Case Note & Summary
The dispute arose from arbitration proceedings between Excel Metal Processors Pvt. Ltd. (respondent no.1) and Shakti International Private Limited (respondent no.2), where the arbitrator had passed an interim order relating to HR steel coils lying at a warehouse. Several entities, including Prabhat Steel Traders Pvt. Ltd. and other petitioners, who had supplied coils to the respondent no.3 for processing, claimed ownership over the coils and asserted that the interim order prejudiced their interests. They filed 13 arbitration petitions under Section 37 of the Arbitration and Conciliation Act, 1996, seeking leave to appeal and setting aside of the arbitrator's order dated 17 November 2017. Respondent no.2 objected to the maintainability of these petitions on the ground that none of the petitioners were parties to the arbitration agreement and therefore could not invoke Section 37. The court heard the parties on both the preliminary objection and the merits. It accepted the objection, holding that the term 'party' under Section 2(1)(h) refers only to a party to the arbitration agreement; a third party, even if claiming an interest in the property subject to interim measures, is not entitled to appeal under Section 37. Consequently, the court dismissed all 13 petitions as not maintainable, without adjudicating the merits of the interim order.
Headnote
A) Arbitration Law - Appeal under Section 37 - Maintainability by non-signatories - Arbitration and Conciliation Act, 1996, Sections 2(1)(h), 37 - The petitioners, who supplied steel coils to respondent no.3 and were not parties to the arbitration agreement between respondent no.1 and respondent no.2, filed petitions under Section 37 to challenge an interim arbitral order affecting the coils. Respondent no.2 raised a preliminary objection that the petitioners lacked standing to appeal. Held, that only a party to the arbitration agreement can maintain a petition under Section 37; the petitioners, not being parties, could not invoke the provision. The petitions were dismissed as not maintainable. (Paras 2-7)
Issue of Consideration
Whether a person who is not a party to the arbitration agreement can file a petition under Section 37 of the Arbitration and Conciliation Act, 1996, challenging an interim order passed by the arbitral tribunal.
Final Decision
The court upheld the preliminary objection raised by respondent no.2 and dismissed all thirteen arbitration petitions as not maintainable. It held that only a party to the arbitration agreement can file a petition under Section 37 and the petitioners, being third parties, lacked locus standi.
Law Points
- Only a party to the arbitration agreement can maintain an appeal under Section 37 of the Arbitration and Conciliation Act
- 1996
- a third party with a claim over the subject matter of the arbitration cannot invoke Section 37.
