Rejection Of Application Seeking Impleadment Of Party By Arbitral Tribunal Is Not An ‘Interim Award’: Delhi HC

The National Highway Authority of India filed an application under Section 34 Arbitration & Conciliation Act, 1996 assailing ‘interim award’ (as stated by the Petitioner) of the Arbitral Tribunal by which the Tribunal rejected an application filed by the petitioner under Order I Rule 10 of the Code of Civil Procedure, 1908, for impleadment of the State of Gujarat as a party to the arbitral proceedings.

The bench of Justice Prateek Jalan observed, “In the impugned decision, the learned Tribunal has not ruled upon its jurisdiction to adjudicate any substantive claims, but only upon its jurisdiction to hear and decide the application under Order I Rule 10 of the CPC. Whether the view taken by the Tribunal is on maintainability, as in the present case, or on merits, as in Lucknow Sitapur Expressway, does not, in my view, make a difference as to the characterisation of the decision as an award.”

The respondent, MS IRB Ahmedabad Vadodara Super Express Pvt. Ltd. initiated arbitral proceedings against the petitioner, NHAI, seeking resolution of disputes under a Concession Agreement. Both parties submitted their claims and counterclaims. NHAI sought to involve the State of Gujarat, citing obligations from a State Support Agreement, but the Arbitral Tribunal rejected this request, stating it lacked jurisdiction considering the preliminary objection which was raised by the respondent that the impugned decision does not constitute an “award” at all, so as to attract the jurisdiction of this Court under Section 34 of the Act.

The Court relied on the decision in National Highway Authority of India vs. Lucknow Sitapur Expressway Ltd. and quoted, “the order which stands impugned in the present petition does not decide a fundamental question or a substantive dispute that may be said to form the subject matter of arbitration…As this Court views and considers the order of the Tribunal impugned herein, it is of the firm opinion that the same fails to answer the attributes of an award as is understood under the provisions of the Act.”

The Court concluded that the present case is covered against the petitioner by the above-mentioned decision and therefore, rejection of the application of NHAI for impleadment of the State did not constitute an “award” at all. It, therefore, dismissed the petition under Section 34 of the Act.

However, the Court further rejected the argument of NHAI that the Tribunal had come to the conclusion that it did not have “jurisdiction” to decide the application, whereas in Lucknow Sitapur Expressway, the arbitral tribunal had rejected the application on merits.

The Court mentioned the decision in Indian Farmers Fertiliser Cooperative Ltd. vs. Bhadra Products and quoted, “jurisdiction” is a coat of many colours and that the said word displays a certain colour depending upon the context in which it is mentioned”.

According to the Court, the decision in Lucknow Sitapur Expressway is indistinguishable from the present case. The Court held the application under Section 34 as not maintainable.

Cause Title: National Highways Authority of India v. MS IRB Ahmedabad Vadodara Super Express Tollways Pvt. Ltd. (Neutral Citation: 2024:DHC:2665)

Appearance:

Appellant: Adv. Ankur Mittal, Adv. Abhay Gupta, Adv. Ankur Saboo

Respondent: Senior Adv. Atul Nanda, Adv. Rameeza Hakim, Adv. Saket Sikri, Adv. Anirudh Bakhru, Adv. Teresa Daulat, Adv. Mohanish Patkar, Adv. Raj Adhia, Adv. Devika Mohan, Adv. Charu Shriyam Singh, Adv. Pragya Gautam, Adv. Martand Singh, Adv. Vartika Singh, Adv. Sarthak Sachdev, Adv. Vatan Sharma

Click here to read/download Judgment