Calcutta High Court Sets Aside Restraint On Arbitrator, Stresses Limited Judicial Intervention In Arbitration

The Calcutta High Court on Friday set aside an order of the Darjeeling District Judge restraining a Sole Arbitrator from proceeding with a pending application under Section 33 of the Arbitration and Conciliation Act, 1996, holding that courts must exercise restraint in interfering with an ongoing arbitral process.

A bench of Justice Ravi Kishan Kapur and Justice Supratim Bhattacharya was hearing an appeal against an order of the District Judge, Darjeeling, in a dispute between family members concerning the management and control of family-owned companies.

“The instances of judicial intervention are limited and circumscribed under the Act. The repeated pronouncements by all Courts that when matters are pending before the Arbitrator, the Courts should not unnecessarily interfere with the arbitral process have been disregarded.” it observed

Following their father's death, the parties referred their disputes to arbitration, resulting in an award dated September 9, 2014. The award was put to execution in 2022. The appellant's subsequent application under Section 11 of the Arbitration Act, alleging omissions and seeking corrections, was dismissed, with liberty to pursue an appropriate remedy.

The appellant thereafter filed an application under Section 33 of the Arbitration Act before the Sole Arbitrator, seeking correction and interpretation of the award. The application remained pending. Meanwhile, the respondents approached the District Judge seeking termination of the Arbitrator's mandate, followed by an application under Section 9 seeking interim relief.

The District Judge restrained the Sole Arbitrator from proceeding with the Section 33 application until disposal of the proceedings, holding that such restraint could be granted as an interim measure under Section 9.

Challenging the order, the appellant argued that the Arbitrator's jurisdiction had never been questioned before him and that the respondents had not approached him under Section 17 for interim relief. The respondents, however, raised allegations of bias and maintained that the Arbitrator had become de jure incapable of continuing with the proceedings.

The Court observed that the Section 33 application remained pending before the Sole Arbitrator and that his authority had not been challenged before him. It also noted that the District Judge had passed the restraint order without considering the nature of the interim measures available under Section 9.

It also noted that the question of whether the Arbitrator was acting within his jurisdiction or in excess of it had also not been adjudicated. These questions, it said, remained to be determined.

"Judicial intervention during arbitration is limited to extremely urgent cases” the Court observed, stressing that courts must avoid overreaching the authority of the arbitral tribunal.

Referring to the Supreme Court's decision in N.N. Global Mercantile Pvt. Ltd. v. M/S Indo Unique Flame Ltd, the Bench observed that the kompetenz-kompetenz principle requires jurisdictional issues to ordinarily be addressed first by the arbitral tribunal.

“The nature of the interim relief which has been granted in the instant case would emasculate the object of the Act and undermine the role of the Arbitrator. “ it held

Accordingly, the Court allowed the appeal, set aside the District Judge's order and directed the Sole Arbitrator to proceed with the pending application.

For Appellant: Senior Advocate Sudipto Kumar Majumdar and Advocate Mayank Bhandari

For Respondents: Advocates Dr. Arjun Chowdhury, Satyam Lama, Riya Agarwal, Satyajit Paul and Rounak Ghosh