M/S DEEP INDUSTRIES LIMITED versus OIL AND NATURAL GAS CORPORATION LIMITED & ANR. on 28 November 2019

[2019] 17 S.C.R. 995

M/S DEEP INDUSTRIES LIMITED

v.

OIL AND NATURAL GAS CORPORATION LIMITED & ANR.

(Civil Appeal No. 9106 of 2019)

NOVEMBER 28, 2019

[ROHINTON FALI NARIMAN, ANIRUDDHA BOSEAND V. RAMASUBRAMANIAN, JJ.]

Constitution of India: Art. 227 – Exercise of jurisdiction bythe High Court u/Art. 227 – In matters decided under theArbitration and Conciliation Act, 1996 – On facts, termination ofcontract by respondent due to supply of second hand product bythe appellant – Commencement of arbitration proceedings –Meanwhile, respondent blacklisted appellant for a period of twoyears – Appellant filed application u/s. 17 before the arbitratoragainst the ban – Appellant also filed application u/s. 16 whichwas dismissed – Thereafter, disposal of s. 17 application by thearbitrator with the condition that the two year ban will only operateif appellant ultimately loses the final arbitration proceedings – Saidorder upheld in appeal – First appeal filed u/s. 37 dismissed bythe civil court – Application u/Art. 227 filed before the High Courtby the respondent – High Court allowed the petition – On appeal,held: Art. 227 is a constitutional provision which remains untouchedby the non-obstante clause of s. 5 of the Act – Though petitionscan be filed u/Art.227 against judgments allowing or dismissingfirst appeals u/s. 37 of the Act, yet the High Court would beextremely circumspect in interfering with the same, taking intoaccount the statutory policy as adumbrated so that interference isrestricted to orders that are passed which are patently lacking ininherent jurisdiction – High Court inverted this statutory schemeby going into exactly the same matter as was gone into by thearbitrator in s.16 application – Entering into the general thicketof disputes between the parties does not behove a court exercisingjurisdiction u/Art. 227, where only jurisdictional errors can becorrected – Arbitral tribunal was well within its jurisdiction inreferring to the contract and the ban order and then applying thelaw and finally issuing the stay order – More so, merely because,the first appeal was disposed of by a court subordinate to the High

A

B

CDEF

GH

ACourt, an Art. 227 petition ought not to have been entertained –Arbitration and Conciliation Act, 1996 – ss. 5, 37, Arbitration and Conciliation Act, 1996: Policy and objectof – Held: Policy of the Act is speedy disposal of arbitration cases– Object of the Act is that of minimizing judicial intervention whichBshould always be kept in the forefront when Art. 227 petition isbeing disposed of against proceedings decided under the Act.

Allowing the appeal, the Court

HELD: 1.1 The Arbitration Act is a special act and a selfcontained code dealing with arbitration. The policy of the Act isCspeedy disposal of arbitration cases. The object of the Act beingthat of minimizing judicial intervention. This object should alwaysbe kept in the forefront when a 227 petition is being disposedof against proceedings that are decided under the Act. [Para 14,17] [1008-H; 1010-F]DSBP & Co. v. Patel Engineering Ltd. & Another(2005) 8 SCC 618 : [2005] 4 Suppl. SCR 688 –followed.

Fuerst Day Lawson Limited v. Jindal Exports Limited,E(2011) 8 SCC 333 : [2011] 11 SCR 1 – referred to.

1.2 Section 29A of the Arbitration and Conciliation Act,1996 which was inserted by the Amendment Act, 2016 a timelimit was made within which arbitral awards must be made,namely, 12 months from the date the arbitral tribunal entersFupon the reference. Even so far as Section 34 applications areconcerned, Section 34(6) added by the same amendment statesthat these applications are to be disposed of expeditiously, andin any event, within a period of one year from the date on whichthe notice referred to in sub–section (5) is served upon the otherparties. Given the said statutory provision and given the fact thatGthe 1996 Act repealed three previous enactments in order thatthere be speedy disposal of all matters covered by it, it is clearthat the statutory policy of the Act is that not only are time limitsset down for disposal of the arbitral proceedings themselves buttime limits have also been set down for Section 34 referencesHto be decided. [Para 10, 11] [1004-D-F]

Union of India v. M/s Varindera Const. Ltd. (2020) 2SCC 111 – referred to.

