Section 11 Arbitration Orders Not Reviewable, Article 215 Powers Limited: Allahabad High Court

On 14 May, the Allahabad High Court held that it cannot review an order passed under Section 11 of the Arbitration and Conciliation Act, 1996, while exercising its statutory jurisdiction. However, as a Court of Record, it may invoke its inherent powers under Article 215 of the Constitution to correct the record or remedy a grave error that may otherwise result in a failure of justice.

A Bench of Justice Jaspreet Singh dismissed an application seeking recall of an earlier order constituting a three-member arbitral tribunal despite a contractual stipulation providing for a sole arbitrator, holding that the case did not meet the high threshold required for exercise of the Court's inherent powers.

“It may be correct to say that the High Court while exercising its powers under Section 11 of the Act of 1996 may not review its orders but the inherent powers invested in the High Court or the Supreme Court by virtue of being a Court of Record can be invoked to correct the record or undo a serious error which if remained unaddressed, may occasion failure of justice.”

The dispute arose from a contract between Transrail Lighting Ltd. (Transrail) and Madhyanchal Vidyut Vitran Nigam Ltd. (MVVNL). The General Conditions of Contract (GCC) provided for adjudication by a three-member Arbitral Tribunal, while the Special Conditions of Contract (SCC) stipulated that a sole arbitrator would decide disputes involving claims up to Rs. 25 crores.

Transrail filed a petition under Section 11(6) of the Arbitration and Conciliation Act seeking appointment of a three-member Tribunal under the GCC. Acting on that request, the Court constituted a three-member tribunal. It later filed the present application seeking recall of that order, contending that the SCC had superseded the GCC and that only a sole arbitrator could have been appointed because the claim value was below Rs. 25 crores.

It argued that neither party had brought the inconsistency between the GCC and SCC to the Court's notice during the Section 11 proceedings and that it discovered the issue only after conducting a detailed examination of the contractual documents. It also submitted that if the Court found the recall application not maintainable, it could treat the application as a review petition and exercise its inherent powers as a Court of Record.

MVVNL opposed the application, arguing that the Court became functus officio once the Section 11 order attained finality. It submitted that Transrail could either challenge the order before the Supreme Court under Article 136 of the Constitution or raise a jurisdictional objection before the arbitral tribunal under Section 16 of the Act.

The Court observed that the Arbitration and Conciliation Act does not confer review powers on the “Court” defined under Section 2(1)(e). However, Section 11 vests jurisdiction specifically in the High Court. It noted that the legal position governing a statutory court differs from that governing the High Court and Supreme Court, both of which function as Courts of Record with inherent constitutional powers.

Justice Singh also held that although it cannot review its Section 11 orders in exercise of statutory powers, it may invoke its inherent jurisdiction under Article 215 to correct the record or rectify a serious error that could otherwise result in a failure of justice.

However, the Bench emphasised that it can exercise this power only in exceptional cases involving procedural lapses. It cannot use Article 215 to rehear questions of law, revisit findings, or reinterpret an arbitration agreement. It added that a party seeking invocation of inherent powers must satisfy a threshold higher than that applicable to an ordinary review petition.

Applying these principles, the Bench found no ground to invoke its inherent jurisdiction. It noted that both parties had referred to the contractual provisions during the Section 11 proceedings and had proceeded on the common understanding that a three-member tribunal would adjudicate the dispute.

Finally, Justice Singh observed that the parties' conduct could itself amount to a subsequent agreement to resolve their disputes through a tribunal comprising three arbitrators rather than the number originally contemplated under the contract.

Accordingly, the High Court dismissed the application.