Interim relief granted to Vapi Municipal Corporation against unilateral arbitrator appointment by Shashijit Infra Projects Limited.
In a significant ruling, the Gujarat High Court has intervened to halt arbitration proceedings initiated by Shashijit Infra Projects Limited against Vapi Municipal Corporation. The proceedings, which were deemed unilateral and non-compliant with natural justice principles by the petitioner, have been stayed until the next hearing scheduled for June 18, 2026.
The petitioner, Vapi Municipal Corporation, formerly known as Vapi Nagarpalika, challenged the unilateral appointment of an arbitrator by the respondent, Shashijit Infra Projects Limited. The Corporation argued that this unilateral action violated established legal principles and amounted to judicial impropriety. The petitioner had previously filed Special Civil Application No. 157 of 2026, which is pending before the High Court.
The learned Government Pleader, Mr. GH Virk, representing the petitioner, emphasized that the arbitration proceedings were initiated without the Corporation's consent and that the arbitrator's communication dated May 16, 2026, threatened to proceed ex-parte. The Corporation was advised that failing to submit a written statement by June 2, 2026, would result in the closure of their right to file one, which could severely prejudice their position.
Highlighting a prior decision by the High Court in Petition under Arbitration Act No. 198 of 2024, Mr. Virk argued that all existing and new arbitration matters should be directed to the Public Works Tribunal, rather than proceeding independently. Given the pending applications and the risk of ex-parte decisions, the High Court acknowledged the petitioner's concerns and granted interim relief.
Justice Mr. L.S. Pirzada, presiding over the case, ordered the arbitration proceedings to be stayed until June 18, 2026, when the related matters would be addressed. The Court issued a notice returnable on the same date and directed that the order be communicated immediately to the respondent arbitrator to ensure compliance.
This decision underscores the importance of adhering to procedural fairness and judicial propriety in arbitration matters, particularly when unilateral actions threaten the rights of involved parties. The stay on arbitration proceedings reflects the Court's commitment to ensuring that disputes are resolved equitably and in accordance with established legal norms.
Bottom line:-
Arbitration proceedings cannot proceed ex-parte when related matters are pending before the High Court, as it may prejudice the petitioner. The High Court directed the respondent arbitrator not to proceed until the next scheduled hearing.
Statutory provision(s): Arbitration and Conciliation Act, 1996
