Writ Petitions Against Arbitral Tribunal's Interlocutory Orders Not Completely Barred: Bombay High Court
The Bombay High Court has held that writ petitions challenging interlocutory orders passed by arbitral tribunals are not completely barred, but courts must exercise restraint and interfere only in exceptional cases involving bad faith, patent perversity, or circumstances where non-interference would leave a party remediless.
Justice Rohit W. Joshi observed:
“…there cannot be a blanket bar on entertaining writ petitions challenging interlocutory orders passed by Arbitral Tribunal. However, interference must be restricted to cases wherein order reflects exercise of power in bad faith or is absolutely perverse on the face of it or in cases of exceptional rarity or renders the petitioner remediless”.
The writ petition was filed by Matrix Life Science Pvt. Ltd. challenging an order passed by the sole arbitrator directing it to file evidence affidavits of all its proposed witnesses within 15 days. The dispute arose out of an insurance claim under a Standard Fire and Perils Policy issued by The Oriental Insurance Company Ltd.
Before the arbitral tribunal, Matrix proposed that it would first examine an officer who is involved in the dispute and may examine two additional witnesses, if needed.
Relying on Order XVIII Rule 4(1-A) to (1-C) of the Code of Civil Procedure, 1908, the Insurance Company requested the tribunal to direct Matrix to file the evidence affidavits of all its proposed witnesses together. The arbitral tribunal allowed the application and issued direction to both the parties to file evidence affidavits of all the witnesses proposed.
Before the High Court, Matrix contended that the directions of the arbitral tribunal are beyond its power as there is no provision either under CPC or Evidence Act.
Matrix argued that if the order is not interfered with, the Insurance Company would be allowed to file gaps in its case after cross-examining the first witness. It relied upon Oil and Natural Gas Corporation Ltd. Vs. M/s. Interocean Shipping (India) Pvt. Ltd., to argue that, once the procedure for conducting arbitration is decided between the parties, such procedure can be modified or altered only by the parties mutually and that, in the absence of such modification or alteration, the Arbitral Tribunal is bound to follow the procedure agreed upon.
Per contra, the Insurance Company opposed the writ petition on maintainability grounds. It relied upn SBP and Co. Vs. Patel Engineering Ltd. and Anr, to contend that procedural orders passed by an Arbitral Tribunal cannot be challenged by invoking Article 226 or 227 of the Constitution of India. It further submitted that the challenges could be made in proceedings u/s 34 of the Arbitration Act of 1996.
The High Court relied on Hon'ble Supreme Court's ruling in the case of Serosoft Solutions Pvt. Ltd. v. Dexter Capital Advisors Pvt. Ltd. to conclude that the interference should be limited to cases of bad faith, a perverse order, etc. The Court also took note of exceptional cases where non-interference would render the petitioner remediless.
Further, the High Court observed that this contentious was raised for the first time in the writ proceedings and was not before the arbitrator in Matrix's reply to the Insurance Company's. It noted that even if this contentious is to be accepted, the impugned order did not come within the exceptional category of cases, warranting, judicial interference.
With the above observations, the writ petition was dismissed.
For Petitioner: Advocate S. S. Rathi
For Respondent: Advocate S. V. Adwant