1.3 Most significant of all is the non–obstante clausecontained in Section 5 which states that notwithstanding anythingcontained in any other law, in matters that arise under Part I ofthe Arbitration Act, no judicial authority shall intervene exceptwhere so provided in this Part. Section 37 grants a constrictedright of first appeal against certain judgments and orders andno others. Further, the statutory mandate also provides for anattempt, and interdicts a second appeal being filed. [Para 12][1004-H; 1005-A]

1.4 There is no doubt whatsoever that if petitions were tobe filed under Articles 226/227 of the Constitution against orderspassed in appeals under Section 37, the entire arbitral processwould be derailed and would not come to fruition for many years.At the same time, it cannot be forgotten that Article 227 is aconstitutional provision which remains untouched by the non–obstante clause of Section 5 of the Act. In these circumstances,what is important to note is that though petitions can be filedunder Article 227 against judgments allowing or dismissing firstappeals under Section 37 of the Act, yet the High Court wouldbe extremely circumspect in interfering with the same, takinginto account the statutory policy as adumbrated so thatinterference is restricted to orders that are passed which arepatently lacking in inherent jurisdiction. [Para 13] [1005-B-D]

Nivedita Sharma v. Cellular Operators Association ofIndia and Others (2011) 14 SCC 337 – referred to.

1.5 On 09.05.2018, a Section 16 application had beendismissed by the Arbitrator in which substantially the samecontention which found favour with the High Court was takenup. The drill of Section 16 of the Act is that where a Section 16application is dismissed, no appeal is provided and the challengeto the Section 16 application being dismissed must await thepassing of a final award at which stage it may be raised underSection 34. What the High Court has done in the instant case isto invert this statutory scheme by going into exactly the samematter as was gone into by the arbitrator in the Section 16application, and then decided that the two year ban was no part A

B

C

DE

F

GH

A

B

C

DE

F

GH

Aof the notice for arbitration issued on 02.11.2017, a finding whichis directly contrary to the finding of the Arbitrator dismissingthe Section 16 application. For this reason alone, the judgmentunder appeal needs to be set aside. Even otherwise, thejudgment under appeal goes into the merits of the case andstates that the action of putting the Contractor and his DirectorsB“on holiday”is not a consequence of the termination of theagreement. This is wholly incorrect as it is only because of thetermination that the show cause notice dated 18.10.2017proposing to impose a two year ban was sent. Even otherwise,entering into the general thicket of disputes between the partiesCdoes not behove a court exercising jurisdiction under Article227, where only jurisdictional errors can be corrected. Thereforeto state that the ban order was passed under a General ContractManual and not Clause 18 of the Agreement, besides beingincorrect, would also be incorrect for the reason that the GeneralContract Manual does not mean that such order was issued asDan administrative order invoking the executive power, but wasonly as an order which emanated from the contract itself. Furtherto state that “serious disputes” as to jurisdiction seem to havecropped up is not the same thing as saying that the ArbitralTribunal lacked inherent jurisdiction in going into and decidingEthe Section 17 application. In point of fact, the Arbitral Tribunalwas well within its jurisdiction in referring to the contract andthe ban order and then applying the law and finally issuing thestay order. Even if it be accepted that the principle laid downby Section 41(e) of the Specific Relief Act was infracted, in thatdamages could have been granted, as a result of which anFinjunction ought not to have been issued, is a mere error of lawand not an error of jurisdiction, much less an error of inherentjurisdiction going to the root of the matter. Therefore, evenotherwise, the High Court judgment cannot be sustained and isset aside. [Para 16] [1009-F-H; 1010-A-E]G

1.6 It becomes clear that had the High Court itselfdisposed of the first appeal in the instant case, no Article 227petition could possibly lie – all that could perhaps have beendone was to file an LPA before a Division Bench of the sameHigh Court. Merely because, on the facts of this case, the firstHappeal was disposed of by a court subordinate to the High Court, A

an Article 227 petition ought not to have been entertained. [Para17] [1011-C-D]

1.7 The legislative policy qua the general revisionaljurisdiction that is contained by the amendments made to Section115 C.P.C. should also be kept in mind when High Courtsdispose of petitions filed under article 227. The legislative policyis that no revision lies if an alternative remedy of appeal isavailable. Further, even when a revision does lie, it lies onlyagainst a final disposal of the entire matter and not againstinterlocutory orders. The arbitration proceedings may bedisposed of as expeditiously as possible, in accordance with themandate contained in the Act. [Para 18, 19] [1011-E-F; 1012-G]

B

C

SBP & Co. v. Patel Engineering Ltd. & Another (2005)8 SCC 618 : [2005] 4 Suppl. SCR 688 –distinguished.

