Orissa High Court
Case Details
Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 01-Aug-2025 18:12:48 IN THE HIGH COURT OF ORISSA AT CUTTACK W.P.(C) No.5028 of 2025 (In the matter of an application under Articles 226 and 227 of the Constitution of India, 1950). National Aluminium Company Ltd., Bhubaneswar & Ors. …. Petitioner(s) M/s. Maheswari Brothers Coal Ltd., Hyderabad …. Opposite Party (s) -versus- Advocates appeared in the case through Hybrid Mode: For Petitioner(s) For Opposite Party (s) : : Mr. Manoj Kumar Mishra, Sr. Adv. Along with associates Mr. Swayamjit Rout, Adv. CORAM: DR. JUSTICE S.K. PANIGRAHI DATE OF HEARING:-15.07.2025 DATE OF JUDGMENT: -24.07.2025 Dr. S.K. Panigrahi, J. 1. The present Writ Petition is preferred by the Petitioners challenging the judgment dated 28.08.2024 passed by the learned District Judge, Khurda at Bhubaneswar in ARBA Case No.7 of 2023 wherein the learned Appellate Court was pleased to dismiss the appeal filed by the present Petitioners under Section 37 of the A&C Act. I. FACTUAL MATRIX OF THE CASE: 2. The present Opposite Party pursuant to an open tender dated 21.10.2008 was given the purchase order dated 29/30.4.2009 for supply Page 1 of 41 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 01-Aug-2025 18:12:48 of 1,00,000 MT of washed coal at a price inclusive of basic price of coal, railway freight, logistic charges, taxes, etc. on a continuous basis to be completed within a period of 3 months from the date of the purchase order. 3. The specifications for supply of washed coal were mentioned at Clause 1 of the purchase order which also included other terms and conditions pertaining to the delivery schedule, contracts cum performance bank guarantee, acceptance with penalty and rejection, payment terms, termination, arbitration, etc. 4. The present Opposite Party accordingly started dispatching the washed coal through rail as per the dispatch schedule. Dispute arose, when the Petitioner observed that the coal supplied through Rake Nos. 16 to 23 from Vishakapatnam siding contains a higher moisture than the acceptable limit specified in Clause 1 of the purchase order. 5. Relying on the analysis report of the washed coal provided by Mitra S.K. Coal Inspection Private Limited dated 22.7.2009, 23.7.2009 and 27.7.2009 for Rake Nos. 16, 17 and 18 the present Petitioner vide letter dated 31.7.2009 intimated to the Opposite Party that the moisture content for the rakes have exceeded the acceptable range and hence as per the terms of the purchase order, these rake loads will be rejected and no payment against the same will be made. 6. A similar letter dated 14.8.2009 was issued by the Petitioner intimating the Opposite Party of the same issue qua Rake Nos. 19,20,21,22 and 23. Page 2 of 41 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 01-Aug-2025 18:12:48 7. In response, vide letter dated 3.9.2009, the Opposite Party stated that all the parameters except total moisture are in conformity with the specifications laid out in the purchase order. The reason for higher moisture was ascribed to the heavy rainfall which, despite precautions might have entered the rakes in transit. 8. Vide letter dated 17.6.2011, the Opposite Party requested release of payment for Rake Nos. 16 to 23. A meeting was convened on 27.9.2011 between the officials of both parties for reconciliation of outstanding amounts as the Opposite Party contended that it continued dispatching rakes during heavy monsoon due to the constant demand put forth by the Petitioner who was facing an acute shortage of coal and would have had to shut down if not for the deliveries made by the Opposite Party. The Opposite Party in the meeting was asked to recast their outstanding amounts for further review. 9. However, on 5.4.2012, the Opposite Party referred the dispute for arbitration and sought appointment of an arbitrator by invoking Clause 15 of the purchase order. Accordingly Retd. Justice Basudev Panigrahi was appointed as the Ld. Sole Arbitrator to adjudicate upon the dispute between the present Parties vide letter dated 2.8.2012. 10. The Ld. Sole Arbitrator after referring to the pleadings and evidence led in the arbitration proceeding, vide award dated 24.6.2017 directed the present Petitioners to pay Rs. 26,77,38,990/- to the present Opposite Party within a period of 3 months from the date of order failing which, the entire awarded amount would carry interest at the rate of 12% p.a. Page 3 of 41
