Dismissed

State of U.P. Thru. Addl. Chief Secy. Deptt. of Medical Health and Family Welfare Lko and Another v. Emergency Dhatri Sishu Care Foundation Thru. Auth. Repr. Toopilivenkatasravan Kumar Reddy and Anr.

Allahabad HC30 Sept 2024/4669/2024

Case brief

AI extract

What is this about?

The Allahabad High Court dismissed an Article 227 petition challenging an arbitral tribunal's interlocutory order allowing amendment of a statement of claim. The Court held such challenges are not maintainable before the award is passed, citing Supreme Court precedent.

What did the court decide?

The petition under Article 227 was dismissed as it was not maintainable.

State of U.P. Thru. Addl. Chief Secy. Deptt. of Medical Health… — Arbitration | Allahabad HC (2024)

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Neutral Citation No. - 2024:AHC-LKO:67506

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Court No. - 19

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Case :- MATTERS UNDER ARTICLE 227 No. - 4669 of 2024

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Petitioner :- State Of U.P. Thru. Addl. Chief Secy. Deptt. Of Medical Health And Family Welfare Lko And Another Respondent :- Emergency Dhatri Sishu Care Foundation Thru. Auth. Repr. Toopilivenkatasravan Kumar Reddy And Anr. Counsel for Petitioner :- C.S.C.

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Counsel for Respondent :- Gaurav Mehrotra,Tushar Mittal

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Hon'ble Subhash Vidyarthi,J.

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Heard Sri Mohit Jauhari, the learned Standing Counsel for the petitioners-State of U.P. and Director General, Family Welfare, Government of U.P., Sri Brijesh Kumar Saxena, Advocate who has put in appearance on behalf of the opposite party no.1 and filed his vakalatnama, which is taken on record, Sri Gaurav Mehrotra, the learned counsel appearing on behalf of the opposite party no.2-caveator and perused the records.

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By means of the instant petition under Article 227 of the Constitution of India the petitioners have assailed the validity of an order dated 08.05.2024, passed by an Arbitral Tribunal, whereby an application for amendment of statement of claim filed by the opposite parties was allowed by the Arbitral Tribunal.

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The learned counsel for the opposite parties have raised a preliminary objection an interlocutory order passed by the Arbitral Tribunal allowing an application for amendment of the statement of claim is not maintainable.

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The second preliminary objection raised by the learned counsel for the opposite parties is that while approaching this

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court for invoking discretionary jurisdiction conferred by Article 227 of the Constitution of India, the petitioners are required to disclose all the relevant facts. In paragraph 42 of the petition, it has been pleaded "That now the arbitration is next listed on 24.05.2024 for the consideration of the application for interim relief under Section 17 of the Arbitration & Conciliation Act, 1996." The contents of the affidavit in support of the averments made in the petition has been verified by the Director General, Family Welfare on 06.09.2024. Meanwhile, the arbitration has proceeded further, the claimants have incorporated the amendments in the claim petition, the petitioners (the opposite parties in the arbitration proceedings) have filed their reply to the amended pleas along with a counter claim and the issues have been framed and the matter is now at the stage of recording of evidence.

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The learned counsel for the opposite parties have submitted that the concealment of the aforesaid relevant and material facts disentitles the petitioners-State of U.P. and Director General, Family Welfare for grant of any relief in exercise of discretionary jurisdiction of this court.

