Interference In Arbitral Proceedings In Exercise Of Writ Jurisdiction Permissible Only & Only In ‘Exceptional Circumstances’: Delhi HC

The Court was hearing a Letters Patent Appeal assailing the judgment where the Single Judge dismissed the Writ Petition as non-maintainable.

The bench of Chief Justice Manmohan and Justice Tushar Rao Gedela observed that "interference in arbitral proceedings in exercise of jurisdiction under Articles 226/227 of the Constitution of India, can be permissible only and only in ‘exceptional circumstances.."

Senior Advocate Rajshekhar Rao appeared for the Appellant and Advocate Shreesh Chadha appeared for the Respondent.

Brief Facts-

The Appellant was awarded a contract by the Gas Authority of India Ltd. for HDD services which subcontracted the work to M/s Harji Engineering Pvt. Ltd. (HEWPL), which further engaged the respondent for part of the work. While the Appellant claimed it had no direct contract with the respondent, HEWPL sent a letter agreeing that the Appellant would directly pay the respondent from HEWPL's bills. Respondent later filed a case before the Micro and Small Enterprise Facilitation Council (MSEFC), alleging non-payment by the Appellant. After conciliation failed, MSEFC referred the matter to the Delhi International Arbitration Center (DIAC) for arbitration under the A&C Act.

The Court mentioned the Supreme Court decision in Gujarat State Civil Supplies Corporation Ltd vs. Mahakali Foods Pvt. Ltd., (2023) and quoted, “If any registration is obtained subsequently, the same would have the effect prospectively and would apply for the supply of goods and rendering services subsequent to the registration. The same cannot operate retrospectively.”

The Court noted, “under section 16 of the Act, the Arbitral Tribunal is empowered to consider issues of its own jurisdiction and other legal objections that the appellant possibly may have. The framework envisaged under the Act confers independent power upon the Tribunal to independently assess the merits of the claims and legal issues too.”

The Court further noted, “…section 16 of the Act mandates that the issue of jurisdiction must be dealt first by the Arbitral Tribunal, before the Court examines the same under section 34 of the Act. Therefore, the appellant is not left remediless as the statute provides him a chance of appeal.”

Accordingly, the Court disposed of the Appeal.

Cause Title: Corrtech International Private Ltd. v. Delhi Internarional Arbitration Centre & Ors. (Neutral Citation: 2024:DHC:7607-DB)

Appearance:

Appellant: Senior Advocate Rajshekhar Rao, Advocates Anushree Kapadia, Ajay Sabharwal, Ekta Kundu

Respondent: Advocates Shreesh Chadha, Aman Singh Bakshi, Divjot Singh Bhatia and Harvinder Singh Bhakshi

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