Punjab Agro Industries Corporation Limited v. KewalSingh Dhillon (2008) 10 SCC 128 : [2008] 12 SCR569 ; Tek Singh v. Shashi Verma and Another 2019SCC OnLine SC 168 – referred to.

D

Case Law Reference

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 9106of 2019

G

From the Judgment and Order dated 25.07.2018 of the HighCourt of Gujarat at Ahmedabad in R/Special Civil Application No. 9305of 2018.

Mukul Rohatgi, Sr. Adv., Mahesh Agarwal, Rishi Agrawala,Ankur Saigal, Shubham Kulshreshtha, E. C. Agrawala, Ms. MishaRohatgi, Ms. Parul Shukla, Ajitesh Soni, Advs. for the Appellant.

H

AK. M. Nataraj, ASG, Sandeep Mahapatra, Abhishek Praharaj,Vinayak Sharma, Kanu Agrawal, Manan Popli, Ms. Mrinmayee Sahu,Advs. for the Respondents.

The Judgment of the Court was delivered by

R. F. NARIMAN, J.B

1. Leave granted.

2. The present appeal raises important questions relating to theHigh Court’s exercise of jurisdiction under Article 227 of the Constitutionof India when it comes to matters that are decided under the Arbitrationand Conciliation Act, 1996 (“the Act” for short).C

3. In the present case, the respondent-Oil and Natural GasCorporation Limited (for short “ONGC”) awarded a contract to theappellant for supply of one Mobile Air Compressor for a period of fiveyears. Shortly after entering into the contract, the contract wasterminated on 11.10.2017 by the ONGC on the ground that some partDof the equipment was not new but only second hand. This position wasdisputed by the appellant. On the very next day, i.e. on 12.10.2017,the Vendor Code of the appellant was blocked, meaning thereby, thatthe appellant would be unable to bid for any other further bids floatedby the ONGC. On 18.10.2017, a Show Cause Notice was issued bythe ONGC to the appellant asking the appellant why it should not beEput “on Holiday” i.e. black listed for a period of two years.

4. Since disputes had arisen between the parties, the appellantinvoked the arbitration clause contained in the contract on 02.11.2017.This notice is the subject-matter of dispute before the Arbitrator as wellas before this Court and will be adverted to subsequently. Pursuant toFthe notice, one Justice J.C. Upadhyaya (Retd. High Court Judge) wasappointed as a Sole Arbitrator to decide the disputes between the partieson 21.12.2017. On 02.02.2018, a claim petition was filed by theappellant before the learned Arbitrator in which the termination of thecontract/show cause notice was challenged and damages claimed. Afterthis claim petition was filed, on 15.02.2018, the appellant was blacklistedGby an order passed by the ONGC with effect from 11.10.2017 for aperiod of two years. Meanwhile, a Section 17 application was alsobeen moved before the learned Arbitrator. Applications were thenmoved by the appellant to amend both the petition as well as the Section17 application to challenge this order dated 15.02.2018, whichHamendments were granted by the learned Arbitrator on 10.03.2018.

5. Meanwhile, a Section 16 application was before the learnedArbitrator basically on the ground that since the arbitration notice wasconfined only to termination of the agreement, blacklisting would beoutside the Arbitrator’s ken. This Section 16 application was dismissedon 09.05.2018 by the learned Arbitrator, in which the learned Arbitratorheld that the notice dated 02.11.2017 was not merely confined totermination of the contract but was also in respect of the two year banthat was sought to be imposed at that time. He further held that theban order was relatable to Clause 18 of the contract and that thereforethe validity of the 15.02.2018 office order could be decided by him, andconsequently dismissed the Section 16 application filed by therespondent.

6. On the same day i.e. 09.05.2018, the Section 17 applicationwas separately disposed of by the learned Arbitrator, in which the learnedArbitrator stayed the operation of the order dated 15.02.2018 oncondition that the two year ban will only operate if the appellantultimately loses in the final arbitration proceedings.

