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Dismissal of applications during the process of arbitration cannot be challenged in court: High Court of Calcutta

When an order by the arbitrator under Section 16 of the Act is paased dismissing an application, such an order cannot be challenged by any party in the high court until the final order for that arbitration is not passed. This was decided in the case of. Saraswati Ojha And Ors. -Vs- Sri Birendra Prasad Singh And Ors [AP 61 of 2021] by the Hon’ble  Judge Ravi Krishan Kapur in the High Court of Calcutta.

The disputes between the parties arose out of an arbitration clause contained in a partnership deed.  By an order, this Court had appointed a Sole Arbitrator to adjudicate the disputes between the parties arising out of the aforesaid partnership deed. Before the Arbitrator, the petitioners herein filed an application under Section 16 of the Act contending that the arbitration proceedings were barred by limitation. The Arbitrator rejected the application filed under Section 16, on the ground that the disputes raised by the petitioners did not give rise to a pure question of law but involved a mixed question of law and fact. The Arbitrator has further held that, it was necessary for issues to be framed and evidence to be taken in order to ascertain whether the partnership business has been actually dissolved or not or whether it had been reconstituted

The counsel for the petitioner contended that the issue of limitation raised by the petitioners did not involve determination of any fact or framing of issues or adducing of any evidence. On the other hand, the claimants contention was that the application under Section 34 was misconceived and not maintainable.

The court referred to the case of Deep Industries Ltd. vs. Oil And Natural Gas Corporation Ltd. & Ors. [2019(17) SCALE 85] where it was mentioned that, “The drill of Section 16 of the Act is that where a Section 16 application is dismissed, no appeal is provided and the challenge to the Section 16 application being dismissed must await the passing of a final award at which stage it may be raised under Section 34.”

It further noted that the court was of the view that from the scheme of the Act, it is apparent that at this stage, a challenge under section 34 of the Act is not maintainable against an order dismissing an application under Section 16 of the Act. Also, it categorically stated that the legislature does not provide for recourse by way of a challenge under Section 34 against an order under Section 16(5) where the Arbitral Tribunal takes a decision rejecting the plea that the Arbitral Tribunal has no jurisdiction.

The court highlighted that the intention of the Act appears to be that in such case, the Arbitral Tribunal ought to continue with the arbitral proceedings and make an award without delay. In the interregnum, there ought to be no interference with the arbitral process. And finally, the court held “In the facts of this case, there is no scope for challenging the order passed by the Arbitrator dismissing the application under Section 16, at this stage. The parties must continue with the arbitration proceedings and await a final award”. Hence, on the ground of maintainability alone the application got dismissed. The Arbitrator was directed to dispose of the arbitration proceedings as expeditiously as possible in accordance with the mandate contained in the Act.

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