Legal Reasoning
Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 01-Aug-2025 18:12:48 11. Being aggrieved, the present Petitioners resorted to an application u/s 34 of the A&C Act before the Ld. Senior Civil Judge (Commercial Court), Bhubaneswar, praying for setting aside the award. The Ld. Senior Civil Judge (Commercial Court), Bhubaneswar vide order dated 28.8.2023 after referring to the materials placed on record, dismissed the arbitration petition with the observation that the present Petitioners have failed to make out a case requiring interference with the award. 12. Still aggrieved, the present Petitioners preferred an application u/s 37 of the A&C Act before the Court of the Ld. District Judge, Khurda at Bhubaneswar. Vide order dated 28.8.2024, the Ld. District Judge was of the view that there is neither any ‘patent illegality’ nor violation of any ‘public policy’ in the arbitral award. Furthermore it was observed that the errors alleged do not go to the root of the matter, warranting interference and therefore the order dated 28.8.2023 passed by the Ld. Senior Civil Judge (Commercial Court), Bhubaneswar was upheld. 13. At this stage, the present Petitioners approached the Supreme Court of India in SLP(C) Diary No. 57336/2024, wherein the Apex Court vide order dated 15.1.2025 was pleased to permit the present Petitioners to approach this Court in its writ jurisdiction. Hence, the present Petition. 14. Now that the broad facts leading up to the instant Petition have been laid down, this Court shall endeavour to fully summarise the contentions of the Parties and the broad grounds that have been urged to seeking the exercise of this Court’s writ jurisdiction. Page 4 of 41 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 01-Aug-2025 18:12:48 II. PETITIONERS’ SUBMISSIONS: 15. It is submitted by Ld. Counsel for the Petitioners that the impugned award suffers from patent illegality and is contrary to the public policy of India, hence, deserves to be set aside vis-a-vis the impugned order passed by Ld. Senior Civil Judge (Commercial Court), Bhubaneswar, being illegal & arbitrary, is also liable to be set aside. He further contended that the reasons assigned by the Arbitral Tribunal while deciding the arbitration proceeding are irrational and perverse to the settled position of law, which on perusal will shock the conscience of the Court. He again contended that the glaring fact that the Respondent failed to supply washed coal in eight Rakes, i.e., Rake Nos.16 to 23, as per the specifications provided in the Purchase Order, leading to non-performance in term of the Purchase Order, makes the Respondent solely responsible for its own loss and the same was not taken into account in its proper perspective by the Arbitral Tribunal, resulting in passing an erroneous award. 16. It was also contended that the letters of the Opposite Party stating that due to heavy rainfall, the moisture percentage has gone up beyond the stipulated parameters has not been taken into account by the Ld. Arbitral Tribunal as the same is a material admission of their own breach of the terms of the purchase order. III. OPPPOSITE PARTY’S SUBMISSIONS: 17. Per contra, it is submitted by Ld. Counsel for the Opposite Party that the interference of this Court under writ jurisdiction is restricted to Page 5 of 41 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 01-Aug-2025 18:12:48 orders that are passed which are patently lacking in inherent jurisdiction which requires a perversity that stares one in the face. The same not being the case, this Writ Petition is bad in law and ought to be dismissed. 18. It is also earnestly contended that the scope of Section 37 of the A&C Act being limited to reviewing the order passed u/s 34 of the A&C Act essentially means that this Court also ought not to undertake an independent assessment of the merits or the evidence in the matter and ought to restrict itself to only reviewing whether the Ld. Courts below have committed any inherent error in adjudicating the matter. 