Power of the High Court to Review the Order Passed under Section 11 of the Arbitration and Conciliation Act, 1996: An Analysis

Article by Prateek Dhir and Sahil Kumar Purvey 

Introduction

The Arbitration and Conciliation Act, 1996’, (hereinafter, ‘the Act’), is the cardinal law for Indian arbitration. Indian arbitration law has been evolving due to economic volatility, dynamic contractual terms, and trans-border dealings etc. Interpretation of various provisions of the Act has been subjected to judicial scrutiny. The scope of judicial inquiry under Section 11 of the Act, is one of them. Section 11 confines the Court’s role under Section 11 to the examination of the existence of an arbitration agreement. Whether the Court while considering application under Section 11 of the Act should examine that the contract containing the arbitration clause is properly stamped or not has been ongoing topic of judicial discussion. The Supreme Court in N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd.[1], held by a 3:2 majority that the arbitration agreements must be stamped to be enforceable. Subsequently, many review applications were filed to review the previous orders passed under the applications under Section 11 of the Act.

On 21.07.2023, the Delhi High Court in Ambience Developers and Infrastructure Pvt. Ltd. vs. Zesty Foods[2], had rejected one of the similar review applications (i.e. Review Petition No. 161/2023). The review application was filed, to review the order dated 20.03.2023 passed in application bearing no. Arbitration Petition No. 549/2022 under Section 11 of the Act on the premise that the agreement dated 02.02.2019 executed between the parties, containing the arbitration clause, is unstamped, and after the judgment in N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd.[3], the same is invalid in law/cannot be acted upon.

The Delhi High Court in the instant matter rejected the review application under Order XLVII, Rule 1 of the Code of Civil Procedure, 1908. The High Court relying on various judgments observed that where any question of law on which the judgment of the Court is based, has been reversed or modified by a subsequent decision of a superior Court in any other case, the same shall not be a ground for the review of such judgment. The Delhi High Court rejected the review application on the ground that there is no ground for review of the order dated 20.03.2023. However, the Hon’ble High Court did not determine whether the High Court has any power under the Act to review the order under Section 11 of the Act or not. Therefore, this Article attempts to determine the same.

Difference between ‘Review’ and ‘Appeal’

An appeal allows a party who is not satisfied with the verdict to challenge the judicial verdict before a higher court. Whereas, a review challenges the correctness of a judicial order based on new evidence, illegality, impropriety, irrationality etc. before the same court, which had passed the judicial verdict. The grounds for review are laid down in under Order XLVII of the Code of Civil Procedure, 1908.

It is settled law that the Arbitration Act is a Complete Act in itself and exhaustive in nature pertaining to arbitration proceeding[5]. The Arbitration and Conciliation Act, 1996 has no provisions  providing for review or appeal of the Orders passed in application under Section 11 of the Act. The Apex Court in SBP & Co. v. Patel Engineering Limited[6], had already observed that the order passed under Section 11 of the Act by the Chief Justice of a High Court or by the designate Judge of that High Court is appealable before the Supreme Court under Article 136 of the Constitution. However, there is no recourse available to party for filing of review of such order before the same High Court.

Power of High Court to Review the Order Passed under Section 11 of the Act

Observations of various High Courts on the question that whether the High Court has any power under the Act to review the order passed under Section 11 of the Act or not, are as follows;

• The Andhra Pradesh High Court in Nagireddy Srinivasa Rao vs. Chinnari Suryanarayana[7], has observed that “There is no provision in the Arbitration and Conciliation Act, 1996, providing for a review of an order passed under Section 11 of the Act. The provisions of the Act also do not make out a case for holding that such a power of review is available by implication.”
• The Allahabad High Court[8] is also of the similar opinion that the power of review is a creature of the statute. In the absence of such specific power, a review is not maintainable, unless the review is a procedural review.
• The Calcutta High Court in Sarada Construction vs. Bhupendra Pramanik and Ors.[9], has observed that “the Act is a complete code which does not specifically confer any power upon this Court to review an application under the statute which is section 11 of the Act and consequently, a review in the instant case is not maintainable”.
• The Delhi High Court in M/s Diamond Entertainment Technologies Private Limited & Ors. vs. Religare Finvest Limited[10], has observed that“By way of the present review petition, the petitioner is seeking review of the Order vide which an application under Section 11 of the Arbitration & Conciliation Act, 1996 has been allowed. Since the Order made under Section 11 of the Act is in exercise of the statutory powers as defined under the Arbitration & Conciliation Act, any review of the same can be only within the parameters of the Statute. Since, there is no provision of review in the Arbitration & Conciliation Act, this Court finds itself without any jurisdiction to review the present Order.” The Similar View was observed in Kush Raj Bhatia v. M/S DLF Power & Services Ltd[11].

