Arbitration and Conciliation Act, 1996 – s.11, s.15(2), s.15(3), s.17 and s.37 – The appellants and respondent (now under liquidation) entered into a partnership firm to develop and construct an SRA project – Dispute arose between them – The High Court appointed an arbitrator to arbitrate the disputes and differences between the parties – The NCLT admitted the respondent to CIRP and imposed a moratorium u/s.14 of IBC – Meanwhile, various applications were filed by both the appellants and respondent under provisions of the Act, 1996 before the Arbitral Tribunal and the High Court – Pursuant thereto, various orders were passed by the Arbitral Tribunal and the High Court – The High Court by its impugned judgment and order appointed substitute arbitrator to adjudicate the disputes and differences between the appellants and the respondent – However, the High Court proceeded to observe the all proceedings undertaken by the Arbitral Tribunal between 26.09.2019 and 26.08.2022 respectively being hit by the moratorium could be said to be a nullity – Correctness: Held: Since the appointment in the case at hand was made in terms of the Act, 1996, the original provision applicable to the appointment of the arbitrator would be s.11 of the Act, 1996 – The position of law as regards s.11 is well settled – It affords the Court with a very limited scope essentially requiring the Court only to make prima facie finding that an arbitration agreement exists – The High Court could be said to have travelled beyond its vested jurisdiction including by subsuming jurisdictions expressly made unavailable to it including s.37 of the Act, 1996 – Having regard to the plain language of sub-section (2) and sub-section (4) of s.15 respectively, the High Court exceeded in its jurisdiction while taking the view that the proceedings held by the Arbitral Tribunal between 17.03.2022 and 25.08.2022 are a nullity because of the operation of moratorium – The proper and legal course for the High Court acting u/s.15(2) of the Act, 1996, should have been to appoint a substitute arbitrator to continue from the existing stage of the proceedings – The impugned part of the judgment rendered by the High Court could be said to have resulted in a situation where the arbitration proceedings would have to be restarted de novo and the same would have a direct impact on the sale of flats made pursuant to the s.17 orders of the Tribunal – This could be both inequitable and inefficient – Thus, the part of the impugned order by which the High Court declared the proceedings undertaken between 17.03.2022 and 25.08.2022 as a nullity deserves to be interfered with and is hereby set aside. [Paras 34, 35, 37, 44-46]
As published in the Supreme Court Reports, Supreme Court of India. Headnotes prepared by: Ankit Gyan. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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