BHAVEN CONSTRUCTION THROUGH AUTHORISED SIGNATORY PREMJIBHAI K. SHAH versus EXECUTIVE ENGINEER SARDAR SAROVAR NARMADA NIGAM LTD.& ANR.

Citation: [2021] 1 S.C.R. 1 · Decided: 06-01-2021 · Supreme Court of India · Bench: N.V. RAMANA · Disposal: Appeal(s) allowed

Cited by 4 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

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BHAVEN CONSTRUCTION THROUGH AUTHORISED
SIGNATORY PREMJIBHAI K. SHAH
v.
EXECUTIVE ENGINEER SARDAR SAROVAR NARMADA
NIGAM LTD.& ANR.
(Civil Appeal No. 14665 of 2015)
JANUARY 06, 2021
[N.V. RAMANA, SURYA KANT AND HRISHIKESH ROY, JJ.]
Constitution of India, 1950 – Arts.226 and 227 – Interference
with arbitral process – Scope – Dispute arising out of a contract
between appellant and respondent no.1 – Contract had an
arbitration clause – Appellant appointed respondent no.2 as the
sole arbitrator – Application of respondent no.1 u/s.16 of the
Arbitration Act disputing jurisdiction of the sole arbitrator, rejected
– Writ petition filed by respondent no.1 – Allowed by High Court –
Whether arbitral process could be interfered u/Art.226/227, and
under what circumstance – Held: Respondent No.1 chose to impugn
the order passed by arbitrator through a petition u/Art.226/227 when
in the usual course, the Arbitration Act provided for a mechanism
of challenge u/s.34 – When a statutory forum is created by law for
redressal of grievances, a writ petition should not be entertained
ignoring the statutory dispensation – It is 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
– On facts, no exceptional circumstance mandating interference by
High Court u/Arts. 226 and 227 – High Court should not have used
its inherent power to interject the arbitral process at a stage when
subsequent to the impugned order of sole arbitrator, a final award
was rendered by him on merits, which is already challenged by
Respondent No. 1 in a separate s.34 application, and which is
pending – If Courts are allowed to interfere beyond ambit of the
enactment, then efficiency of the process will be diminished –
Impugned order of High Court set aside – Arbitration and
Conciliation Act, 1996.
   [2021] 1 S.C.R. 1
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SUPREME COURT REPORTS
[2021] 1 S.C.R.
Arbitration and Conciliation Act, 1996 – Framework of the
Act – Non-obstante clause in s.5 of the Act – Interpretation and
effect – Held: The Act is a code in itself – The non-obstante clause
in s.5 of the Act is provided to uphold the intention of the legislature
as provided in the Preamble to adopt UNCITRAL Model Law and
Rules, to reduce excessive judicial interference which is not
contemplated under the Act – 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.
Allowing the appeal, the Court
HELD : 1.1. The Arbitration and Conciliation Act, 1996 is
a code in itself. The non-obstante clause in Section 5 of the
Arbitration Act is provided to uphold the intention of the
legislature as provided in the Preamble to adopt UNCITRAL
Model Law and Rules, to reduce excessive judicial interference
which is not contemplated under the Arbitration Act. The
Arbitration Act itself gives various procedures 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. Any party
can enter into an arbitration agreement for resolving any disputes
capable of being arbitrable. Parties, while entering into such
agreements, need to fulfill the basic ingredients provided under
Section 7 of the Arbitration Act. Arbitration being a creature of
contract, gives a flexible framework for the parties to agree for
their own procedure with minimalistic stipulations under the
Arbitration Act. If parties fail to refer a matter to arbitration or to
appoint an arbitrator in accordance with the procedure agreed by
them, then a party can take recourse for court assistance under
Section 8 or 11 of the Arbitration Act. [Paras 11, 12, 13 and 14]
[10-D-H; 11-A-B]
2.1. The Appellant acted in accordance with the procedure
laid down under the agreement to unilaterally appoint a sole
arbitrator, without Respondent No.1 mounting a judicial challenge
at that stage. Respondent No. 1 then appeared before the sole
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BHAVEN CONST. THR. AUTH. SIGNATORY PREMJIBHAI K. SHAH v.
EXEC. ENGR. SARDAR SAROVAR NARMADA NIGAM LTD.
arbitrator and 

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