7. An appeal against the Section 17 Order was filed and disposedof by the City Civil Court, Ahmedabad on 31.05.2018 by which thelearned Arbitrator’s order was upheld. Consequently, the first appealfiled under Section 37 was dismissed. At this stage, and which is themajor bone of contention between the parties before us, a Special CivilApplication being Application No. 9305/2018 was filed under Article227 of the Constitution of India before the High Court Gujarat atAhmedabad in which the City Civil Court’s order was challenged. Bythe impugned judgment dated 25.07.2018, the High Court of Gujaratreferred to a preliminary contention raised on behalf of the petitionerthat the petition filed under Article 227 should be dismissed at thethreshold as it did not raise any jurisdictional issue. The High Court,without answering this question, then went on to state that the ban orderhad, in fact, been passed under a General Contract Manual and notunder Clause 18 of the Agreement as a result of which serious disputesarose as to the jurisdiction of the Arbitrator to deal with the same. Itwas also held on a reading of the notice for arbitration that the noticedid not raise the issue of the ban for two years and was confined onlyto illegal termination. The High Court finally held that no stay couldpossibly have been granted under Section 17 of the ban order as aninjunction cannot be granted in cases where the party can be A

B

C

D

E

F

G

H

Acompensated later in damages. This being the case, the Writ Petitionwas allowed and the Ahmedabad City Civil Court’s order was set aside.

8. Mr. Mukul Rohatgi, learned senior counsel appearing for theappellant has argued that the High Court referred to the preliminaryobjection before it but did not answer the same. He took usBpainstakingly through the Act, in particular, to the provisions of Sections5 and 37 and argued that given the non-obstante clause contained inSection 5 together with the constricted right of first appeal under Section37, and the denial of the right of second appeal, that a second bite atthe cherry would not be permissible under any circumstances, and thatdespite the fact that Section 5 of the Act could not possibly interdict aCconstitutional provision, namely, Article 227, yet the statutory schemeought to be taken into account in order to deny relief in almost everycase. For this purpose, he relied upon this Court’s judgment in SBP &Co. vs. Patel Engineering Ltd. & Another, (2005) 8 SCC 618. Healso relied upon Fuerst Day Lawson Limitedvs. Jindal ExportsDLimited, (2011) 8 SCC 333 for the proposition that the Act is a self-contained Code as a result of which not only would second appeals beinterdicted expressly under Section 37(2) of the Act but appeals filedunder the Letters Patent would also be so interdicted. He was at painsto point out that even under Section 115 C.P.C. as amended, a revisionwould lie only in cases where no appeal lies, and under the provisoEinserted with effect from 2002, no revision petition would be maintainableagainst interlocutory orders. He then took us through the impugnedjudgment, and stated that the observations made on merits werethemselves erroneous and that “serious disputes as to jurisdiction” wouldnot amount to lack of jurisdiction. He also stated that, at best, therecan be stated to be a mere error of law, which could not, in any case,Fbe interfered with under Article 227 of the Constitution of India.

9. Mr. K.M. Nataraj, learned Additional Solicitor Generalappearing on behalf of the respondent, took us through the facts andwas at pains to point out that under the relevant clause of the contract,which is Clause 27.1, the notice invoking the arbitration must specifyGall points of dispute with the details of the amount claimed at the timeof invocation of arbitration and not thereafter. He stressed the fact thateven a cursory reading of the notice dated 02.11.2017 would show thatit was confined to illegal termination and did not raise any plea as tothe ban that was imposed for two years. He further went on toHdistinguish the SBP & Co. (supra) stating that it only applied at a stage where an order of the Arbitral Tribunal was sought to be interferedwith directly under Article 226/227, in which context the seven-Judgebench made its observations. The present is a case where the Tribunal’sorders had travelled to the first appellate court, which appeal was thendismissed, as a result of which the first appellate court’s order camedirectly under the supervisory jurisdiction of the High Court under Article227. He then referred to Punjab Agro Industries CorporationLimitedvs. Kewal Singh Dhillon, (2008) 10 SCC 128 which is ajudgment which distinguished SBP & Co. (supra) in a case in whichan article 227 petition was held to be maintainable against an orderrejecting a Section 11 application for appointment of an Arbitrator. Hethen referred to several judgments stating that the power under Article227, though to be sparingly exercised, can certainly be exercised incases of patent lack of jurisdiction, and that the present case is onesuch. He then defended the judgment under appeal stating that thejudgment under appeal correctly held that in the circumstances of thepresent case no stay order could possibly have been granted by theArbitrator under Section 17 on the basis of fundamental principlescontained in the Specific Relief Act, in that damages could always begranted, and that therefore, the injunction granted in the facts of thepresent case should have been denied.

10. Having heard learned counsel for both parties, it is firstnecessary to set out certain provisions of the Arbitration & ConciliationAct, 1996.

Section 5 states:-

“5. Extent of judicial intervention.- Notwithstanding anythingcontained in any other law for the time being in force, in mattersgoverned by this Part, no judicial authority shall intervene exceptwhere so provided in this Part.”

