TMI Blog2021 (1) TMI 177X X X X Extracts X X X X X X X X Extracts X X X X ..... cedures and forums to challenge the appointment of an arbitrator. The framework clearly portrays an intention to address most of the issues within the ambit of the Act itself, without there being scope for any extra statutory mechanism to provide just and fair solutions. In any case, the hierarchy in legal framework, mandates that a legislative enactment cannot curtail a Constitutional right. It is therefore, prudent for a Judge to not exercise discretion to allow judicial interference beyond the procedure established under the enactment. This power needs to be exercised in exceptional rarity, wherein one party is left remediless under the statute or a clear bad faith shown by one of the parties. This high standard set by this Court is in terms of the legislative intention to make the arbitration fair and efficient - In the instant case, Respondent No. 1 has not been able to show exceptional circumstance or bad faith on the part of the Appellant, to invoke the remedy under Article 227 of the Constitution. No doubt the ambit of Article 227 is broad and pervasive, however, the High Court should not have used its inherent power to interject the arbitral process at this stage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Appellant : Mr. Purvish Jitendra Malkan, AORMs. Dharita P. Malkan, Adv.Mr. Jitendra M. Malkan, Adv.Ms. Deepa Gorasia, Adv.Ms. Neha Ambashta, Adv.Ms. Bhavna Sarkar, Adv. For the Respondent : Ms. Hemantika Wahi, AOR Ms. Jesal Wahi, Adv. JUDGMENT N.V. RAMANA, J. 1. This Civil Appeal raises an important question of law concerning arbitration law in India and special enactments enacted by States concerning public works contract. 2. A brief reference to facts in this case is necessary for the disposal of the case. On 13.02.1991, Respondent No. 1 entered into a contract with the Appellant to manufacture and supply bricks. The aforesaid contract had an arbitration clause. As some dispute arose regarding payment in furtherance of manufacturing and supplying of bricks, the Appellant issued a notice dated 13.11.1998, seeking appointment of sole arbitrator in terms of the agreement. Clause 38 of the agreement provide for arbitration as under: Clause 38 Arbitration All disputes or differences in respect of which the decision has not been settled, shall be referred for arbitration to a sole arbitrator appointed as follows: Within thirty days of receipt of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter referred to as the Gujarat Act ). Therefore, the disputes between the parties were to be adjudicated in accordance with the aforesaid statute. b. That the arbitration was time barred, as Clause 38 mandated that neither party was entitled to claim if the arbitrator has not been appointed before the expiration of thirty days after the defect liability period. 4. In any case, the Appellant appointed Respondent No. 2 to act as a sole arbitrator for adjudication of the disputes. Respondent No. 1 preferred an application under Section 16 of the Arbitration and Conciliation Act of 1996 (hereinafter referred to as the Arbitration Act ) disputing the jurisdiction of the sole arbitrator. On 20.10.2001, the sole arbitrator rejected the application of the Respondent No. 1 and held that the sole arbitrator had jurisdiction to adjudicate the dispute. 5. Aggrieved by the order of the sole arbitrator, Respondent No. 1 preferred Special Civil Application No. 400 of 2002, under Articles 226 and 227 of the Constitution of India before the High Court of Gujarat. The Single Judge, while dismissing the Special Civil Application, held as under: At this stage, the judgment of the Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lenged under Section 34 of the Arbitration Act clearly shows the attempt of Respondent No. 1 to bypass the framework laid down under the Arbitration Act. He points out that Section 16(2) of the Arbitration Act mandates that the sole arbitrator had the jurisdiction to adjudicate the preliminary issue of jurisdiction, which can only be challenged under Section 34 of the Arbitration Act. 9. On the other hand, learned counsel for Respondent No. 1 contended that since the enactment of the Gujarat Act, the Arbitration Act was substituted with respect to the disputes arising out of the works contract. It was contended that under Articles 226 and 227 of the Constitution, it was always open for Respondent No. 1 to invoke the writ jurisdiction of the High Court to set aside an arbitration which was a nullity as it was in conflict with the State enactment. 10. Having heard both parties and perusing the material available on record, the question which needs to be answered is whether the arbitral process could be interfered under Article 226/227 of the Constitution, and under what circumstance? 11. We need to note that the Arbitration Act is a code in itself. This phrase is not merely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h award in accordance with sub-section (2) and sub-section (3) . The use of term only as occurring under the provision serves two purposes of making the enactment a complete code and lay down the procedure. 17. In any case, the hierarchy in our legal framework, mandates that a legislative enactment cannot curtail a Constitutional right. In Nivedita Sharma v. Cellular Operators Association of India, (2011) 14 SCC 337, this Court referred to several judgments and held: 11. We have considered the respective arguments/submissions. There cannot be any dispute that the power of the High Courts to issue directions, orders or writs including writs in the nature of habeas corpus, certiorari, mandamus, quo warranto and prohibition under Article 226 of the Constitution is a basic feature of the Constitution and cannot be curtailed by parliamentary legislation - L. Chandra Kumar v. Union of India, (1997) 3 SCC 261. However, it is one thing to say that in exercise of the power vested in it under Article 226 of the Constitution, the High Court can entertain a writ petition against any order passed by or action taken by the State and/or its agency/ instrumentality or any public authority or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xtremely 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. 19. In the instant case, Respondent No. 1 has not been able to show exceptional circumstance or bad faith on the part of the Appellant, to invoke the remedy under Article 227 of the Constitution. No doubt the ambit of Article 227 is broad and pervasive, however, the High Court should not have used its inherent power to interject the arbitral process at this stage. It is brought to our notice that subsequent to the impugned order of the sole arbitrator, a final award was rendered by him on merits, which is challenged by the Respondent No. 1 in a separate Section 34 application, which is pending. 20. Viewed from a different perspective, the arbitral process is strictly conditioned upon time limitation and modeled on the principle of unbreakability . This Court in P. Radha Bai v. P. Ashok Kumar, (2019) 13 SCC 445, observed: 36.3. Third, Section 34(3) reflects the principle of unbreakability. Dr Peter Binder in International Commercial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e pendency of this appeal, and the Respondent No. 1 has already preferred a challenge under Section 34 to the same. Respondent No. 1 has not been able to show any exceptional circumstance, which mandates the exercise of jurisdiction under Articles 226 and 227 of the Constitution. 23. The Division Bench further opined that the contract between the parties was in the nature of a works contract as it held that the manufacturing of bricks, as required under the contract, was only an ancillary obligation while the primary obligation on the Appellant was to supply the bricks. The Division Bench therefore held that the Gujarat Act holds the field, and not the Arbitration Act. 24. The Gujarat Act was enacted in 1992 with the object to provide for the constitution of a tribunal to arbitrate disputes particularly arising from works contract to which the State Government or a public undertaking is a party. A works contract is defined under Section 2(k) of the Gujarat Act. The definition includes within itself a contract for supply of goods relating to the execution of any of the works specified under the section. However, a plain reading of the contract between the parties indicates tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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