Orissa High Court
Case Details
Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-Apr-2025 16:40:34 IN THE HIGH COURT OF ORISSA AT CUTTACK W.P.(C) No. 32426 of 2022 (In the matter of an application under Articles 226 and 227 of the Constitution of India, 1950). M/S Hotel Sea Point Pvt. Ltd., Puri …. Petitioner (s) -versus- M/s Blueline Resorts Pvt. Ltd., Bhubaneswar …. Opposite Party (s) Advocates appeared in the case through Hybrid Mode: : For Petitioner(s) Mr. Surendra Routray, Adv. For Opposite Party (s) : Mr. D.P. Nanda, Sr. Adv. along with Mr. Avijit Pal, Adv. CORAM: DR. JUSTICE S.K. PANIGRAHI DATE OF HEARING:-14.02.2025 DATE OF JUDGMENT: -11.04.2025 Dr. S.K. Panigrahi, J. 1. This Writ Petition is preferred by the Petitioner against order dated 1.8.2022 passed by the Ld. Sole Arbitrator purporting the same to be an award wherein the Petitioner was directed to pay a sum of Rs.4,31,94,711/- along with cost of Rs.15,00,00/- within two months from the date of the award to the Respondent on the basis of breach of the Lease Agreement dated 01.05.2012. Page 1 of 29 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-Apr-2025 16:40:34 I. FACTUAL MATRIX OF THE CASE: 2. The Petitioner is a company which has taken on lease the land from one, Mr. Durga Charan Rautray on which the hotel premises are located. The Opposite Party was desirous of taking the hotel premises on lease and therefore, Lease Agreement dated 1.5.2012 was entered into between the Petitioner and the Opposite Party. The Agreement dated 1.5.2012 was valid for a period of 10 years, further extendable by 10 years which would commence from 1.5.2012. Accordingly, monthly rental was provided for in the Agreement dated 1.5.2012 itself which was payable during the entire duration of the lease period. It is pertinent to mention here that the Lease Agreement was signed by the parties on a Rs.100 stamp paper, and was not registered. 3. Disputes arose over non-payment of the rent as prescribed in the Agreement and therefore, the Petitioner approached this Court for appointment of an Arbitrator u/s 11 of the Arbitration and Conciliation Act. 4. During the pendency of the Section 11 application, the Opposite Party filed C.S No. 598/2015 before the Civil Judge at Puri claiming specific performance and damages with respect to alleged breach of Agreement dated 1.5.2012. 5. Meanwhile, vide order dated 5.11.2015, this Court was pleased to appoint the Ld. Sole Arbitrator for adjudication of the dispute between
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the parties. Accordingly, the parties appeared before the Ld. Arbitrator and filed their respective claim and counter claim. Page 2 of 29 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-Apr-2025 16:40:34 6. At this juncture, the Petitioner filed an application before the Ld. Arbitrator praying for impound of the Agreement dated 1.5.2012 and abeyance of proceedings as the said Agreement was not sufficiently stamped nor registered as required in law. 7. The Ld. Arbitrator vide order dated 13.4.2017, rejected the prayer of impounding the Agreement as prayed for by the Petitioner. Aggrieved, the Petitioner approached this Court in W.P.(C) No. 7893/2017 challenging the refusal order of the Ld. Arbitrator. This Court vide order dated 8.5.2017 in W.P.(C) No. 7893/2017 was pleased to direct the Ld. Arbitrator to impound the Agreement in line with the Supreme Court’s judgment in SMS Tea Estates (P) Ltd. v. Chandmari Tea Co. (P) Ltd1. 8. In compliance with this Court’s order dated 8.5.2017 in W.P.(C) No. 7893/2017, the Ld. Arbitrator vide order dated 20.7.2017 was pleased to impound the Agreement. However, the order was passed ex-parte without hearing the Petitioner and the onus of payment of the deficit stamp duty was placed on the Petitioner. This was challenged by the Petitioner before this Court, where it was prayed that the onus be shifted to the Respondent who was liable to bear the same in terms of the Agreement. 9. Here, now, the litigation gets even more chequered. The Opposite Party did not bring the orders of this Court with regards to the impounding to the attention of this Court and managed to secure an order directing the Ld. Arbitrator to conclude the arbitration proceedings within 3 1 (2011) 14 SCC 66 Page 3 of 29 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-Apr-2025 16:40:34 months. This was then challenged by the Petitioner, and the same was stayed vide this Court’s order dated 11.8.2017. 10. In the meanwhile, it is pertinent to note that the Petitioner had filed C.S. No. 462/2017 seeking recovery of possession, mesne profits and damages from the Respondent alleging breach of the Agreement dated 1.5.2012. 11. While the arbitration proceeding had hit a pause, the Parties were pursuing their respective Civil Suits. Then, the Respondent filed an application under Section 8 of the A&C Act for reference of the matter to the arbitrator even though its own Civil Suit was pending on 20.11.2017. Thereafter, the Respondent sought to withdraw its C.S. No. 598/2018 seeking pursuing the arbitration under Order 23 Rule 1 CPC on 16.2.2018. 