Arbitral Tribunal Cannot Exercise Appellate Jurisdiction Over Order Passed Under Section 9: SC

New Delhi, Sep 30 (KNN) The Supreme Court has held that a High Court cannot transfer an appeal under Section 37 of the Arbitration and Conciliation Act against a Section 9 interim order to an Arbitral Tribunal for treatment as an application under Section 17, even with the parties’ consent.

A bench of Justices Aravind Kumar and Prasanna B Varale set aside a Bombay High Court direction remitting such proceedings to an Arbitral Tribunal, observing that the powers under Sections 9, 17 and 37 arise from distinct sources of jurisdiction.

The bench observed that an arbitral tribunal exercising powers under Section 17 does not exercise appellate jurisdiction over an order passed by a competent court under Section 9.

Dispute Over Contract Termination

The dispute arose from a Union of India contract awarded to Hariom Projects for providing Administrative and Training Infrastructure (Phase-I) at NDA Khadakwasla.

Following disputes over adjustments, payments and design issues, Hariom Projects invoked arbitration and sought interim protection under Section 9 before the District Judge, Pune, including an injunction against termination of the contract. After the application was dismissed, the company appealed under Section 37 before the Bombay High Court.

During the appeal, the Union terminated the work order. The High Court stayed the termination and appointed a Sole Arbitrator with the parties’ consent, directing that the pending proceedings be treated as an application under Section 17.

The Union challenged this direction before the Supreme Court.

Statutory Powers Cannot Be Interchanged

The Supreme Court accepted the Union’s contention that an Arbitral Tribunal, constituted under the parties’ arbitration agreement, cannot exercise appellate or supervisory powers statutorily vested in courts, even with consent.

It held that treating a Section 37 appeal as a Section 17 application would impermissibly change the nature and source of the jurisdiction involved.

The Court set aside the High Court’s order only to the extent that it remitted the Section 37 proceedings to the Tribunal for treatment as a Section 17 application.

The ruling clarifies the distinct roles of courts and arbitral tribunals in interim-relief proceedings, including in commercial contract disputes involving MSMEs.

(KNN Bureau)