From the above, we can conclude that the various High Courts have repeatedly observed that they do not have any power under the Act to review the order under Section 11 of the Act. Various High Courts have time and again reiterated that the Act is a complete code in itself, which does not has any provision permitting review. Therefore, the High Court cannot exercise power of review in the absence of an enabling provision. The approach of the High Courts are in accordance with settled principle on power of review that the power to review is not inherent but must be conferred by the Statute either specifically or by necessary implication, and in absence of any such conferment, no power of review can be exercised[12].

Power of Supreme Court to Review the Order Passed under Section 11

In Jain Studios Ltd., vs. Shin Satellite Public Co. Ltd[13], a review application filed before the Hon’ble Supreme Court under Article 137 of the Constitution of India, against an order under Section 11 of the Act. The Hon’ble Supreme Court had held that by virtue of Article 137 of the Constitution of India, the Apex Court could review only its own judgments or orders.  The Hon’ble Supreme Court did not decide that, whether a review against an order passed by the High Court under Section 11 of the Act would be available before the Supreme Court under any provisions other than the Article 137 of the Constitution of India. Therefore, there is no recourse of review available under Article 137 of the Constitution of India similar to recourse of appeal under Article 136 of the Constitution of India.

Conclusion

Considering the above discussions, it can be concluded that High Court does not have any power under the Act to review the order under Section 11 of the Act. The Delhi High Court in Ambience Developers and Infrastructure Pvt. Ltd. vs. Zesty Foods[14] ought to have first determined that whether the High Court is competent to review any order passed under section 11 of the Act or not before analysing the grounds available for review of such order. The same is against the settled principle on power of review[15]. However, whenever any apparent factual mistake[16], procedural error[17] or order passed vitiated with fraud[18], the court may review or reopen the proceedings without going in the merit of the case.

[1] N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd., (2023) 7 SCC 1

[2] Ambience Developers and Infrastructure Pvt. Ltd. Vs. Zesty Foods, 2023 SCC OnLine Del 4231

[3] N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd., (2023) 7 SCC 1

[4] Naresh Shridhar Mirajkar vs. State of Maharashtra, (1966) 3 SCR 744; Union of India vs. Major S.P. Sharma, (2014) 6 SCC 351; Neelima Srivastava vs. State of Uttar Pradesh and Ors., AIR 2021 SC 3884; and Beghar Foundation vs. Justice K.S. Puttaswamy (Retired) & Ors., (2021) 3 SCC 1

[5] National Highway Authority of India vs. Oriental Structure Engineers Ltd., 2012 SCC OnLine Del 4787

[6] SBP & Co. v. Patel Engineering Limited, (2005) 8 SCC 618

[7] Nagireddy Srinivasa Rao vs. Chinnari Suryanarayana, AP No. 138 of 2017

[8] Manish Engineering Enterprises vs. Managing Director, IFFCO, New Delhi & Ors., 2008 SCC OnLine All 84; and Smt. Chandra Dickshit vs. Smart Builders, 2008 SCC OnLine All 85

[9] Sarada Construction vs. Bhupendra Pramanik and Ors., 2023 SCC OnLine Cal 342

[10] M/s Diamond Entertainment Technologies Private Limited vs. Religare Finvest Limited, 2023/DHC/000156

[11] Kush Raj Bhatia v. M/S DLF Power & Services Ltd., 2022 SCC OnLine Del 3309

[12] Ram Chandra Pillai vs. Arunschalathammal & Ors., 1971 (3) SCC 847

[13] Jain Studios Ltd., vs. Shin Satellite Public Co. Ltd., 2006 (5) SCC 501

[14] Ambience Developers and Infrastructure Pvt. Ltd. Vs. Zesty Foods, 2023 SCC OnLine Del 4231

[15] Ram Chandra Pillai vs. Arunschalathammal & Ors., 1971 (3) SCC 847

[16] Always Remember Properties Private Limited v. Reliance Home Finance Limited, 2022 SCC OnLine Del 4479;

[17] Manish Engineering Enterprises vs. Managing Director, IFFCO, New Delhi & Ors., 2008 SCC OnLine All 84

[18] Indian National Congress (I) Vs. Institute of Social Welfare and Ors., [2002] 3 SCR 1040