Section 37 which is also material states as follows:- “37. Appealable orders.- (1) An appeal shall lie from the followingorders (and from no others) to the Court authorized by law tohear appeals from original decrees of the Court passing the order,namely:- (a) refusing to refer the parties to arbitration under section8; AB

C

D

E

F

G

H

A(b) granting or refusing to grant any measure under section9;

(c) setting aside or refusing to set aside an arbitral awardunder section 34.

(2) An appeal shall also lie to a Court from an order granting ofBthe arbitral tribunal.- (a) accepting the plea referred in sub-section (2) or sub-section (3) of section 16; or (b) granting or refusing to grant an interim measure undersection 17.C

(3) No second appeal shall lie from an order passed in appealunder this section, but nothing in this section shall affect or takeaway any right to appeal to the Supreme Court.”

What is also important to note is that under Section 29A of theDAct which was inserted by the Amendment Act, 2016 a time limit wasmade within which arbitral awards must be made, namely, 12 monthsfrom the date the arbitral tribunal enters upon the reference. Also, itis important to note that even so far as Section 34 applications areconcerned, Section 34(6) added by the same amendment states thatthese applications are to be disposed of expeditiously, and in any event,Ewithin a period of one year from the date on which the notice referredto in sub-section (5) is served upon the other parties.

11. Given the aforesaid statutory provisions and given the factthat the 1996 Act repealed three previous enactments in order that therebe speedy disposal of all matters covered by it, it is clear that theFstatutory policy of the Act is that not only are time limits set down fordisposal of the arbitral proceedings themselves but time limits have alsobeen set down for Section 34 references to be decided. Equally, inUnion of Indiavs. M/s Varindera Const. Ltd., dated 17.09.2018,disposing of SLP (C) No. 23155/2013, this Court has imposed theGself-same limitation on first appeals under Section 37 so that there bea timely resolution of all matters which are covered by arbitrationawards.

12. Most significant of all is the non-obstante clause containedin Section 5 which states that notwithstanding anything contained in anyHother law, in matters that arise under Part I of the Arbitration Act, no judicial authority shall intervene except where so provided in this Part.Section 37 grants a constricted right of first appeal against certainjudgments and orders and no others. Further, the statutory mandatealso provides for one bite at the cherry, and interdicts a second appealbeing filed (See Section 37(2) of the Act)

13. This being the case, there is no doubt whatsoever that ifpetitions were to be filed under Articles 226/227 of the Constitutionagainst orders passed in appeals under Section 37, the entire arbitralprocess would be derailed and would not come to fruition for manyyears. At the same time, we cannot forget that Article 227 is aconstitutional provision which remains untouched by the non-obstanteclause of Section 5 of the Act. In these circumstances, what isimportant to note is that though petitions can be filed under Article 227against judgments allowing or dismissing first appeals under Section 37of the Act, yet the High Court would be extremely circumspect ininterfering with the same, taking into account the statutory policy asadumbrated by us herein above so that interference is restricted toorders that are passed which are patently lacking in inherent jurisdiction.

14. In Nivedita Sharmavs. Cellular Operators Associationof India and Others, (2011) 14 SCC 337, this Court referred to severaljudgments and held:

“11. We have considered the respective arguments/submissions.There cannot be any dispute that the power of the High Courtsto issue directions, orders or writs including writs in the natureof habeas corpus, certiorari, mandamus, quo warranto andprohibition under Article 226 of the Constitution is a basic featureof the Constitution and cannot be curtailed by parliamentarylegislation - L. Chandra Kumar v. Union of India (1997) 3 SCC261. However, it is one thing to say that in exercise of the powervested in it under Article 226 of the Constitution, the High Courtcan entertain a writ petition against any order passed by or actiontaken by the State and/or its agency/instrumentality or any publicauthority or order passed by a quasi-judicial body/authority, andit is an altogether different thing to say that each and everypetition filed under Article 226 of the Constitution must beentertained by the High Court as a matter of course ignoring thefact that the aggrieved person has an effective alternativeremedy. Rather, it is settled law that when a statutory forum is A

BCD

E

F

G

H

Acreated by law for redressal of grievances, a writ petition shouldnot be entertained ignoring the statutory dispensation.

12. In Thansingh Nathmal v. Superintendent of Taxes AIR1964 SC 1419, this Court adverted to the rule of self-imposed restraintthat the writ petition will not be entertained if an effective remedy isBavailable to the aggrieved person and observed:

“7… The High Court does not therefore act as a court of appealagainst the decision of a court or tribunal, to correct errors offact, and does not by assuming jurisdiction under Article 226trench upon an alternative remedy provided by statute forCobtaining relief. Where it is open to the aggrieved petitioner tomove another tribunal, or even itself in another jurisdiction forobtaining redress in the manner provided by a statute, the HighCourt normally will not permit by entertaining a petition underArticle 226 of the Constitution the machinery created under thestatute to be bypassed, and will leave the party applying to it toDseek resort to the machinery so set up.”

