The Gujarat High Court has recently made an important ruling regarding the procedural laws governing arbitration proceedings. In a case between Pahal Engineers and Gujarat Water Supply and Sewerage Board involving a contract dispute between Pahal Engineers and Gujarat Water Supply and Sewage Board, the respondent had raised a preliminary objection that the claim petition submitted by the appellant was not maintainable as it was not verified in accordance with Order VI Rule 15 of the Code of Civil Procedure. The Arbitral Tribunal upheld this objection and dismissed the claim, resulting in the appellant filing a writ petition before the High Court.
The Single Judge ruled that the Tribunal’s order was not amenable to writ jurisdiction since an alternative remedy under Section 34 of the Arbitration and Conciliation Act was available to the appellant. However, the Division Bench of the High Court overturned this ruling and held that the failure to abide by the procedural laws would not be fatal to the arbitral proceedings.
The Court noted that under Section 19 of the Arbitration and Conciliation Act, the Arbitral Tribunal is not bound by the Code of Civil Procedure or the Indian Evidence Act, and is empowered to regulate the proceedings in the manner it considers appropriate if the parties fail to reach an agreement on the procedure to be followed. Therefore, the Tribunal’s dismissal of the claim solely on the ground of non-verification of pleadings was not justified.
Referring to an earlier decision by a Coordinate Bench of the Gujarat High Court, the Court stated that it had the power of superintendence under Article 227 of the Constitution of India to correct jurisdictional errors committed by the Arbitral Tribunal. The Court set aside the order of the Single Judge and quashed the order of the Arbitral Tribunal, granting the parties the liberty to seek an extension of the mandate. The Court directed the Arbitral Tribunal to proceed to adjudicate the claim on merits and in accordance with law by accepting the amended claim statement.
This ruling is significant as it clarifies that the failure to comply with procedural laws, such as the verification of pleadings, would not be fatal to the arbitral proceedings, and that the High Court has the power to correct jurisdictional errors committed by the Arbitral Tribunal.