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In SBP & Company Vs. Patel Engineering Ltd. and another: (2005) 8 SCC 618 a Constitution Bench of Hon'ble Supreme Court has held as follows:

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"45. It is seen that some High Courts have proceeded on the basis that any order passed by an arbitral tribunal during arbitration, would be capable of being challenged under Article 226 or 227 of the Constitution of India. We see no warrant for such an approach. Section 37 makes certain orders of the arbitral tribunal appealable. Under Section 34, the aggrieved party has an avenue for ventilating his grievances against the award including any in-between orders that might have been passed by the arbitral tribunal acting under Section 16 of the Act. The party aggrieved by any order of the arbitral tribunal, unless has a right of appeal under Section 37 of

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the Act, has to wait until the award is passed by the Tribunal. This appears to be the scheme of the Act. The arbitral tribunal is after all, the creature of a contract between the parties, the arbitration agreement, even though if the occasion arises, the Chief Justice may constitute it based on the contract between the parties. But that would not alter the status of the arbitral tribunal. It will still be a forum chosen by the parties by agreement. We, therefore, disapprove of the stand adopted by some of the High Courts that any order passed by the arbitral tribunal is capable of being corrected by the High Court under Article 226 or 227 of the Constitution of India. Such an intervention by the High Courts is not permissible.

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46. The object of minimizing judicial intervention while the matter is in the process of being arbitrated upon, will certainly be defeated if the High Court could be approached under Article 227 of the Constitution of India or under Article 226 of the Constitution of India against every order made by the arbitral tribunal. Therefore, it is necessary to indicate that once the arbitration has commenced in the arbitral tribunal, parties have to wait until the award is pronounced unless, of course, a right of appeal is available to them under Section 37 of the Act even at an earlier stage."

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The above mentioned law laid down by a Constitution Bench of the Hon'ble Supreme Court has been followed in Deep Industries Limited Vs. Oil and Natural Gas Corporation Limited and another: (2020) 15 SCC 706 , in which the Hon'ble Supreme Court referred to the statutory provisions contained in Sections 5 and 37 of Arbiration and Conciliation Act, which provide as follows:

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“ 5. Extent of judicial intervention.- Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part.

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37. Appealable orders.- (1) An appeal shall lie from the following orders (and from no others) to the Court authorized by law to hear appeals from original decrees of the Court passing the order, namely:-

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(a) refusing to refer the parties to arbitration under section 8;

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(b) granting or refusing to grant any measure under section 9;

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

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(2) An appeal shall also lie to a Court from an order granting of the arbitral tribunal.-

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(a) accepting the plea referred in sub-section (2) or sub-section (3) of section 16; or

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(b) granting or refusing to grant an interim measure under section 17.

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

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The Hon'ble Supreme Court in the case of Deep Industries (Supra) held as under:

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"16. Most significant of all is the non-obstante clause contained in Section 5 which states that notwithstanding anything contained in any other 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 certain judgments and orders and no others. Further, the statutory mandate also provides for one bite at the cherry, and interdicts a second appeal being filed (See Section 37(2) of the Act)

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17. This being the case, there is no doubt whatsoever that if petitions were to be filed under Articles 226/227 of the Constitution against orders passed in appeals under Section 37, the entire arbitral process would be derailed and would not come to fruition for many years. At the same time, we cannot forget that Article 227 is a constitutional provision which remains untouched by the nonobstante clause of Section 5 of the Act. In these circumstances, what is important to note is that though petitions can be filed under Article 227 against judgments allowing or dismissing first appeals under Section 37 of the Act, yet the High Court would be extremely circumspect in interfering with the same, taking into account the statutory policy as adumbrated by us herein above so that interference is restricted to orders that are passed which are patently lacking in inherent jurisdiction.

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

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“ 89. It is, thus, to be seen that Arbitration Act, 1940, from its inception and right through to 2004 (in P.S. Sathappan v. Andha Bank Ltd., (2004) 11 SCC 672 was held to be a self-contained code. Now, if the Arbitration Act, 1940 was held to be a self-contained code, on matters pertaining to arbitration, the Arbitration and Conciliation Act, 1996, which consolidates, amends and designs the law relating to arbitration to bring it, as much as possible, in harmony with the UNCITRAL Model must be held only to be more so. Once it is held that the Arbitration Act is a self-contained code and exhaustive, then it must also be held, using the lulcid expression of Tulzapurkar,J., that it carries with it

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“ 19....a negative import that only ‘such acts as are mentioned in the Act are permissible to be done and acts or things not mentioned therein are not permissible to be done”.