19. It is further brought to this Court’s notice that the present Petitioners have consumed the entire coal delivered in Rake Nos. 16 to 23 and have subsequently questioned its moisture percentage to avoid payment. When the coal itself was consumed, there is no scope for the present Opposite Party to withdraw the said rakes. The mere fact of consumption also amounts to satisfaction of the purchase order and therefore, the Opposite Party is liable to receive the price of coal delivered in the alleged rakes. IV. ISSUES FOR CONSIDERATION: 20. Having heard the parties and perused the materials available on record, this court has identified the singular following issue that has to be determined which have emerged contentiously during the course of the hearing and is germane to finally decide the lis at hand; Page 6 of 41 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 01-Aug-2025 18:12:48 A. WHETHER THIS COURT OUGHT TO INTERFERE WITH THE IMPUGNED ORDER? 21. The law is well settled that Arbitral Tribunals are a species of tribunals over which the High Court exercises writ jurisdiction. Challenge to an order of an arbitral tribunal can be raised by way of a writ petition. In Union of India v. R. Gandhi, President Madras Bar Association1 the Supreme Court observed on the question as to what constitutes ‘Courts’ and ‘Tribunals’ as under: the state “38. The term ‘Courts’ refers to places where justice is administered or refers to Judges who exercise judicial for functions. Courts are established by administration of justice that is for exercise of the judicial power of the state to maintain and uphold the rights, to punish wrongs and to adjudicate upon disputes. Tribunals on the other hand are special alternative institutional mechanisms, usually brought into existence by or under a statute to decide disputes arising with reference to that particular statute, or to determine controversies arising out of any administrative law. Courts refer to Civil Courts, Criminal Courts and High Courts. Tribunals can be either private Tribunals (Arbitral Tribunals), or Tribunals constituted under the Constitution (Speaker or the Chairman acting under Para 6(1) of the Tenth Schedule) or Tribunals authorized by the Constitution (Administrative Tribunals under Article 323A and Tribunals for other matters under Article 323B) or Statutory Tribunals which are created under a statute (Motor Accident Claims Tribunal, Debt Recovery Tribunals and consumer fora). Some Tribunals are manned exclusively by Judicial Officers (Rent Tribunals, Motor Accidents Claims Tribunal, Labour statutory Courts and Industrial Tribunals). Other 1 (2010) 11 SCC 1 Page 7 of 41 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 01-Aug-2025 18:12:48 Tribunals have and Technical Members (Administrative Tribunals, TDSAT, Competition Appellate Tribunal, Consumer fora, Cyber Appellate Tribunal, etc).” Judicial 22. Similar observations were made by the Supreme Court in SREI Infrastructure Finance Limited2as under: “14. Arbitration is a quasi judicial proceeding, equitable in nature or character which differs from a litigation in a Court. The power and functions of arbitral tribunal are statutorily regulated. The tribunals are special arbitration with institutional mechanism brought into existence by or under statute to decide dispute arising with reference to that particular statute or to determine controversy referred to it. The tribunal may be a statutory tribunal or tribunal constituted under the provisions of the Constitution of India. Section 9 of the Civil Procedure Code vests into the Civil Court jurisdiction to entertain and determine any civil dispute. The constitution of tribunals has been with intent and purpose to take out different categories of litigation into the special tribunal for speedy and effective determination of disputes in the interest of the society. Whenever, by a legislative enactment jurisdiction exercised by ordinary civil court is transferred or entrusted to tribunals such tribunals are entrusted with statutory power. The arbitral tribunals in the statute of 1996 are no different, they decide the lis follows Rules and procedure between conforming to the principle of natural justice, the adjudication has finality subject to remedy provided under the 1996 Act. Section 8 of the 1996 Act obliges a judicial authority in a matter which is a subject of an agreement to refer the parties to arbitration. The reference to arbitral tribunal thus can be made by judicial authority or an in accordance with the arbitrator can be appointed arbitration agreement under Section 11 of the 1996 Act.” the parties, 2 (2018) 11 SCC. 470 Page 8 of 41 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 01-Aug-2025 18:12:48 23. Thus, the Apex Court held that arbitral tribunals are private tribunals unlike those tribunals set up under the statute or specialized tribunals under the Constitution of India. Thus, a Petition under Article 227 challenging orders of an Arbitral Tribunal would be maintainable. 