New Delhi: The Supreme Court has held that once an arbitrator is appointed under Section 11 of the Arbitration and Conciliation Act, 1996, the arbitral process must continue unhindered, and no review, recall, or appeal lies against the appointment order.
The Court emphasized that the legislative design of the Arbitration Act consciously excludes any mechanism permitting reconsideration of such orders, and judicial interference at this stage would defeat the objective of ensuring the expeditious commencement of arbitration.
A bench of Justices JB Pardiwala and R. Mahadevan examined whether the Patna High Court was justified in entertaining proceedings challenging a Section 11 order after an arbitrator had already been appointed. The question before the Court was whether a party dissatisfied with the appointment could approach the High Court seeking review or reconsideration of an order passed under Section 11(6).
The appeal arose out of proceedings in which the High Court had effectively reopened the appointment process by entertaining a petition seeking reconsideration of the earlier order. The petitioners before the Supreme Court submitted that such a course of action was wholly outside the statutory framework. They argued that Section 11 is intended solely for constituting the arbitral tribunal, and once that function is discharged, no further judicial review is permitted. The petitioners relied on the 2015 and 2019 legislative amendments, contending that Parliament had narrowed the court’s scope at the referral stage and that permitting a review would frustrate this scheme.
The respondent, supporting the High Court’s order, contended that if the appointment suffers from a patent legal error, the High Court must retain limited corrective jurisdiction. It was argued that Section 11 orders cannot be insulated completely from scrutiny where a substantial miscarriage of justice is alleged. The respondent urged that the Arbitration Act must be interpreted harmoniously with the general powers of review available to High Courts.
The Supreme Court rejected the respondent’s submissions in categorical terms. The bench observed: “Once an arbitrator is appointed, the arbitral process must proceed unhindered. There is no statutory provision for review or appeal from an order under Section 11, which reflects a conscious legislative choice.” The Court further held that allowing High Courts to revisit Section 11 orders would create a multiplicity of proceedings and derail the arbitral mechanism at its threshold, thereby defeating the purpose of the 1996 Act.
The Court underscored that the statute clearly distinguishes between the referral stage and the adjudicatory stage, and that once the arbitrator is appointed, all issues relating to jurisdiction, arbitrability, or procedural defects must be raised before the arbitral tribunal under Section 16. The bench stated that “revisiting the appointment order would amount to judicial interference prohibited by Section 5,” which mandates minimal intervention.
Addressing the contention relating to correction of errors, the bench held that the absence of a statutory review mechanism is deliberate, and that even allegations of jurisdictional or factual error do not empower High Courts to recall or modify a Section 11 order. The Court noted that the autonomy of the arbitral process hinges on the conclusiveness of the referral order, and that permitting post-appointment challenges would undermine the foundation of party autonomy.
The Supreme Court, therefore, concluded that the Patna High Court lacked jurisdiction to entertain proceedings seeking reconsideration of the appointment of an arbitrator. The impugned High Court order was set aside, and the arbitral process was restored to proceed before the appointed arbitrator.
Cause Title: HINDUSTAN CONSTRUCTION COMPANY LTD. v. BIHAR RAJYA PUL NIRMAN NIGAM LIMITED & ORS.
