Case Note & Summary
This writ petition arose from a contractual dispute between Hindustan Petroleum Corporation Limited (HPCL), a government enterprise, and a joint venture of Om Construction and Nice Projects Limited. HPCL had floated a tender for civil works at its bio-refinery in Bhatinda, which was awarded to the joint venture in 2021. Subsequently, HPCL terminated the contract citing delays, leading the joint venture to invoke arbitration. Om Construction filed a Section 11 application before the Bombay High Court, which appointed a sole arbitrator by order dated 12 December 2022. HPCL participated in the arbitration but later discovered that Nice Projects Limited was undergoing Corporate Insolvency Resolution Process (CIRP) since February 2021, prior to the tender, and that its declaration of solvency was false. HPCL moved an application before the arbitrator under Section 16 contending that the contract was void due to fraud, and thus the arbitration agreement also void, and sought termination of proceedings. The arbitrator rejected that application on 16 September 2023. HPCL then filed the present writ petition seeking to set aside both the arbitrator's order and the earlier appointment order under Section 11, alleging fraud and suppression of material facts. The respondent raised preliminary objections to maintainability: (i) any order under Section 11 appointing an arbitrator can only be challenged by Special Leave Petition under Article 136 of the Constitution before the Supreme Court, and not by a writ petition before the same High Court; (ii) the order under Section 16 can be challenged under Section 34 after the final award, hence an alternative remedy exists. It was also argued that HPCL had participated in the arbitration and was aware of the CIRP before the appointment, and was thus estopped. The court, after hearing only on maintainability, upheld both objections. It relied on precedents to hold that an order under Section 11 is a judicial order passed by a designated judge and is not amenable to writ jurisdiction of the same court; the only remedy is an SLP under Article 136. Regarding the Section 16 order, the court noted the availability of a challenge under Section 34 read with other remedies, rejecting the argument that the writ was necessary to cut short a fraudulent proceeding. The court thus found the writ petition not maintainable on both counts. The final order dismissing the petition is not extracted in the available text, but the court's reasoning clearly favors the respondent's preliminary objection.
Headnote
A) Arbitration and Conciliation - Challenge to Arbitrator's Jurisdiction Order - Section 16, Arbitration and Conciliation Act, 1996 - Interim Order - The petitioner challenged the arbitrator's order rejecting the application to terminate proceedings on ground of fraud and lack of jurisdiction, but the High Court held that such order can only be challenged along with the final award under Section 34, as an efficacious alternative remedy exists; the writ petition under Article 226 is not maintainable. Held that the petitioner could raise allegations of fraud and misrepresentation in proceedings under Section 34 after the award is passed (Paras 5-6, 8). B) Arbitration and Conciliation - Appointment of Arbitrator - Section 11, Arbitration and Conciliation Act, 1996 - Challenge - The High Court held that an order passed by a Judge under Section 11 appointing an arbitrator is a judicial order which can only be assailed before the Supreme Court by way of Special Leave Petition under Article 136 of the Constitution; the High Court cannot in its writ jurisdiction set aside its own order under Section 11. (Para 5)
Issue of Consideration
Whether a writ petition under Article 226 of the Constitution of India is maintainable against an order passed by an arbitrator under Section 16 of the Arbitration and Conciliation Act, 1996 and an order passed by the High Court under Section 11 of the Act, in light of the availability of alternate remedies.
Final Decision
Decision not clearly stated
Law Points
- Legal points not extracted
- section 16 order challengeable only under section 34
- section 11 order challengeable only by SLP under article 136
- writ jurisdiction not available to challenge arbitration orders
