2003 (3) TMI 609 - HC - Companies Law

Summary

Issues:
Constitutional validity and vires of sub-sections (5) and (6) of section 16 and clause (a) of sub-section (2) of section 37 of the Arbitration and Conciliation Act, 1996.

Analysis:

Issue 1: Constitutional Validity of Section 16
The petitioners challenged the validity of sub-sections (5) and (6) of section 16 of the Arbitration and Conciliation Act, 1996, arguing that they were arbitrary and discriminatory, violating Article 14 of the Constitution. However, the High Court referred to a Supreme Court decision in Babar Ali v. Union of India, which upheld the validity of section 16. The Supreme Court dismissed the Special Leave Petition challenging the High Court decision, stating that judicial review was available by challenging the award as per the Act's procedure. The High Court concluded that the challenge to the vires was rightly negatived.

Issue 2: Appealable Orders under Section 37
The petitioners contended that section 37(2)(a) of the Act, which allows appeals against certain orders, was discriminatory and violated Article 14 of the Constitution. The High Court disagreed, stating that the provision did not discriminate between persons similarly situated. It explained that the Act granted a right of appeal in certain cases where the authority reserved the right to decide its jurisdiction, which was not ultra vires. The Court also highlighted that the provision for appeals was based on the different outcomes for aggrieved parties depending on the jurisdictional ruling by the Arbitral Tribunal.

Issue 3: Doctrine of Merger and Binding Effect of Supreme Court Orders
The petitioners argued that the Supreme Court's order in Babar Ali did not constitute law under Article 141 of the Constitution and that the doctrine of merger did not apply. However, the High Court cited precedents to explain that the reasons given by the Supreme Court in dismissing a Special Leave Petition had a binding effect, even if no detailed reasons were recorded. Therefore, the High Court upheld the Supreme Court's decision in Babar Ali and dismissed the contention raised by the petitioners.

In conclusion, the High Court dismissed the petitions challenging the constitutional validity and vires of the specified provisions of the Arbitration and Conciliation Act, 1996, finding no merit in the arguments presented by the petitioners.