2019 (7) TMI 1822 - SC - Indian Laws

Partial award made under Section 16 of the Arbitration Act - Section 16 (6) of the Arbitration Act - HELD THAT - Such an application was not tenable vide Section 16 (6) of the Arbitration Act. Since such an application was not tenable, we fail to understand how in a writ petition filed against an order made by the District Judge in an untenable application, the High Court could have set aside the partial award. This is clearly contrary to law. This court in the case of SBP Co. vs. Patel Engineering Ltd. Anr 2005 (10) TMI 495 - SUPREME COURT , where it was held that We, therefore, disapprove of the stand adopted by some of the High Courts that any order passed by the arbitral tribunal is capable of being corrected by the High Court under Article 226 or 227 of the Constitution of India. T he judgment of the High Court is liable to be set aside - Appeal disposed off.

Summary

Issues:
- Jurisdiction of High Court under Article 227 against an order of the District Judge under the Arbitration Act and the MSME Act.
- Tenability of the application made to the District Judge against a partial award under Section 16 of the Arbitration Act.
- Applicability of Section 37 and Section 34 for challenging arbitral tribunal orders.
- Permissibility of High Court intervention under Article 226 or 227 in correcting arbitral tribunal orders.

Analysis:
1. The Supreme Court examined the jurisdiction of the High Court under Article 227 concerning an order of the District Judge under the Arbitration Act and the MSME Act. The High Court entertained a writ petition against an order made by the District Judge, which was purportedly passed under Section 20 of the Arbitration Act and Section 19 of the MSME Act. The Court noted that the application made to the District Judge by the respondent against a partial award under Section 16 of the Arbitration Act was not tenable as per Section 16(6) of the Act. The Supreme Court emphasized that the High Court setting aside the partial award in a writ petition against an order made by the District Judge in an untenable application was contrary to law. Reference was made to the case of SBP & Co. vs. Patel Engineering Ltd., where it was clarified that orders of the arbitral tribunal can be challenged under specific sections of the Arbitration Act, and High Court intervention under Article 226 or 227 is not permissible in such cases.

2. Considering the above circumstances, the Supreme Court concluded that the judgment of the High Court was liable to be set aside. The Court ordered accordingly, emphasizing the incorrectness of the High Court's decision in setting aside the partial award based on the writ petition against the District Judge's order.

3. The senior counsel for the respondent consented to the Supreme Court's order and sought liberty to challenge the award once it is finally passed under the MSME Act. The Court granted the liberty to challenge the award in accordance with the law, without adjudicating on the dispute regarding the final award's status.

4. In the final disposition, the Supreme Court disposed of the appeals accordingly, affirming the setting aside of the High Court's judgment and granting liberty to challenge the award under the MSME Act when it is finally passed.