Writ Challenges In Arbitration Proceedings: Bombay High Court Reasserts Narrow Exception Test

Recently, the Bombay High Court once again clarified an ever-persisting question concerning the scope of judicial intervention under the Arbitration and Conciliation Act, 1996 (the "Act"). Although the Act has been in force since 1996, it continues to undergo judicial interpretation to clarify areas left unaddressed in the statutory text. One such area pertains to the maintainability of challenges against certain non-appealable orders of the arbitral tribunal, such as those passed under Sections 16 or 38 of the Act.

In the present case, the Court was dealing with an order passed under Section 38(2), whereby the arbitral tribunal had terminated the claimant's proceedings owing to non-payment of arbitral fees. In the past various courts on multiple occasions have stated and reiterated that orders of such nature are not independently appealable and that objections to such orders may be raised only at the stage of a challenge under Section 34 once the final award is rendered. Nevertheless, parties have, on several occasions, sought to invoke the writ jurisdiction of High Courts against such orders.

While the Court acknowledged that the writ remedy under Article 226 of the Constitution of India remains theoretically available, it underscored that such jurisdiction cannot be invoked in every case. The Court clarified that interference under writ jurisdiction would be justified only in two exceptional circumstances: (i) where the arbitral tribunal acts without jurisdiction, or (ii) where the impugned order leaves the aggrieved party remediless.

The facts in the present case were largely undisputed. Arbitral proceedings were underway between the parties, and during the very first sitting, the arbitral tribunal finalized both the timeline for completion of pleadings and the schedule of fees payable by each party. It is significant to note that the schedule of fees, as fixed, was never challenged by either side. While the proceedings continued thereafter, the petitioner repeatedly defaulted in depositing its share of the tribunal's fees. Although partial payments were made from time to time, arrears amounting to approximately INR 27,00,000/- (Twenty-Seven Lakhs) i.e., INR 9,00,000/- (Nine Lakhs) per member of the three-member tribunal had accumulated over time.

Despite the tribunal granting multiple extensions and indulgences to enable compliance, the petitioner failed to clear the outstanding dues within the stipulated timelines. Consequently, invoking its powers under Section 38(2) of the Act, the tribunal passed an order terminating the arbitral proceedings insofar as the petitioner's claims were concerned, while directing that the respondents' counterclaim would proceed in accordance with law. Aggrieved by this order of termination, the petitioner approached the Bombay High Court under Article 226 of the Constitution, assailing the tribunal's decision by way of a writ petition.

The Court addressed the issue by first holding that the arbitral tribunal possessed the requisite jurisdiction to terminate the proceedings owing to non-payment of its fees. It observed that the tribunal's authority to do so flows directly from Section 38(2) of the Act, read with Sections 31(8) and 31A, which collectively recognize the arbitrators' entitlement to fees and expenses as part of the "costs" of arbitration. Accordingly, the contention that the tribunal had acted without jurisdiction was found to be untenable.

On the second consideration whether the petitioner had been left remediless the Court examined the statutory framework and drew parallels with Section 32(2)(c) of the Act, which empowers a tribunal to terminate proceedings if continuation becomes unnecessary or impossible. The Court referred to earlier Supreme Court and High Court precedents holding that in cases of termination under Section 32(2)(c), a party may seek recourse under Section 14(2) of the Act. Applying the same rationale, the Court held that even where termination occurs under Section 38(2), an aggrieved party is not left without remedy and may similarly approach the Court under Section 14 to challenge such termination.

Anhad Law's Perspective

The judgment of the Bombay High Court is both well-reasoned and timely. It reaffirms the principle that writ jurisdiction should not be invoked in every factual scenario arising out of arbitral proceedings. In our view, the apparent vacuum within the Act, is deliberate and purposive. If the statute were to permit challenges to every procedural or interlocutory order, the efficiency and autonomy of the arbitral process would be rendered meaningless.

While the law continues to provide an avenue to approach the Court in exceptional circumstances—such as through Section 14 or by invoking writ jurisdiction in rare cases—it is both appropriate and desirable that no appeal lies against orders passed under Section 16 or other procedural provisions, including those under Section 38. Allowing routine challenges to such orders would only serve to frustrate and delay arbitral proceedings. Importantly, no party is left remediless; rather, judicial oversight is preserved only for cases that genuinely warrant intervention.

This judgment marks another critical step towards insulating arbitration from avoidable court intervention and ensuring that the process remains self-contained, efficient, and commercially meaningful. By reiterating that writ jurisdiction is not a fallback to circumvent the statutory scheme, the Bombay High Court has sent a clear message against tactical litigation and delay-driven strategies. 

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