The court underscores the applicability of Section 14 of the Arbitration and Conciliation Act, 1996, for challenging orders refusing to recall termination of arbitral proceedings.
In a significant ruling, the Delhi High Court has delineated the legal pathways for challenging arbitration-related orders, emphasizing that orders rejecting recall applications of termination of arbitral proceedings cannot be contested under Section 34 of the Arbitration and Conciliation Act, 1996. The court held that such challenges must be made under Section 14(2) of the Act.
The case involved a dispute between U.P. Infraestate P. Ltd. and Rivaj Infratech Private Limited, wherein the former's application for recalling a termination order was dismissed by the arbitrator. Subsequently, U.P. Infraestate sought to challenge this dismissal under Section 34, which was deemed inappropriate by the learned Single Judge of the Delhi High Court, leading to the dismissal of their petition.
In the appeal before the Division Bench, the court, led by Justices C. Hari Shankar and Om Prakash Shukla, reiterated the Supreme Court’s stance in "Harshbir Singh Pannu v. Jaswinder Singh," stating that the proper remedy for challenging a recall order lies in Section 14(2) of the Arbitration and Conciliation Act, not Section 34. The bench underscored that the dismissal of a recall application does not equate to the termination of arbitral proceedings, thus cannot be treated as a termination order under Section 25.
The court further clarified that arbitral proceedings can be terminated only once, and a subsequent refusal to recall such a termination does not constitute a second termination. This interpretation aligns with the Supreme Court’s doctrine that judgments apply retrospectively unless explicitly stated otherwise.
The ruling also touched upon the doctrine of prospective overruling, confirming that Supreme Court judgments inherently apply retrospectively, unless otherwise declared. Therefore, the legal remedy for challenging recall applications must adhere to the established norms under Section 14(2).
This judgment sets a precedent for similar disputes in the future, ensuring clarity in the application of arbitration laws and reinforcing the procedural correctness as dictated by the Supreme Court.
Bottom line:-
Arbitration and Conciliation Act, 1996 - A recall application rejected by an arbitrator cannot be challenged under Section 34 of the Act; the remedy lies under Section 14(2). Orders rejecting recall applications do not constitute termination of arbitral proceedings under Section 25 of the Act.
Statutory provision(s): Arbitration and Conciliation Act, 1996 Sections 14(2), 25, 34
