2021 (4) TMI 1344 - SC - Indian Laws

Validity of Arbitral Award - execution of award was stayed on deposit of 60% of the figure - Jurisdiction of High Courts to interfere with deposit orders - HELD THAT - Repeatedly referring to Section 5 of the Arbitration Act in particular and the Arbitration Act in general and despite this Court having laid down in M/S. DEEP INDUSTRIES LIMITED VERSUS OIL AND NATURAL GAS CORPORATION LIMITED ANR. 2019 (11) TMI 1632 - SUPREME COURT that the High Court under Article 226 and 227 should be extremely circumspect in interfering with orders passed under the Arbitration Act, such interference being only in cases of exceptional rarity or cases which are stated to be patently lacking in inherent jurisdiction, we find that High Courts are interfering with deposit orders that have been made. This is not a case of exceptional rarity or of any patent lack of inherent jurisdiction. This being the case, the impugned order of the High Court of Karnataka is set aside and that of the learned Additional City Civil and Sessions Judge is restored. The deposit of 60% and security for the remainder is to be made within four weeks from the date of our order - Appeal disposed off.

Summary

Issues:
Interference with deposit orders under the Arbitration Act by High Courts.

Analysis:
The Supreme Court heard a case where an Arbitral Award was made in favor of the appellant, allowing 10 out of 16 claims amounting to Rs. 175.32 Crores. The respondent had filed a Section 34 petition challenging the Award, which was pending before the Additional City Civil and Sessions Judge at Bengaluru. The execution of the Award was stayed, and both parties filed writ petitions against the order. The appellant's writ petition was dismissed, while the respondent's petition was allowed, ordering a deposit of 50% of the principal amount. The Supreme Court noted that despite previous judgments emphasizing limited interference by High Courts in Arbitration Act matters, High Courts were still interfering with deposit orders without sufficient cause.

The Supreme Court referred to the importance of Section 5 of the Arbitration Act and previous case law, highlighting that High Courts should only interfere in exceptional cases where there is a clear lack of inherent jurisdiction. In this instance, the Court found that the High Court's interference was unjustified and set aside the impugned order, restoring the decision of the lower court. The appellant was directed to make the required deposit and security within four weeks from the Court's order.

Additionally, the Solicitor General requested an early disposal of the Section 34 application. The Court granted this request and directed the Additional City Civil and Sessions Judge to dispose of the petition within four months. Consequently, the appeals were disposed of, bringing an end to the legal proceedings in this case.