Independence of Arbitral Proceeding versus Writ Jurisdiction of High Courts: Recent Trends

There is a rising trend of litigants approaching the state High Courts across India thereby invoking its inherent powers under Article 226 and supervisory jurisdiction under Article 227 of the Constitution of India for challenging orders passed by arbitral tribunals. Recently the Hon’ble Supreme Court of India overturned a judgement of the Hon’ble Delhi High Court wherein the court granted additional time to one of the parties for cross-examination in an ongoing arbitration proceeding. In this case, while exercising its writ jurisdiction under Article 227, the Hon’ble Delhi High Court was effectively interfering with the order passed by the arbitral tribunal [1] . While setting aside the judgement order of Hon’ble Delhi Court, the Supreme Court held that the interference by the High Court under Article 227 with a decision of an arbitral tribunal should only be done sparingly and in cases of exceptional rarity, where the order passed by the Arbitral Tribunal is completely perverse. This position of law laid down by the Supreme Court has been in line with its earlier judgements in Bhaven Construction v. Sardar Sarovar Narmada Nigam Ltd [2] and the Delhi High Court in Surender Kumar Singhal v. Arun Kumar Bhalotia [3] . The position of law in cases of challenge to an order by arbitral tribunal is that the writ jurisdiction cannot be ousted completely. However, the same has to be exercised in cases of exceptional rarity and complete perversity.

The above seems to be the position in cases of procedural orders passed by the arbitral tribunal. However, in case of a challenge under Articles 226 or227 to the final award passed in arbitrations conducted under the Micro Small and Medium Enterprise Development Act, 2006 (“MSMED Act”) the position remains unsettled. For instance, the Hon’ble Supreme Court in its judgement passed in November 2023 categorically held that a writ petition under Articles 226/227 of the Constitution is not maintainable as Section 18 of the MSMED Act provides for recourse to a statutory remedy for challenging an award under Section 34 of the Arbitration and Conciliation Act, 1996 (“Act”). [4] However, very recently in January 2025, the Hon’ble Supreme Court has referred this question to a larger bench (five-judge) seeking clarity on whether there exists a complete bar/prohibition against the maintainability of the writ petition before a High Court in case of challenge to award passed in an arbitration under MSMED Act [5] . In the said judgement, the Hon’ble Supreme Court has duly highlighted that access to the High Court by way of writ is not just a constitutional right but also a part of the basic structure of the Constitution of India.

This tussle on one hand between the High Courts’ powers under writ jurisdiction and on the other hand the independence of arbitration proceedings is nothing new. In fact, this conundrum has come up for consideration from time to time before various courts. In fact, the seven-judge bench of the Hon’ble Supreme Court in the landmark judgement of SBP v. Patel Engineering [6] decisively rejected the approach adopted by certain High Courts, which held that orders passed by an arbitral tribunal could be challenged under Articles 226 or 227 of the Constitution of India. While deciding the said case, the Hon’ble Apex Court rightly emphasized that the Act provides specific avenues for challenging the arbitral orders. The Section 37 [7] of the Act expressly outlines the appealable orders, while Section 34 [8] of the Act allows an aggrieved party to challenge the final award, including orders under Section 16 of the Act [9] . The Court further reinforced that the arbitral tribunal, established by the parties & agreement is a creature of contract and therefore, is not subject to supervision by the High Courts under Article 227. Therefore, the intervention by the High Courts under Articles 226 or 227 was categorically held to be impermissible, maintaining the independence of the arbitration process.

However, Hon’ble Supreme Court from time to time seems to have deviated from the position of law laid down in SBP v. Patel Engineering holding that interference by the High Court under Article 227 can be allowed in cases of exceptional rarity. For instance, in a case where an arbitral proceeding was terminated for default in filing statement of claim [10] the Hon’ble Supreme Court allowed the intervention of the High Court under Article 227. For that matter, the Hon’ble Bombay High Court interfered with an order in an arbitration proceeding on the ground that there was a violation of the principles of natural justice. [11] The above judgements passed by not considering the ratio in SBP v. Patel Engineering are definitely per incuriam.

In our view, the Hon’ble five-judge bench of the Hon’ble Supreme Court of India which has been called upon to deliberate whether the High Court can interfere with the decision of the arbitral tribunal under Articles 226 or 227. However, while deciding this it would be prudent for the Hon’ble Apex court to take note of the position laid out in SBP v. Patel Engineering. At this juncture, it is critical that the Hon’ble Supreme Court puts this ambiguity to rest. This would serve a twofold purpose (a) avoid multiple writ petitions impugning procedural orders and final awards from the arbitral tribunals (in case of arbitrations under the MSMED Act), (b) upholding the principal objective of the Act i.e., minimal judicial intervention in arbitral proceedings as envisaged under Section 5 [12] of the Act.

References:

[1] Serosoft Solutions Pvt. Ltd. v. Dexter Capital Advisors Pvt. Ltd, 2025 INSC 26.
[2] (2022) 1 SCC 75
[3] 2021 SCC OnLine Del 3708
[4] M/s India Glycols Limited and Another v. Micro and Small Enterprises Facilitation Council, Medchal - Malkajgiri and Others, 2023 SCC OnLine SC 1852.
[5] M/S Tamil Nadu Cements Corporation Limited v. Micro and Small Enterprises Facilitation Council and Another, 2025 INSC 91.
[6] SBP v. Patel Engineering, 2005 INSC 526
[7] Section 37: Appealable orders
[8] Section 34: Application for setting aside arbitral award.
[9] Section 16: Challenge to the jurisdiction of Arbitral Tribunal
[10] SREI Infrastructure Finance Limited v. Tuff Drilling Private Limited, (2018) 11 SCC 470.[11] Shri Guru Gobind Singhji Institute of Engineering and Technology, Vishnupuri, Nanded v. Kay Vee Enterprises, Hyderabad, Writ Petition No. 9868/2024.
[12] Section 5: Extent of judicial intervention.