HIGH COURT UNDER ARTICLE 226 AND 227 SHOULD BE EXTREMELY CIRCUMSPECT IN INTERFERING WITH ORDER PASSED UNDER ARBITRATION ACT: SUPREME COURT

12-04-2021

The Supreme Court reiterated that a High Court, while exercising jurisdiction under Article 226 & 227 of the Constitution of India, should be extremely circumspect in interfering with the orders passed under the Arbitration and Conciliation Act. The Division Bench, comprising Justices RF Nariman and BR Gavai. observed that such interference can be made only in cases of exceptional rarity or cases which are stated to be patently lacking in inherent jurisdiction. The Bench further observed that in spite of making this clear through decision in Deep Industries Ltd. vs. ONGC & Anr., High Court are still making such interference. In the present case of Navayuga Engineering Company vs. Bangalore Metro Rail Corporation Limited, an Arbitral Award was made in favour of the appellant, and a sum of Rs. 122.76 Crores, amounting to Rs. 56.23 Crores principal and Rs. 66.53 Crores on various heads was ordered to be paid. In section 34 petition filed by the respondent, the execution of the said award was stayed on deposit of 60% of the figure of Rs. 122.76 Crores and security being given for the balance. The writ petition filed by the appellant was dismissed. The writ petition filed by the respondent was allowed in which a deposit of 50% of the principal amount of Rs. 56.23 Crores was ordered. Setting aside the High Court order, the Bench directed that the deposit of 60% and security for the remainder has to be made within four weeks.

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