12. Pursuant to the order dated 15.1.2018, both the Civil Suits are directed to be heard analogously by the Ld. Civil Judge, Sr. Div., Puri with the consent of both Parties. The application under Section 8 of the A&C Act is rejected by the Ld. Civil Judge, Sr. Div. ,Puri vide its order dated 17.5.2018. 13. Aggrieved, the Opposite Party approached this Court in W.P.(C) No.13136/2018 challenging the rejection of its application under Section 8 of the A&C Act. 14. On 5.12.2019, the Opposite Party was permitted to withdraw its Civil Suit upon payment of cost of Rs.500/- to the Petitioner. 15. In all this, the Opposite Party has consistently approached either this Court or the Ld. District Judge seeking extension of time for passing an award in favour of the Ld. Sole Arbitrator. These efforts culminated Page 4 of 29 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-Apr-2025 16:40:34 finally in the Opposite Party’s application under Section 29A of the A&C Act in ARBP No.123/2017 which was rejected by the Ld. District Judge, Puri for suppression of facts and forum hunting vide order dated 27.12.2021. 16. The same was challenged by the Opposite Party in W.P.(C) No. 3203/2022 before this Court. However, this Court deemed it appropriate to decline to allow the application under Section 29A of the A&C Act, it appears vide order dated 6.7.2022, this Court directed the Ld. Arbitrator to continue the arbitration expeditiously. 17. Thereafter, the Ld. Arbitrator passed the impugned order purported to be an Award on 1.8.2022. 18. Aggrieved by the Impugned Order, the instant Petition has been preferred. As the facts leading up to the instant Petition have been laid down, this Court shall endeavour to summarise the contentions of the Parties and the broad grounds that have been raised to seek the exercise of this Court’s writ jurisdiction. II. PETITIONER’S SUBMISSIONS:
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19. The Ld. Counsel for the Petitioner Mr. Surendra Routray contends that there has been a complete failure by the Ld. Sole Arbitrator in rendering the impugned order as the Lease Agreement on the basis of which the impugned order was passed, or the arbitration was kickstarted still remained unstamped and unregistered despite this Court’s direction. Not to mention that the Ld. Arbitrator had himself impounded the Agreement for being insufficiently stamped, and without the defect Page 5 of 29 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-Apr-2025 16:40:34 being cured, had surprisingly proceeded to pass the Impugned Order. Insofar as the maintainability of the petition is concerned, it is urged by him that the provisions of the Act cannot oust the jurisdiction of the High Courts and under Article 226 and 227. While the said power ought to be exercised sparingly, the jurisdiction of High Courts can not to be ousted especially when there is a manifest error by the Arbitral Tribunal in which case, the High Courts ought to exercise jurisdiction under Article 227. 20. Ld. Counsel for the Petitioner Mr. Routray referred to the judgments in Deep Industries Ltd. v. Oil and Natural Gas Corporation Ltd.2 and Bhaven Construction through Authorised Signatory Premjibhai K. Shah v. Executive Engineer Sardar Sarovar Narmada Nigam Ltd.3. Relying upon the judgment in Deep Industries (supra) his submission was that in the said case, also, the Supreme Court categorically held that the jurisdiction of the writ court under Article 227 cannot be ousted. III. OPPOSITE PARTY’S SUBMISSIONS: 21. On the other hand, Ld. Sr. Counsel Mr. D.P. Nanda appearing for the Opposite Party, submits that the orders of an Arbitral Tribunal are not amenable to writ jurisdiction. It is further submitted that if the parties have entered into an agreement to arbitrate their disputes, the court must decline to exercise its extraordinary jurisdiction under the Constitution and leave the parties to avail the remedies under the 2 2019 SCC OnLine SC 1602 3 (2022) 1 SCC 75 Page 6 of 29 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-Apr-2025 16:40:34 special enactment which in itself is a self-contained code. The object of minimal judicial intervention under the 1996 Act, will be defeated at the High Court exercises its jurisdiction under Article 226 or 227 with any orders of the arbitral tribunal. IV. ISSUES FOR CONSIDERATION: 22. Having heard the parties and perused the materials available on record, this Court has identified herein the following issues to be determined: A. Whether this Court can exercise its writ jurisdiction to interfere with the Impugned Order passed by the Ld. Sole Arbitrator? B. Whether this Court ought to interfere with the Impugned Order? V. ISSUE A: WHETHER THIS COURT CAN EXERCISE ITS’ WRIT JURISDICTION TO INTERFERE WITH THE IMPUGNED ORDER PASSED BY THE LD. SOLE ARBITRATOR? 