Exercise of writ jurisdiction interfering with arbitral process, shall be special rarity

Article 227 is a Constitutional provision that remains untouched by the non-obstante clause of Section 5 of the Arbitration Act. It is important to note is that though petitions can be filed under Article 227 against judgments allowing or dismissing first appeals against the arbitral award, yet the High Court would be extremely circumspect in interfering with the same, taking into account the statutory policy. When no exceptional circumstances or ‘bad faith’ are shown by a person filing the petition, to invoke remedy under Article 227, Courts are not allowed to interfere in the arbitral process.

In the case before Court, a contract was entered into between parties for manufacturing as well as the supply of bricks and that contract was not works contract under S.2(k) of Gujarat Public Works Contracts Disputes Arbitration Tribunal Act, 1992. However, a dispute arose regarding payment in furtherance of manufacturing and supplying of bricks and the appellant appointed sole arbitrator for adjudication of disputes.

The Supreme Court has declared that no exceptional circumstance or bad faith was shown by the aggrieved party on part of the opposite party, to invoke the remedy under Article 227 merely on the fact that the Act of 1992 might apply would not be sufficient for writ courts to entertain a plea of one party to challenge the ruling of the arbitrator and interfere with such process.

As per Justice N.V. Ramana, “Power of High Court under Art.226/227 cannot be exercised to interfere with arbitral process when one party is not left remediless under the statute and there no clear ‘bad faith’ shown by one such parties.”