16 July 2021, Friday

2 years ago

1. Article 227 petition against tribunal’s order allowed to prevent miscarriage of justice (Calcutta High Court)

by EditorSamarth Madan

19 July 2021 | Satyendra Nath Ray v. VCK Share & Stock Broking Services Limited | CO No.1235 of 2021 | Sabyasachi Bhattacharyya J | 2021 SCC OnLine Cal 2096

In an arbitration, it was alleged that some documents and signatures were forged. The tribunal recorded in one of the proceedings that appointing a handwriting expert was not in its jurisdiction, thus refusing permission to apply for the appointment. The petitioner challenged this decision in a petition under Article 227 of the Constitution.

The court recognised that its jurisdiction under Article 227 to intervene in the arbitral process was limited given the Supreme Court’s judgments, including Deep Industries Limited v. ONGC Ltd. & another, (2020) 14 SCC 706, and Bhaven Construction v. Executive Engineer, Sardar Sarovar Narmada Nigam Ltd. & another, 2021 SCC OnLine SC 8.

However, it ruled that its limited jurisdiction should be exercised in this case because:

  1. Section 26 ACA confers power explicitly on the arbitral tribunal to appoint experts. The bye-laws of the National Stock Exchange under which the arbitration was conducted empowered the concerned authority to prescribe the terms subject to which the arbitrator may appoint an expert. [Ed. Possibly, by referring to the NSE rules, the court meant to emphasise the existence of the power to appoint an expert].
  2. Thus, the tribunal “patently refused to exercise jurisdiction vested in law in precluding the petitioner ...”
  3. The refusal, particularly at the rudimentary stage of the proceedings when the arbitrator's procedural rules had yet to be determined, resulted in a gross miscarriage of justice.
  4. The remedy to challenge the finding at the set-aside stage would be illusory in the absence of a formal application and a decision on it.
  5. The court, therefore, allowed the petitioner to make an application and directed the arbitrator to decide it on merits.

Access the court's decision here.


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