Saturday, January 17, 2015

Contempt of Order of Arbitration Tribunal

In the event that a party to an arbitration seeks to file a contempt to the arbitral tribunal committed by another party then Section 27(5) of the Arbitration and Conciliation Act, 1996 (“the Act”) allows such party to make an application before the Court with the approval of the arbitral tribunal.

Section 27 (5) of the Act reads as under:
Persons failing to attend in accordance with such process, or making any other default, or refusing to give their evidence, or guilty of any contempt to the arbitral tribunal during the conduct of arbitral proceedings, shall be subject to the like disadvantages, penalties and punishments by order of the Court on the representation of the arbitral tribunal as they would incur for the like offences in suits tried before the court.”

In Sri Krishan vs. Anand,(OMP. No. 597/2008) the Hon'ble Delhi High Court held that:
Any person failing to comply with the order of the arbitral tribunal would be deemed to be "making any other default" or "guilty of any contempt to the arbitral tribunal during the conduct of the proceedings". Thus the remedy of the other party is to apply to the arbitral tribunal for making a representation to the court to meet out such punishment, penalty to the guilty party, as would have been incurred for default in or contempt of the court. Naturally, the arbitral tribunal would make such a representation to the court only upon being satisfied that the party/person is in default or in contempt. Once such a representation is received by this court from the arbitral tribunal, this court would be competent to deal with such party in default or in contempt as if in contempt of order of this court i.e., either under the provisions of the Contempt of Courts Act or under the provisions of Order 39 Rule 2A CPC.”
Though I have been unable to find the dicta of any other court dealing with the aforesaid aspect but mention must be made of the judgments of the Single Judges of the Bombay High Court in i) Anuptech Equipments Private Ltd. v. Ganpati Cooperative Housing Society Ltd. MANU/MH/0144/1999 : AIR 1999 Bombay 219 where in para 16 reference is made to Section 27(5) in the context of holding that the arbitral tribunal discharges the inherent judicial function of the State - it is for this reason only that in a major departure from 1940 Act, power of contempt of arbitral tribunal has been conferred; once a person can be punished for contempt of the arbitral tribunal and which can bring the administration of justice into disrespect or interference with the administration of justice, it shows the legislative intent qua the arbitral tribunal and ii) Maharashtra State Electricity Board v. Datar Switchgear Ltd. MANU/MH/1187/2002 also holding that Section 27(5) reveals the scheme of the legislation; the contempt of the arbitral tribunal has been made subject to imposition of disadvantages, penalties and punishments by order of the court on the representation of the arbitral tribunal. The Gujarat High Court in Saurashtra Chemicals Ltd. v. Hon'ble Mr Justice K. Ramamoorthy (Retd.) MANU/GJ/0329/2005 has also approved the view of Bombay High Court.

14. However, Section 27(5) was not noticed in Sundaram Finance Ltd. or in Sumangal Services Pvt. Ltd. (supra). Perhaps, because it is hedged in the heading/title of Section 27. However, the said heading/title cannot limit or narrow the otherwise wide amplitude of Sub-section (5) thereof. The default, contempt mentioned therein cannot be limited to that only in appearance of witnesses before the arbitral tribunal. To do so, would be to render the words "any other default" and "guilty of any contempt" therein otiose. It may be highlighted that under Section 37(2)(b) of the Act the order of the arbitral tribunal under Section 17 of the Act granting or refusing to grant an interim measure is appeable before the court. The same also disclose the legislative intent of the same being in the exercise of the judicial functions.”
Thus, a party to arbitration may file contempt proceedings by way of an application before the Court as may be done in the case of a suit before the Court.
The Hon'ble Court also considered whether a petition under Section 9 of the Arbitration Act 1996 lies for the same interim measure which has already been granted to the petitioner by the arbitral tribunal on an application being made by the petitioner under Section 17 of the Act. The Hon'ble Court answered in the negative, and held that this petition is not maintainable because the petitioner is remediless in the event of violation by the respondent of the interim order passed by the arbitrator; however if the same order is passed against the respondent by this court also, in exercise of powers under Section 9 of the Act, in the event of breach thereof, the petitioner shall have remedy of contempt of court against the respondent. It is further contended that the Act is a complete code within itself and nowhere provides for the consequences of breach of such an order of the Arbitral Tribunal under Section 17 of the Act; that under Section 36 of the Act it is only the award passed by the arbitral tribunal which is enforceable under the CPC and there is no such parallel provision for the enforcement of the order under Section 17 of the Act.



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