Case Note & Summary
The Supreme Court allowed appeals against three interim orders of the Rajasthan High Court passed in an appeal under Section 37 of the Arbitration and Conciliation Act, 1996. The dispute arose from a partnership deed concerning Hotel Grand Uniara. The respondents had filed an application under Section 9 of the Act for interim relief, which was dismissed by the Commercial Court. The respondents appealed under Section 37. During the appeal, the High Court passed orders directing the investigating agency to file a status report, produce case diary, summon the Investigating Officer, and eventually transfer the investigation of FIR No.293/2021 to the Special Operation Group, Jaipur. The appellants contended that these orders exceeded the scope of Section 37, which is limited to examining the order under Section 9. The Supreme Court agreed, holding that the High Court acted in excess of its jurisdiction by conducting a roving inquiry into the criminal investigation. The Court quashed the three impugned orders but clarified that the interim order restraining alienation of the property remained in force. The High Court was directed to decide the Section 37 appeal strictly within the parameters of the Act.
Headnote
A) Arbitration Law - Scope of Appeal under Section 37 - Interim Measures - Section 37, Arbitration and Conciliation Act, 1996 - The High Court, in an appeal under Section 37 against an order rejecting a Section 9 application, exceeded its jurisdiction by directing transfer of investigation of an FIR and summoning the Investigating Officer. Held that the scope of such appeal is confined to examining the merits of the order under Section 9 and cannot be used to supervise criminal investigation (Paras 7-8).
B) Criminal Law - Investigation - Transfer of Investigation - FIR No.293/2021 - The High Court, in arbitration proceedings, transferred investigation of an FIR to Special Operation Group and directed supervision by an SP. Held that such orders are beyond the parameters of Section 37 and the proper remedy lies before the competent criminal court (Paras 7-8).
Issue of Consideration
Whether the High Court, in an appeal under Section 37 of the Arbitration and Conciliation Act, 1996 against an order rejecting a Section 9 application, can pass orders relating to the supervision of a criminal investigation into an FIR concerning the subject matter of the dispute.
Final Decision
The Supreme Court allowed the appeals, quashed the three impugned orders dated 24th February 2022, 11th March 2022, and 29th March 2022, and directed the High Court to decide the Section 37 appeal strictly in accordance with law within the parameters of Section 37. The interim order restraining alienation of the property was not interfered with.
Law Points
- Scope of Section 37 appeal limited to order under Section 9
- High Court cannot conduct roving inquiry into criminal investigation in arbitration appeal
- Section 37 proceedings cannot be used to supervise criminal investigation
Case Details
Civil Appeal Nos. 3651-3653 of 2022 (Arising out of SLP(C) No.6449-6451 of 2022)
N. V. Ramana, Krishna Murari, Hima Kohli
Dalpat Singh Naruka & Anr.
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Nature of Litigation
Civil appeals against interim orders passed by the High Court in an appeal under Section 37 of the Arbitration and Conciliation Act, 1996.
Remedy Sought
The appellants sought quashing of three interim orders passed by the High Court that exceeded the scope of Section 37 by directing supervision of a criminal investigation.
Filing Reason
The High Court, in an appeal under Section 37 against an order rejecting a Section 9 application, passed orders relating to the investigation of an FIR, which the appellants contended was beyond its jurisdiction.
Previous Decisions
The Commercial Court had dismissed the respondents' Section 9 application for interim relief on 11th February 2021. The respondents appealed under Section 37. The High Court passed three interim orders on 24th February 2022, 11th March 2022, and 29th March 2022, which were challenged in the Supreme Court.
Issues
Whether the High Court, in an appeal under Section 37 of the Arbitration and Conciliation Act, 1996, can pass orders relating to the supervision of a criminal investigation into an FIR concerning the subject matter of the dispute.
Whether the impugned orders exceeded the limited jurisdiction vested in the High Court under Section 37 of the 1996 Act.
Submissions/Arguments
Appellants argued that the impugned orders travel far beyond the scope of Section 37, which is limited to examining the order under Section 9. They also submitted that the respondents had already approached the arbitrator under Section 17, rendering the Section 37 appeal infructuous.
Respondents defended the orders, submitting that the appellants had attempted to oust them from the partnership business and that the High Court's orders were necessary to ensure a fair investigation.
Ratio Decidendi
The scope of an appeal under Section 37 of the Arbitration and Conciliation Act, 1996 is confined to examining the merits of the order passed under Section 9. The appellate court cannot conduct a roving inquiry into a criminal investigation or pass orders relating to the transfer or supervision of an FIR, as such matters are beyond the jurisdiction conferred by Section 37.
Judgment Excerpts
We are of the firm view that by passing the impugned orders, the High Court has acted in excess of the limited jurisdiction vested in it under Section 37 of the 1996 Act.
The scope of the appeal preferred by the respondents under Section 37 of the 1996 Act ought to be confined to examining the merits of the order dated 11th February, 2021, passed by the Commercial Court that has refused to grant any interim measures in favour of the respondents on the application moved by them under Section 9 of the 1996 Act.
If the respondents have any grievance regarding the unfair or partial manner of the investigation conducted in respect of the FIR registered on their complaint, it is for them to seek appropriate legal recourse before the competent court on the criminal side.
Procedural History
The respondents filed an application under Section 9 of the Arbitration and Conciliation Act, 1996 before the Commercial Court, which was dismissed on 11th February 2021. The respondents appealed under Section 37 to the Rajasthan High Court. During the appeal, the High Court passed three interim orders on 24th February 2022, 11th March 2022, and 29th March 2022, directing supervision of the investigation in FIR No.293/2021. The appellants challenged these orders by way of special leave petitions, which were converted into civil appeals and allowed by the Supreme Court on 21st April 2022.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 9, Section 17, Section 37, Section 11
