Writ Petition Upheld Despite Alternative Remedy, Citing Breach of Natural Justice and Jurisdictional Error
In a significant ruling, the Allahabad High Court has set aside an ex-parte arbitral award, directing fresh arbitration proceedings due to procedural irregularities and breach of natural justice. The decision came in response to a writ petition filed by Sushil Kumar Prajapati, challenging the arbitral award issued on May 21, 2025, by the sole arbitrator, CMM/Electrical, Eastern Railway.
The petitioner contended that the arbitrator unilaterally changed the arbitration venue from Allahabad to Kolkata without mutual consent, violating Section 20 of the Arbitration and Conciliation Act, 1996. This alteration of the seat of arbitration deprived the petitioner of a fair hearing, as he was unable to attend the proceedings due to short notice. The High Court acknowledged these concerns, emphasizing that such procedural flaws render the award null and void.
The court's judgment, delivered by Justices Ajit Kumar and Indrajeet Shukla, underscored the maintainability of the writ petition under Article 226 of the Constitution of India. Despite the availability of an alternative remedy under Section 34 of the Arbitration and Conciliation Act, 1996, the court exercised its writ jurisdiction due to the exceptional circumstances presented—lack of jurisdiction and violation of natural justice.
The bench cited precedents from the Supreme Court, including the Whirlpool Corporation v. Registrar of Trademarks, Mumbai, which permits writ jurisdiction in cases of fundamental rights enforcement, natural justice violations, or lack of jurisdiction. The judgment also referenced cases such as Harbans Lal Sahnia v. Indian Oil Corporation and Mafatlal Industries Ltd. v. Union of India, reinforcing the discretionary nature of writ jurisdiction in the face of procedural injustices.
The court directed the General Manager, North Central Railway, to appoint a new arbitrator with proper notice to the petitioner, ensuring the proceedings resume from the stage prior to the ex-parte decision. The new arbitration must conclude within three months, failing which the parties may seek recourse under Section 11(6) of the Arbitration and Conciliation Act, 1996.
This ruling highlights the judiciary's role in safeguarding procedural fairness and jurisdictional integrity in arbitration proceedings, reaffirming the principle that alternative remedies do not bar judicial intervention when fundamental rights and justice are at stake.
Bottom line:-
Arbitration - Writ jurisdiction under Article 226 - Maintainability of writ petition against arbitral award - High Court can interfere in exceptional circumstances, such as lack of jurisdiction or violation of natural justice, even if an alternative remedy is available under Section 34 of the Arbitration and Conciliation Act, 1996.
Statutory provision(s): Article 226 of the Constitution of India, Arbitration and Conciliation Act, 1996 Sections 20, 34
Sushil Kumar Prajapati v. Union of India, (Allahabad)(DB) : Law Finder Doc id # 2893406
