Writ Against Order U/S 37 Arbitration Act Not Barred By Second Appeal Restriction: Orissa High Court

The Orissa High Court on 21 September held that a writ petition under Articles 226 and 227 of the Constitution can be maintained against an order passed by a District Judge under Section 37 of the Arbitration and Conciliation Act, 1996, despite Section 37(3) barring a second appeal.

Justice B.P. Routray rejected the preliminary objection to the maintainability of the writ petitions filed by the state and other, holding that the High Court's constitutional jurisdiction does not constitute a second appellate remedy. The Bench observed:

“it would be incorrect to refuse the Petitioners to approach this Court under Article 226 and 227 of the Constitution of India to challenge the order of the District Judge passed under Section 37(1) of 1996 Act. Thus, the preliminary objection raised by the Opposite Parties with regard to maintainability of the writ petitions in terms of Section 37(3) of 1996 Act is overruled.”

Section 37(3) provides that no second appeal lies against an order passed under Section 37, except an appeal to the Supreme Court. The opposite parties therefore argued that the writ petitions amounted to an indirect attempt to invoke a second appellate remedy.

The Bench rejected the objection, holding that although the Arbitration Act is a self-contained code and an appeal under Section 37 constitutes a final statutory appellate remedy, the High Court's jurisdiction under Articles 226 and 227 is not appellate in nature.

It further held that constitutional jurisdiction can be exercised in appropriate cases involving questions of jurisdiction, illegality and other circumstances warranting judicial review. The presence of Section 37(3) cannot, by itself, curtail the constitutional powers of the High Court. The Court observed:

“It would not be any gain saying that that the remedy under Article 226 and 227 of the Constitution of India is not an appellate remedy. The jurisdiction of the High Court under Article 226 and 227 of the Constitution would come to the questions of jurisdiction, illegality and alike and it cannot be curtailed by the presence of provisions of the Act.”

Relying on the Supreme Court's decision in Nivedita Sharma v. COAL, the Bench reiterated that although judicial review is a basic feature of the Constitution, writ jurisdiction is ordinarily exercised with due regard to the availability of an effective alternative statutory remedy.

The Bench, however, clarified that recognising the maintainability of a writ petition does not mean that the High Court can routinely re-examine an arbitral award on merits or an order passed under Section 37 of the Arbitration Act.

It held that supervisory jurisdiction under Article 227 is not equivalent to appellate jurisdiction and can be exercised only in cases involving perversity, patent lack of jurisdiction, manifest illegality or similarly exceptional circumstances. The Court held:

“However, the supervisory control under Article 227 of the Constitution is not equivalent to the appellate review and the rule is confined to correct manifest circumstances of illegality, faith or perversity so glaring that it indicts a patent lack of jurisdiction and should not be used in routine manner lest would nullify the entire performance of separate arbitration regime”

Relying on several Supreme Court judgments, the Bench held that a party cannot be prevented from approaching the High Court under Article 227 against an order passed by a District Judge under Section 37 merely because Section 37(3) bars a second appeal.

Accordingly, the High Court overruled the objection to the maintainability of the writ petitions.