Supreme Court Bars HC Review Powers – Finality of Section 11 Arbitrator Orders
Arbitration is often a friend in conferences but a foe in practice. Its rad’etre has always been to ease the burden on courts and to ensure expeditious resolution of commercial disputes. Yet, this is not its only virtue.
The true advantage of arbitration lies in its freedom and flexibility with party autonomy as the cornerstone of the arbitral process.
Parties often embrace arbitration in good times, only to resist or manipulate it when disputes actually arise – seeking either to wiggle out of the situation altogether or to tilt the process unfairly in their favour. In such situations, judicial intervention becomes inevitable and rightly so to safeguard fairness and the integrity of the arbitral process.
The evolution of the judicial role from that of a helicopter parent to that of a guardian angel of arbitration has been neither smooth nor uniform.
Successive legislative amendments have sought to curtail judicial interference and recalibrate the delicate balance between autonomy and oversight. Yet, in practice arbitration has at times become more cumbersome than civil litigation. Parties continue to explore every procedural avenue to delay proceedings i.e. filing a maze of applications before the arbitral tribunal, the High Court and even the Supreme Court on technical or jurisdictional objections.
The present case is yet another instance where the fine boundary between judicial oversight and arbitral independence is tested.
Clause 25 of the contract for construction of bridge on river in two districts of Bihar, provided for arbitration.
The High Court of Patna appointed the sole Arbitrator on 18.8.2021. The Arbitrator and the High Court granted extensions of mandate and time. Both the parties jointly moved applications under Section 29A of the AA on multiple occasions for extensions and last extension was granted vide order dated 10.5.2024.
More than seventy hearings were conducted, both the parties filed pleadings & actively participated, paid fees and
incurred substantial costs.
Thereafter, the respondent filed application for review of order dated 18.8.2021 appointing the arbitrator.
The High Court reviewed its earlier order and directed the arbitrator not to proceed further with the ongoing arbitration. Thereafter, the matter was listed for appointment of new Arbitrator in view of appointment of earlier Arbitrator as President of State Consumer Commission.
By the judgment dated 9.12.2024, the High Court dismissed the request case of 2020 of the appellant.
In para 9 of the judgment, three questions were framed. Two questions are important on powers of the High Court to review or recall its earlier order under Section 11(6) and if yes, whether exercise of such power was valid in law. Secondly, whether the joint application filed by both the parties for extension of mandate under Section 29A constitutes express or implied waiver of the ineligibility under section 12(5) and Section 4 of the Act.
HELD that once section 11 order had attained finality, the only remedies available to the respondents were to approach this Court under Article 136 or to raise objections under Section 16 before the arbitral tribunal. Having chosen neither route and having participated in the arbitral proceedings including joint applications under Section 29A, they were estopped from reopening the matter through review. A later judgment cannot revive a concluded cause of action.
The High Court did not have the jurisdiction to reopen or review its earlier section 11(6) order since the Court becomes functus officio once appointment made.
The review order cuts against the grain of the Act, undermines the principle of minimal judicial interference and effectively, converts the review into an appeal in disguise. Such an exercise cannot stand.