13. In Titaghur Paper Mills Co. Ltd. v. State of Orissa (1983)2 SCC 433, this court observed:

“11. It is now well recognised that where a right or liability isEcreated by a statute which gives a special remedy for enforcingit, the remedy provided by that statute only must be availed of.This rule was stated with great clarity by Willes, J. inWolverhampton New Waterworks Co. v. Hawkesford (1859)6 CBNS 336 : 141 ER 486 in the following passage: ’... ‘… Thereare three classes of cases in which a liability may be establishedFfounded upon a statute .... But there is a third class, viz., wherea liability not existing at common law is created by a statutewhich at the same time gives a special and particular remedyfor enforcing it. .... The remedy provided by the statute must befollowed, and it is not competent to the party to pursue the courseGapplicable to cases of the second class. The form given by thestatute must be adopted and adhered to.’

The rule laid down in this passage was approved by the Houseof Lords in Neville v. London Express Newspapers Ltd. 1919AC 368 : (1918-19) 10 All ER Rep. 61 (HL) and has beenHreaffirmed by the Privy Council in Attorney General of Trinidad and Tobago v. Gordon Grant and Co. Ltd 1935 AC 532 (PC)and Secy. of State v. Mask and Co. (1939-40) 67 IA 222 : AIR1940 PC 105. It has also been held to be equally applicable toenforcement of rights, and has been followed by this Courtthroughout. The High Court was therefore justified in dismissingthe writ petitions in limine.”

14. In Mafatlal Industries Ltd. v. Union of India (1997) 5 SCC536, B.P. Jeevan Reddy, J. (speaking for the majority of the largerBench) observed:

“77. … So far as the jurisdiction of the High Court under Article226 - or for that matter, the jurisdiction of this Court under Article32 - is concerned, it is obvious that the provisions of the Actcannot bar and curtail these remedies. It is, however, equallyobvious that while exercising the power under Article 226/Article32, the Court would certainly take note of the legislative intentmanifested in the provisions of the Act and would exercise theirjurisdiction consistent with the provisions of the enactment.”

15. In the judgments relied upon by Shri Vaidyanathan, which,by and large, reiterate the proposition laid down in BaburamPrakash Chandra Maheshwari v. Antarim Zila Parishad AIR1969 SC 556, it has been held that an alternative remedy is nota bar to the entertaining of writ petition filed for the enforcementof any of the fundamental rights or where there has been aviolation of the principles of natural justice or where the orderunder challenge is wholly without jurisdiction or the vires of thestatute is under challenge.

16. It can, thus, be said that this Court has recognised someexceptions to the rule of alternative remedy. However, theproposition laid down in Thansingh Nathmal v. Superintendentof Taxes (supra) and other similar judgments that the High Courtwill not entertain a petition under Article 226 of the Constitutionif an effective alternative remedy is available to the aggrievedperson or the statute under which the action complained of hasbeen taken itself contains a mechanism for rederssal of grievancestill holds the field.”

In SBP & Co. (supra), this Court while considering interferencewith an order passed by an arbitral tribunal under Article 226/227 ofthe Constitution laid down as follows:- A

B

C

D

E

F

G

H

A

A“45. It is seen that some High Courts have proceeded on thebasis that any order passed by an arbitral tribunal duringarbitration, would be capable of being challenged under Article226 or 227 of the Constitution. We see no warrant for such anapproach. Section 37 makes certain orders of the arbitral tribunalappealable. Under Section 34, the aggrieved party has an avenueBfor ventilating his grievances against the award including any in-between orders that might have been passed by the arbitraltribunal acting under Section 16 of the Act. The party aggrievedby any order of the arbitral tribunal, unless has a right of appealunder Section 37 of the Act, has to wait until the award isCpassed by the Tribunal. This appears to be the scheme of theAct. The arbitral tribunal is, after all, a creature of a contractbetween the parties, the arbitration agreement, even though, ifthe occasion arises, the Chief Justice may constitute it based onthe contract between the parties. But that would not alter theDstatus of the arbitral tribunal. It will still be a forum chosen bythe parties by agreement. We, therefore, disapprove of the standadopted by some of the High Courts that any order passed bythe arbitral tribunal is capable of being corrected by the HighCourt under Article 226 or 227 of the Constitution. Such anintervention by the High Courts is not permissible.