23. In India, the maintainability of writ petitions in respect of arbitration matters presents a nuanced legal challenge, requiring the balancing of the extraordinary powers of High Courts under Articles 226 and 227 of the Constitution of India with the objectives of the Arbitration and Conciliation Act, 1996 (Arbitration Act). Section 5 of the Arbitration Act minimises judicial interference in arbitral proceedings, confining intervention strictly to the circumstances outlined within the statute. However, courts have frequently grappled with situations where exercising the writ powers was deemed necessary to preserve the purity of justice. Over the years, landmark judgments have delineated the scope of judicial intervention, affirming two fundamental principles: (i) Page 7 of 29 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-Apr-2025 16:40:34 the writ jurisdiction of High Courts remains intact despite Section 5 of the Arbitration Act; and (ii) its exercise must be limited to rare and exceptional cases, such as those involving a manifest lack of jurisdiction, bad faith, or violations of natural justice principles. 24. This question assumes greater importance as arbitration continues to gain prominence as an alternative dispute resolution mechanism in India. While Arbitral Tribunals are afforded significant autonomy to adjudicate disputes, judicial scrutiny is sometimes required to prevent the misuse of arbitration proceedings or a miscarriage of justice. Recent rulings of the Apex Court have further clarified the contours of this balance, emphasising that writ petitions should be entertained sparingly and in line with the objective of the Arbitration Act and its quest for an efficient and independent dispute resolution. 25. The extraordinary jurisdiction of High Courts in India, enshrined in Articles 226 and 227 of the Constitution, serves as a foundation for protecting fundamental rights and administering justice. Article 226 empowers High Courts to issue writs for the enforcement of fundamental rights, offering a remedy against both legislative and executive actions. Article 227, on the other hand, confers every High Court with supervisory powers over all courts and tribunals within the jurisdiction of such High Court. Together, these articles establish a robust framework for judicial review, reinforcing the rule of law and providing a mechanism to check the misuse of power. 26. The Arbitration Act establishes a robust legal framework designed to facilitate efficient dispute resolution mechanism through arbitration. Page 8 of 29 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-Apr-2025 16:40:34 This landmark legislation was crafted to minimise judicial intervention and enhance party autonomy, thereby aligning Indian arbitration practices with international norms and expectations. Section 5 of the Arbitration Act embodies a fundamental principle: courts are expressly prohibited from interfering in matters governed by the Arbitration Act, except as explicitly stipulated within its framework. Through this provision, the legislature aims to preserve the integrity of arbitration as a preferred dispute resolution mechanism, ensuring that Arbitral Tribunals operate with the requisite independence to deliver fair and impartial awards. In addition to defining the limits of judicial oversight, the Act encompasses provisions that further reinforce the principle of minimal intervention. It grants arbitrators substantial discretion to determine procedural issues and the scope of their jurisdiction. 27. In Fuerst Day Lawson Ltd. v. Jindal Exports Ltd.4, the Supreme Court of India characterised the Arbitration Act as a comprehensive and specialised law designed to facilitate quick and efficient dispute resolution through arbitration while reducing judicial interference. 28. One of the main objectives of the Arbitration Act is to minimise the supervisory role of Courts in the arbitral process. Party autonomy and settlement of disputes by an Arbitral Tribunal are the hallmarks of arbitration law. Section 5 gives effect to the true intention of the parties to have their disputes resolved through arbitration in a quick, efficient and effective manner by minimising judicial interference in the arbitral 4 (2011) 8 SCC 333 Page 9 of 29 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-Apr-2025 16:40:34 proceedings5. Parliament enacted Section 5 to minimise the supervisory role of Courts in the arbitral process to the bare minimum, and only to the extent “so provided” under the Part I of the Arbitration Act. In doing so, the legislature did not altogether exclude the role of Courts or judicial authorities in arbitral proceedings, but limited it to circumstances where the support of judicial authorities is required for the successful implementation and enforcement of the arbitral process67. The Arbitration Act in fact, envisages the role of Courts to “support arbitration process”8 by providing necessary aid and assistance when required by law in certain situations. 29. Section 5 begins with the expression “notwithstanding anything contained in any other law for the time being in force.” The non obstante clause is Parliament’s addition to Article 5 of the Model Law. This is of a wide amplitude and sets forth the legislative intent of limiting judicial intervention during the arbitral process. In the context of Section 5, this means that the provisions contained in Part I of the Arbitration Act ought to be given full effect and operation irrespective of any other law for the time being in force. It is now an established proposition of law that the legislature uses non obstante clauses to remove all obstructions which might arise out of the provisions of any other law, which stand in