Articles 226 & 227 Of Constitution Remain Untouched By Non Obstante Clause In Section 5 Of Arbitration & Conciliation Act: Allahabad HC

The Allahabad High Court has allowed a writ petition in an arbitration matter with the observation that Articles 226 and 227 are constitutional provisions which remain untouched by the non obstante clause of Section 5 of Arbitration & Conciliation Act.

The High Court allowed the writ petition assailing the order passed by the Commercial Court in an Arbitration Miscellaneous Case.

Referring to the judgment of the Supreme Court in Hindustan Limited vs. State of Uttar Pradesh and others [(2016) 12 SCC 613], the Single-Judge Bench of Justice Piyush Agrawal held, “From a perusal of the aforementioned paragraphs it is clear that Article 226/227 is a constitutional provision which remains untouched by the non obstante clause of Section 5 of the Act, therefore, the present writ petition is maintainable.”

The Petitioner was represented by Advocates Rishabh Agarwal and Tarun Agrawal.

The factual background of the case as laid down by the petitioner was that the petitioner and respondent were in dispute over the assets of the firm, M/s Bajrang Ice & Cold Storage situated in Agra. It was submitted that the dispute was referred to the Arbitrator and the petitioner had sought examination of one Rajiv Agarwal, sole witness of the retirement-cum-conversion deed which according to the petitioner was a vital document. An order was passed issuing summons to this witness.

Thereafter the petitioner moved an application under section 27 of the Arbitration and Conciliation Act, 1996 for enforcement of the summons. During the pendency of the said application the Arbitrator on different dates, deferred the hearing but by the impugned order the Commercial Court rejected the application of the petitioner on the ground that no prior approval as required under section 27 was taken by the Arbitrator.

The petitioner contended that the impugned order had wrongly been passed as before 'approval' prior word was not mentioned. However, the respondent argued that the present writ petition was not maintainable in view of section 5 and the petitioner had equally efficacious remedy under sections 34 and 37.

The Bench referred to Hindustan Limited Case (Supra) where it has been clearly stated that after and before the word 'approval' prior is not mentioned.

“The word 'approval' includes ratifying of the action or approval can be granted later but on that basis it would not mean that before filing the application under section 27 prior approval is mandatory. In the case in hand, an application has been moved, if the same is allowed, it will be subject to approval of the Tribunal but it cannot be rejected on the ground that before filing of the said application prior approval must be there, the order, in view of the said fact, cannot be sustained in the eye of law”, the Bench said.

Section 5 of the Arbitration & Conciliation Act prohibits interference by judicial authority unless it is provided for in the Act. On the issue of maintainability of petition, the Bench referred to Hindustan Limited Case (Supra) and held that Article 226/227 is a constitutional provision which remains untouched by the non obstante clause of Section 5 of the Act.

Thus, quashing the impugned order, the Bench allowed the petition.

Cause Title: Sanjeev Kumar Agarwal v Sudhir Mohan Agrawal

Appearance:

Petitioner: Advocates Rishabh Agarwal and Tarun Agrawal (Neutral Citation: 2024:AHC:162344)

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