24. At this juncture, it is necessary to set out certain provisions of the Arbitration and Conciliation Act, 1996. Section 5 states: judicial “5. Extent of intervention.—Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part.” Section 37 which is also material states as follows: “37. Appealable orders.—(1) An appeal shall lie from the following orders (and from no others) to the court authorised by law to hear appeals from original decrees of the Court passing the order, namely— (a) refusing to refer the parties to arbitration under Section 8; (b) granting or refusing to grant any measure under Section 9; (c) setting aside or refusing to set aside an arbitral award under Section 34. (2) An appeal shall also lie to a court from an order granting of the Arbitral Tribunal— (a) accepting the plea referred in sub-section (2) or sub- section (3) of Section 16; or (b) granting or refusing to grant an interim measure under Section 17. Page 9 of 41 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 01-Aug-2025 18:12:48 (3) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court.” 25. What is also important to note is that under Section 29-A of the Act which was inserted by the Amendment Act, 2016 a time-limit was made within which arbitral awards must be made, namely, 12 months from the date the Arbitral Tribunal enters upon the reference. Also, it is important to note that even so far as Section 34 applications are concerned, Section 34(6) added by the same amendment states that these applications are to be disposed of expeditiously, and in any event, within a period of one year from the date on which the notice referred to in sub-section (5) is served upon the other parties. 26. Given the aforesaid statutory provision and given the fact that the 1996 Act repealed three previous enactments in order that there be speedy disposal of all matters covered by it, it is clear that the statutory policy of the Act is that not only are time-limits set down for disposal of the arbitral proceedings themselves but time-limits have also been set down for Section 34 references to be decided. Equally, in Union of India v. Varindera Constructions Ltd.3 The Supreme Court has imposed the selfsame limitation on first appeals under Section 37 so that there be a timely resolution of all matters which are covered by arbitration awards. 27. Most significant of all is the non obstante clause contained in Section 5 which states that notwithstanding anything contained in any other 3 (2020) 2 SCC 111 Page 10 of 41 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 01-Aug-2025 18:12:48 law, in matters that arise under Part I of the Arbitration Act, no judicial authority shall intervene except where so provided in this Part. Section 37 grants a constricted right of first appeal against certain judgments and orders and no others. Further, the statutory mandate also provides for one bite at the cherry, and interdicts a second appeal being filed [see Section 37(2) of the Act]. 28. Coming now to the question as to what would be the scope of interference under Article 226/227 against orders passed by the Arbitral Tribunals, though, a number of judgments have been cited by both parties, recent decisions of the Supreme Court and of this Court have settled the issue. 29. While there is no doubt that the arbitral tribunal is a tribunal over which writ jurisdiction can be exercised, the said interference by a writ court is limited in nature. Recently, in Deep Industries Ltd. v. ONGC Ltd.4 decided on 28th November, 2019, the Supreme Court considered S.B.P. & Company v. Patel Engineering Ltd.5 and Fuerst Day Lawson Limited v. Jindal Exports Limited6 and observed as under: “17. This being the case, there is no doubt whatsoever that if petitions were to be filed Under Articles 226/227 of the Constitution against orders passed in appeals Under Section 37, the entire arbitral process would be derailed and would not come to fruition for many years. At the same time, we cannot forget that Article 227 is a constitutional