurisdiction of specialized statutory tribunals, despite the general limitations on judicial intervention.

J U D G M E N T

Can the High Court exercise its Jurisdiction under Article 227 of the Constitution of India against an order of the Arbitrator upholding his Jurisdiction in an application under Section 16(2) of the Arbitration and Reconciliation Act, 1996, (for short ‘the Act’)?. The petitioner contends that the order is not appealable under Section 37 of the Act and that he has no other remedy except to invoke the Jurisdiction of this Court. Respondents also do not dispute the same, but contend that the petitioner must wait till the final award is passed by the arbitrator and thereafter invoke the remedy under Section 34 of the Act, if so advised. This Court is called upon to resolve this short issue.

2. The facts in the case is not seriously disputed and are as follow-A.R No.169/2024 was filed under Section 11 of the Arbitration and Conciliation Act, 1996 for appointment of an Arbitrator to arbitrate upon the dispute between respondents 1 and 2. This Court by order dated 21.01.2025 appointed Smt.K.P.Prasanna Kumari, Retired District Judge, as sole Arbitrator. Accordingly, the 1^st respondent filed Ext.P2 claim petition. The relief sought for in Ext.P2 claim petition is basically to record the division of assets and liabilities of the company as per Memorandum of Understanding (MOU) dated 17.09.2021. The MOU pertains to certain division of assets and liabilities in respect of three companies namely Pioneer Cars India Private Limited, Pioneer Motors (Kannur) Private Limited and Wayanad Vehicles Private Limited, which are companies registered under the provisions of the Companies Act, 2013. The MOU also contained certain arrangements between the respondents in a partnership firm of which this Court is not concerned with. The petitioner, who is the 2^nd respondent in the arbitration case, filed an application under Section 16 of the Arbitration and Conciliation Act, 1996, seeking to drop the arbitration proceedings in respect of the companies in question on the ground that the Arbitrator lacks jurisdiction to decide the claim. According to him, the jurisdiction exclusively vest with National Company Law Tribunal. The said application was ordered by Ext.P7 order holding that nowhere the company is sought to be wound up nor dissolved and that the arbitrator can make decisions about the ownership and shareholding of the companies including dividing shares among the owners. The said order is impugned in this original petition.

3. Heard Shri.Jawahar Jose, the learned counsel appearing for the petitioner, Shri.P.V.Vinod(Bengalam), the learned counsel appearing for the 1^st respondent and Shri.T.Ramesh Babu, the learned counsel appearing for the 2^nd respondent.

4. Shri.Jawahar Jose, the learned counsel appearing for the petitioner contended that the matters relating to the companies cannot be arbitrated, and that the remedy of the respondents is to move an application under Section 241 read with Section 242 of the Companies Act, 2013, before the National Company Law Tribunal. He further pointed out that in a case where a division of assets is ordered, necessarily, the petitioner who is a shareholder will be adversely affected by the said division. He further pointed out that the petitioner is not a signatory to MOU entered between the respondents and therefore the respondents cannot seek to bind the petitioner with the terms and conditions of the MOU. He further pointed out that, if the MOU attempts to divi