E

46. The object of minimizing judicial intervention while the matteris in the process of being arbitrated upon, will certainly bedefeated if the High Court could be approached under Article227 or under Article 226 of the Constitution against every ordermade by the arbitral tribunal. Therefore, it is necessary to indicateFthat once the arbitration has commenced in the arbitral tribunal,parties have to wait until the award is pronounced unless, ofcourse, a right of appeal is available to them under Section 37of the Act even at an earlier stage.”

While the learned Additional Solicitor General is correct in statingGthat this statement of the law does not directly apply on the facts ofthe present case, yet it is important to notice that the seven-JudgeBench has referred to the object of the Act being that of minimizingjudicial intervention and that this important object should always be keptin the forefront when a 227 petition is being disposed of againstHproceedings that are decided under the Act.

15. It is true that in Punjab Agro Industries CorporationLimited (supra), this Court distinguished SBP & Co. (supra) statingthat it will not apply to a case of a non-appointment of an Arbitrator.This Court held:

“9. We have already noticed that though the order under Section11(4) is a judicial order, having regard to Section 11(7) relatingto finality of such orders and the absence of any provision forappeal, the order of the Civil Judge was open to challenge in awrit petition under Article 227 of the Constitution. The decisionin SBP & Co. does not bar such a writ petition. Theobservations of this Court in SBP & Co. that against an orderunder Section 11 of the Act, only an appeal under Article 136 ofthe Constitution would lie, is with reference to the orders madeby the Chief Justice of a High Court or by the designate Judgeof that High Court. The said observations do not apply to asubordinate court functioning as designate of the Chief Justice.”

What is important to note is that the observations of this Courtin this judgment were for the reason that no provision for appeal hadbeen given by statute against the orders passed under Section 11, whichis why the High Court’s supervisory jurisdiction should first be invokedbefore coming to this Court under Article 136. Given the facts of thepresent case, this case is equally distinguishable for the reason that inthis case the 227 jurisdiction has been exercised by the High Court onlyafter a first appeal was dismissed under Section 37 of the Act.

16. One other feature of this case is of some importance. Asstated herein above, on 09.05.2018, a Section 16 application had beendismissed by the learned Arbitrator in which substantially the samecontention which found favour with the High Court was taken up. Thedrill of Section 16 of the Act is that where a Section 16 application isdismissed, no appeal is provided and the challenge to the Section 16application being dismissed must await the passing of a final award atwhich stage it may be raised under Section 34. What the High Courthas done in the present case is to invert this statutory scheme by goinginto exactly the same matter as was gone into by the arbitrator in theSection 16 application, and then decided that the two year ban was nopart of the notice for arbitration issued on 02.11.2017, a finding whichis directly contrary to the finding of the learned Arbitrator dismissingthe Section 16 application. For this reason alone, the judgment under A

B

C

D

E

F

G

H

A

B

C

D

E

F

G

H

Aappeal needs to be set aside. Even otherwise, as has been correctlypointed out by Mr. Rohatgi, the judgment under appeal goes into themerits of the case and states that the action of putting the Contractorand his Directors “on holiday”is not a consequence of the terminationof the agreement. This is wholly incorrect as it is only because of thetermination that the show cause notice dated 18.10.2017 proposing toBimpose a two year ban was sent. Even otherwise, entering into thegeneral thicket of disputes between the parties does not behove a courtexercising jurisdiction under Article 227, where only jurisdictional errorscan be corrected. Therefore to state that the ban order was passedunder a General Contract Manual and not Clause 18 of the Agreement,Cbesides being incorrect, would also be incorrect for the reason that theGeneral Contract Manual does not mean that such order was issuedas an administrative order invoking the executive power, but was onlyas an order which emanated from the contract itself. Further to statethat “serious disputes” as to jurisdiction seem to have cropped up isnot the same thing as saying that the Arbitral Tribunal lacked inherentDjurisdiction in going into and deciding the Section 17 application. In pointof fact, the Arbitral Tribunal was well within its jurisdiction in referringto the contract and the ban order and then applying the law and finallyissuing the stay order. Even if it be accepted that the principle laiddown by Section 41(e) of the Specific Relief Act was infracted, in thatEdamages could have been granted, as a result of which an injunctionought not to have been issued, is a mere error of law and not an errorof jurisdiction, much less an error of inherent jurisdiction going to theroot of the matter. Therefore, even otherwise, the High Court judgmentcannot be sustained and is set aside.

