I. Introduction:

1. The Hon’ble Bombay High Court (“Hon’ble Court”) was recently faced with a number of writ petitions challenging the orders passed by an Arbitral Tribunal in multiple arbitration cases. The Arbitral Tribunal vide an order dated 18^th April 2024 dismissed the arbitration cases filed by the Claimants / Respondents in the writ petitions before the Hon’ble Court (hereinafter referred to as “Respondents”) as withdrawn while granting liberty to the Respondents to file a fresh claim. The Arbitral Tribunal also directed the Respondents to give a fresh notice invoking arbitration to the Respondent / Petitioner (hereinafter referred to as “Petitioner”) (Petitioner is identical in all writ petitions). The Petitioner challenged the aforesaid order passed by the Arbitral Tribunal in the writ petitions.  

II. Factual Matrix

2. The Hon’ble Court recognized that the issues raised in all writ petitions (WP (L) No. 15131 of 2024, WP No. 3083 of 2024, WP No. 3077 of 2024, WP No. 3721 of 2024, WP (L) No. 16245 of 2024, WP (L) No. 16246 of 2024 and WP (L) No. 16251 of 2024) were identical and hence vide a common order in Central Depositories Services (India) Ltd. v Ketan Lalit Shah, WP (L) No. 15131 of 2024 (being the lead writ petition), all writ petitions were disposed of. 

3. The facts in the lead writ petition would reveal that Mr. Shah and Anuragh Stock and Broking Pvt. Ltd. (“Anuragh”) executed an agreement under the bye laws of the Petitioner which also provided for reference to arbitration in the event of disputes and differences. Pursuant to executing the agreement, the parties dealt with each other as under: 

S. No.	Dates	Events
1	September 2009	Mr. Shah opened a trading and demat account with Anuragh.  [Funds and securities came to be transferred to Anuragh from time to time]
2	15.09.2023	Mr. Shah addressed a notice calling upon the Petitioner to indemnify him towards the loss caused to him by the Petitioner and Anuragh along with interest and expenses incurred by him. The said notice also invoked arbitration and hence could be construed as the date of commencement of arbitration.
3	–	Mr. Shah filed his Statement of Claim (“SOC”).
4	27.10.2023	The Petitioner filed its Statement of Defense.
5	–	Multiple other pleadings were filed by parties including rejoinder, sur rejoinder and sur sur rejoinder.
6	12.02.2024	Oral arguments concluded in the arbitration proceedings.
7	–	Pursuant to the hearing, post hearing clarifications were submitted by both parties to the Arbitral Tribunal wherein, Mr. Shah indicated that he had engaged a chartered accountant (“CA”) to analyse shares in his demat account and accordingly sought for a weeks’ time to place on record the CA’s certificate.  The said request for placing on record new documents was opposed by the Petitioner.
8	20.03.2024	During the hearing before the Arbitral Tribunal, Mr. Shah sought to amend the prayers iterated in his SOC including the claim amount. The said amendment was challenged by the Petitioner.
9	21.03.2024	Due to the mandate of the Arbitral Tribunal expiring in May 2024, two options were given to Mr. Shah and the other Respondents, i.e., to either withdraw the arbitration cases with liberty to file afresh or continue with the present claim. In light of the options presented, Mr. Shah vide letter addressed to the Arbitral Tribunal chose to withdraw his claim with liberty to file afresh.
10	29.03.2024	The Petitioner in response vide its letter addressed to the Arbitral Tribunal opposed the liberty sought by Mr. Shah to file a fresh claim on the grounds that; (i) such liberty could not be granted by the Arbitral Tribunal; (ii) Mr. Shah had made out no grounds for filing fresh proceedings; and (iii) the Petitioner would be severally prejudiced in the event liberty to grant fresh proceedings is given.
11	18.04.2024	The Arbitral Tribunal dismissed basis the aforesaid letters dismissed the arbitration proceedings giving Mr. Shah and other Respondents the liberty to file fresh proceedings by giving a fresh notice for invocation of arbitration.

III. Issues at Hand

1. Due to the aforesaid proceedings being terminated by the Arbitral Tribunal, the following questions arose for determination before the Hon’ble Court: 

• Issue No. 1: Whether the order dated 18^th April 2024 warrants interference by the Hon’ble Court, in the exercise of its jurisdiction under Article 226 of the Constitution of India? 

• Issue No. 2: If yes, whether the Arbitral Tribunal, in exercise of its powers under Section 19(3) of the Arbitration & Conciliation Act, 1996 (“the Act”) can permit withdrawal of a claim with liberty to file a fresh claim? 

