Background

The Arbitral Tribunal hereinafter referred to as 'tribunal' now has power to make representation to principal civil court of original jurisdiction and high court of its ordinary jurisdiction for contravention or default of any of its order, any contempt and refusal to give evidence to the tribunal, though the same was provided in Section 27(5) of the Arbitration and Conciliation Act, 1996 hereinafter referred to as "Act" but was interpreted differently, the honorable Supreme Court in Alka Chandewar Vs. Shamshul Ishrar Khan on July 6, 2017 thereby affirmed the power of tribunal under the Act.

Analysis

The Bombay High Court in the case of Alka Chandewar v. Shamshul Ishrar Khan24 ruled that "Section 27(5) of "Act" does not empower the Tribunal to make representation to the Court for contempt if the orders including the interim orders passed by the Arbitrator except in respect of taking evidence are violated by the party".25

The rationale given by the court was citing judgment of Delta Distillers Limited v. United Spirits Limited26 which provided that –

  • Arbitral Tribunal only have the power to get evidence, it is for this purpose only Section 27 of the Act has been provided.
  • The default Contemplated under sub Section 27(5) of the Act is a default pertaining to violating the order in respect of taking evidence and the default under Section 25 of the Act is not in respect of taking evidence though it is covered under conduct of arbitral proceedings. The word 'conduct' in legal proceedings means to take steps. It signals Court's power to decide and to move. Thus by use of the word 'conduct' in sub clause 4 of sub Section  5 of Section 27 of the Act, the legislature has restricted its meaning to taking of evidence only and not any other contempt in arbitral proceedings.

In Nihaluddin v. Tej Pratap Singh and Ors.27, one of the parties in the dispute allegedly disobeyed the injunction order passed by the statutory arbitrator. The other party filed a criminal miscellaneous petition under Section 3 of the Contempt of Courts Act, 1952 alleging contempt. The court had to decide whether the arbitrator was a "Court". Having held that the arbitrator was not a Court, the Allahabad High Court went on to hold that the opposite party could not be guilty of contempt of Court in having overlooked the arbitrator's order.

The Honorable Supreme Court in a special leave petition28 set aside the decision of Bombay High Court and overruled the decision of Allahabad High Court and ruled that the arbitral tribunal has special powers under 27(5) to punish for its contempt. Section 27(5) is read hereunder-

"Persons failing to attend in accordance with such process, or making any other default, or refusing to give their evidence, or guilty of any contempt to the arbitral tribunal during the conduct of arbitral proceedings, shall be subject to the like disadvantages, penalties and punishments by order of the Court on the representation of the arbitral tribunal as they would incur for the like offences in suits tried before the Court."

If the provision is read in a literal manner then the arbitral tribunal has power to punish for non appearance, contempt or any other default and further the court stated "in consonance with the modern rule of interpretation of statutes, the entire object of providing that a party may approach the Arbitral Tribunal instead of the Court for interim reliefs would be stultified if interim orders passed by such Tribunal are toothless".

The judgment also took consideration from Delhi High Court judgment, Sri Krishnan v. State29, which stated that under Section 27(5) of the Act, any person failing to comply with the order of the arbitral tribunal under section 17 would be deemed to be "making any other default" or "guilty" of any contempt to the arbitral tribunal during the conduct of the proceedings under section 27(5) of the Act. The Court also noted down that the aggrieved party has the power to apply to the Court for its contempt under contempt of the Court and Order 39 Rule 2A of the Civil Procedure Code.

Conclusion :

The arbitral tribunal is now entrusted to make embodiment to the Court for default of any order, including the interim orders passed by the arbitrator is violated by the parties before it. Thereby persons appearing before the tribunal will be deterred to make any violations and orders will now be construed scrupulously.

Footnotes

24 2016 (1) ARBLR488(Bom)

25 Paragraph 29, ibid.

26 MANU/SC/0978/2013

27 AIR 1968 All 157

28 Alka Chnadewar v. Shamshul Ishrar Khan CIVIL APPEAL NO.8720 OF 2017, MANU/SC/0818/2017

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.