F17. We reiterate that the policy of the Act is speedy disposal ofarbitration cases. The Arbitration Act is a special act and a self containedcode dealing with arbitration.This Court in Fuerst Day Lawson Limited(supra), has specifically held as follows:

“89. It is, thus, to be seen that Arbitration Act, 1940, from itsGinception and right through to 2004 (in P.S. Sathappan v. AndhaBank Ltd., (2004) 11 SCC 672 was held to be a self-containedcode. Now, if the Arbitration Act, 1940 was held to be a self-contained code, on matters pertaining to arbitration, the Arbitrationand Conciliation Act, 1996, which consolidates, amends anddesigns the law relating to arbitration to bring it, as much asHpossible, in harmony with the UNCITRAL Model must be held only to be more so. Once it is held that the Arbitration Act is aself-contained code and exhaustive, then it must also be held, usingthe lulcid expression of Tulzapurkar,J., that it carries with it “anegative import that only ‘such acts as are mentioned in the Actare permissible to be done and acts or things not mentioned thereinare not permissible to be done”. In other words, a letters patentappeal would be excluded by the application of one of the generalprinciples that where the special Act sets out a self-containedcode the applicability of the general law procedure would beimpliedly excluded.”

What becomes clear is that had the High Court itself disposedof the first appeal in the present case, no article 227 petition couldpossibly lie - all that could perhaps have been done was to file an LPAbefore a Division Bench of the same High Court. This, as we haveseen, has specifically been interdicted by Fuerst Day Lawson Limited(supra). Merely because, on the facts of this case, the first appeal wasdisposed of by a court subordinate to the High Court, an article 227petition ought not to have been entertained.

18. Mr. Rohatgi is also correct in pointing out that the legislativepolicy qua the general revisional jurisdiction that is contained by theamendments made to Section 115 C.P.C. should also be kept in mindwhen High Courts dispose of petitions filed under under article 227.The legislative policy is that no revision lies if an alternative remedy ofappeal is available. Further, even when a revision does lie, it lies onlyagainst a final disposal of the entire matter and not against interlocutoryorders. These amendments were considered in Tek Singhvs. ShashiVerma and Another, 2019 SCC OnLine SC 168 in which this Courtadverted to these amendments and then stated:

7. A reading of this proviso will show that, after 1999, revisionpetitions filed under Section 115 CPC are not maintainable againstinterlocutory orders.

8. Even otherwise, it is well settled that the revisional jurisdictionunder Section 115 CPC is to be exercised to correct jurisdictionalerrors only. This is well settled. In D.L.F. Housing &Construction Company Private Ltd., New Delhi v. Sarup Singhand Others (1970) 2 SCR 368 this Court held:

AB

C

D

E

F

G

H

A“The position thus seems to be firmly established that whileexercising the jurisdiction under Section 115, it is not competentto the High Court to correct errors of fact however gross or evenerrors of law unless the said errors have relation to the jurisdictionof the Court to try the dispute itself. Clauses (a) and (b) of thissection on their plain reading quite clearly do not cover theBpresent case. It was not contended, as indeed it was not possibleto contend, that the learned Additional District Judge had eitherexercised a jurisdiction not vested in him by law or had failed toexercise a jurisdiction so vested in him, in recording the orderthat the proceedings under reference be stayed till the decisionCof the appeal by the High Court in the proceedings for specificperformance of the agreement in question. Clause (c) also doesnot seem to apply to the case in hand. The words “illegally” and“with material irregularity” as used in this clause do not covereither errors of fact or of law; they do not refer to the decisionarrived at but merely to the manner in which it is reached. TheDerrors contemplated by this clause may, in our view, relate eitherto breach of some provision of law or to material defects ofprocedure affecting the ultimate decision, and not to errors eitherof fact or of law, after the prescribed formalities have beencomplied with. The High Court does not seem to have advertedEto the limitation imposed on its power under Section 115 of theCode. Merely because the High Court would have felt inclined,had it dealt with the matter initially, to come to a differentconclusion on the question of continuing stay of the referenceproceedings pending decision of the appeal, could hardly justifyinterference on revision under Section 115 of the Code whenFthere was no illegality or material irregularity committed by thelearned Additional District Judge in his manner of dealing withthis question. It seems to us that in this matter the High Courttreated the revision virtually as if it was an appeal.” at Pg.373

19. For all these reasons, the appeal stands allowed with no orderGas to costs. Accordingly, the arbitration proceedings may now bedisposed of as expeditiously as possible, in accordance with the mandatecontained in the Act.

H

Nidhi Jain