IV. Arguments advanced by the Petitioner

2. With respect to whether a writ was maintainable against the order passed by the Arbitral Tribunal, the Petitioner contended that due to the arbitral proceedings being terminated, no remedy was available to the Petitioner under the provisions of the Act and hence, the present writ petitions were maintainable. 

3. Further, the Petitioner contended that once the mandate of the Arbitral Tribunal stood terminated as per Section 32 of the Act, pursuant to the termination, the Arbitral Tribunal became functus officio and hence, it had no jurisdiction to permit the Respondents to file fresh proceedings. Lastly, the Petitioner submitted that due to the liberty being granted by the Arbitral Tribunal to the Respondents, irreparable loss would be caused to the Petitioner and hence the same cannot be permitted. 

4. The Petitioner also contended that even if the Respondents submit that the authority to withdraw the claim and liberty to file afresh is granted as per the provisions of the Civil Procedure Code, 1908 (“the Code”) by the Arbitral Tribunal, still the order dated 18^th April 2024 could not grant liberty to file proceedings afresh. 

V. Arguments advanced by the Respondents 

5. The Respondents’ contended that the writ petitions filed were not maintainable. He submitted that while a petition is per se maintainable against an order of the Arbitral Tribunal, the courts in India have time and again emphasised that for any interference under the writ jurisdiction, there need to be “exceptional circumstances”. While interpreting exceptional circumstances, the Hon’ble Delhi High Court (“Hon’ble Delhi Court”) in case of IDFC First Bank Limited that interference was warranted, in the event, the order passed by an Arbitral Tribunal is completely perverse, i.e., that the perversity must stare in the face. In any other event, the Hon’ble Delhi Court held that excessive judicial interference / jurisdiction under Article 226 and 227 of the Constitution of India (“Constitution”) ought not be encouraged in reference to the arbitral process. 

6. Further, the Respondents’ contended that the termination of arbitral proceedings under Section 32 of the Act could always be challenged by the Petitioner before a court of competent jurisdiction in line with Section 14 of the Act. 

7. In response to the submission advanced by the Petitioner on the applicability of the Code to the arbitral proceedings, the Respondents’ contended that the provisions of the Code are applicable to arbitral proceedings and further relying on Section 19 (2)  of the Act, it was contended that the Arbitral Tribunal was empowered to conduct the proceedings in any manner, as it deems fit. 

VI. Observations by the Hon’ble Court

8. The Hon’ble Court having viewed the judgments as advanced by both sides admittedly laid down that while judicial interference was permissible by way of invocation of a writ petition under Article 226 of 227 of the Constitution for challenging an order passed by an Arbitral Tribunal, the order ought to be glaringly perverse. Hence, the Hon’ble Court embarked to observe whether the order dated 18^th April 2024 was perverse in any manner. 

9. While reiterating the aforesaid facts as stipulated by both sides, the Hon’ble Court observed that due to the mandate of the Arbitral Tribunal expiring, the Respondents were given an option to either move ahead with the claim already instituted or withdraw the claim with liberty to file afresh. The Hon’ble Court noted that all rights and contentions of both parties were expressly kept open (including preliminary contentions such as limitation) and hence no prejudice / interests of the Petitioner would stand diminished. In fact, it was seen that the order itself records that pursuant to withdrawal, the Arbitral Tribunal directed the Respondents to issue fresh notices invoking arbitration and hence, it was noted that the Arbitral Tribunal was well aware of its mandate having expired. 

10. With reference to the Code, particularly Order 23 Rule 3  therein, the Hon’ble Court concluded that due to the parties not agreeing on any particular procedure, the Arbitral Tribunal had the power to determine the conduct of the proceedings in any manner it deemed fit. Further, in the circumstances of the massive fraud committed by Anugrah, the Arbitral Tribunal had permitted the Respondents to alter their claim which according to the Hon’ble Court was justifiable and permissible due to all rights and contentions of parties being kept open. 

11. In light of the aforesaid observations, the Hon’ble Court held that the Arbitral Tribunal was well within its mandate to allow the Respondents to withdraw their claim and file afresh. Further, it held that none of the actions of the Arbitral Tribunal are least of all perverse and hence no grounds are made out to exercise the jurisdiction as envisioned in the constitution. Having said this, the writ petition was dismissed. 

VII. Conclusion

12. The judgment is thought provoking as it lays down the extent to which a court can intervene by way of writ jurisdiction to adjudicate on the orders passed by an Arbitral Tribunal. Further, it also lays down the authority of an Arbitral Tribunal to adhere to the principles laid down under the Code and take action as it deems fit, in absence of rules laid down for arbitral proceedings by the parties. 

Nikhilesh Koundinya, Associate, Solomon & Co. 

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