Supreme Court: Ought Not to Entertain Practice of Filing Applications in Disposed of SLPs to Side-Step Arbitration Process

Supreme Court: Ought Not to Entertain Practice of Filing Applications in Disposed of SLPs to Side-Step Arbitration Process

The Supreme Court by its coram comprising of Justices Krishna Murari and Sanjay Karol while dealing with an application filed in a Special Leave Petition (SLP) disposed of by the Court by referring the parties to arbitration to arbitration under an (Memorandum of Understanding) MoU executed between the parties, rebuked that, Courts ought not to interfere with arbitral proceedings, especially till the time an award is not passed.

In the present case, the Respondents - State of Uttar Pradesh and others, were seeking vacation of the status quo granted by the Arbitral Tribunal in the arbitration proceedings between the parties. It pleaded to vacate the rights of the petitioner with respect to the disputed project.

The bench noted that despite notice being issued, the applicant did not appear before the Arbitral Tribunal and therefore, the arbitration proceedings had commenced without the presence of the applicant.

Moreover, during the course of the arbitration proceedings, the Arbitral Tribunal had ordered to maintain status quo with respect to the disputed project till the disposal of the matter.

The Court took note of the fact, despite the counsel for the applicant was present in the arbitral proceedings it raised no objection to the same.

The bench particularly noted that, after a lapse of several years, the applicant sought vacation of the status quo granted by the Tribunal.

The Court expressed its dismay after noting that the reliefs sought by the applicant were issues that were already pending adjudication before the Arbitral Tribunal, and that no arbitral award had been passed regarding the same.

The bench commented, “The provisions of the Arbitration and Conciliation Act,1996, as well as a catena of judicial pronouncements of this Court have time and again stated that the courts normally ought not interfere with arbitral proceedings, especially till the time an award is not passed.”

It further opined, “We are further of opinion that this practice of filing applications in disposed of SLPs in order to side-step the arbitration process should be discouraged, and such applications must not be entertained by this Court.”

Accordingly, the Court dismissed the Miscellaneous Application. The Court granted liberty to the parties to raise all issues on merits before the Ld. Arbitral Tribunal which will adjudicate the same in accordance with law.

The Parties were further directed to appear before the Ld. Tribunal and to place a copy of this order before the Tribunal for resumption of the arbitration proceedings. Status-Quo as was directed by the Arbitral Tribunal vide order dated 22 May, 2015 to be maintained by the parties till the matter was disposed of by the Ld. Tribunal.