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In other words, a letters patent appeal would be excluded by the application of one of the general principles that where the special Act sets out a self-contained code the applicability of the general law procedure would be impliedly excluded.”

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

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24. Mr. Rohatgi is also correct in pointing out that the legislative policy qua the general revisional jurisdiction that is contained by the amendments made to Section 115 C.P.C. should also be kept in mind when High Courts dispose of petitions filed under under article 227. The legislative policy is that no revision lies if an alternative remedy of appeal is available. Further, even when a revision does lie, it lies only against a final disposal of the entire matter and not against interlocutory orders. These amendments were considered in Tek Singh vs. Shashi Verma and Another, 2019 SCC OnLine SC 168 in which this Court adverted to these amendments and then stated:

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"5...... A reading of this proviso will show that, after 1999, revision petitions filed under Section 115 CPC are not maintainable against interlocutory orders.

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

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“ 5.....The position thus seems to be firmly established that while exercising the jurisdiction under Section 115, it is not competent to the High Court to correct errors of fact however gross or even errors of law unless the said errors have relation to the jurisdiction of the Court to try the dispute itself. Clauses (a) and (b) of this section on their plain reading quite clearly do not cover the present case. It was not contended, as indeed it was not possible to contend, that the learned Additional District Judge had either exercised a jurisdiction not vested in him by law or had failed to exercise a jurisdiction so vested in him, in recording the order that the proceedings under reference be stayed till the decision of the appeal by the High Court in the proceedings for specific performance of the agreement in question. Clause (c) also does not seem to apply to the case in hand. The words "illegally" and "with material irregularity" as used in this clause do not cover either errors of fact or of law; they do not refer to the decision arrived at but merely to the manner in which it is reached. The errors contemplated by this clause may, in our view, relate either to breach of some provision of law or to material defects of procedure affecting the ultimate decision, and not to errors either of fact or of law, after the prescribed formalities have been complied with. The High Court does not seem to have adverted to the limitation imposed on its power under Section 115 of the Code. Merely because the High Court would have felt inclined, had it dealt with the matter initially, to come to a different conclusion on the question of continuing stay of the reference proceedings pending decision of the appeal, could hardly justify interference on revision under Section 115 of the Code when there was no illegality or material irregularity committed by the learned Additional District Judge in his manner of dealing with this question. It seems to us that in this matter the High Court treated the revision virtually as if it was an appeal.” SCR at Pg.373)."

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The learned counsel for the petitioners could not dispute the aforesaid proposition of law laid down by Hon'ble the Supreme Court and he conceded that the petition is not maintainable.

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Regarding the concealment/misstatement the learned counsel for the petitioners submitted that the aforesaid statement was made in para 42 of the petition at the time of drafting of petition and at that time the statement was correct. Filing of the petition was delayed and meanwhile the arbitration proceeded further and this fact could not be incorporated in the petition, which is merely an error which is not deliberate and he apologies for this error.

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The explanation given by the learned Standing Counsel is accepted and no further action is warranted against the officer, who has signed the affidavit.

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In view of the aforesaid discussion, the petition is not maintainable and the same is dismissed as such.

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[Subhash Vidyarthi, J.]

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Order Date :- 30.9.2024 Ram.

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Digitally signed by :- RAM SINGH High Court of Judicature at Allahabad, Lucknow Bench

State of U.P. Thru. Addl. Chief Secy. Deptt. of Medical Health and Family Welfare Lko and Another v. Emergency Dhatri Sishu Care Foundation Thru. Auth. Repr. Toopilivenkatasravan Kumar Reddy and Anr.

Case brief

What is this about?

What did the court decide?

State of U.P. Thru. Addl. Chief Secy. Deptt. of Medical Health and Family Welfare Lko and Another v. Emergency Dhatri Sishu Care Foundation Thru. Auth. Repr. Toopilivenkatasravan Kumar Reddy and Anr.

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