Overview

In this case, the Supreme Court examined the scope of interference of the High Court in arbitration proceedings under Article 227 of the Constitution of India. The dispute arose from a revision petition which was entertained by the Gauhati High Court challenging the order of the Arbitral Tribunal which was passed under Section 16 of the Arbitration and Conciliation Act 1996.

The principal issue before the Court was whether supervisory jurisdiction could be exercised by the High Court against an interlocutory order of the Tribunal, even though the statutory scheme provided a separate remedy after the arbitral award.

Facts of the Case

The dispute arose from a partnership firm, M/s Boloma Tea Company, which was governed by a partnership deed containing an arbitration clause. The appellant earlier filed a civil suit for rendition of accounts and alleged that there were certain financial irregularities as to the partnership and certain related companies.

Initially, an application under Section 8 of the Arbitration and Conciliation Act was rejected because some of the defendants were not signatories to the arbitration agreement. This decision was upheld by the High Court. 

However, during a subsequent appeal before the Supreme Court, the parties consented to refer their disputes to arbitration, and a sole arbitrator was appointed. 

Respondent Nos. 1 to 3 challenged the jurisdiction of the Tribunal by requesting the deletion of their names from the proceedings. Their applications were treated as objections under Section 16 of the act and were rejected by the Tribunal. It held that the Supreme Court’s referral order could not be reopened. 

The respondents then approached the Gauhati High Court under Article 227. The arbitration notices were stayed by the High Court which held that the revision petition was maintainable. These orders were challenged by the appellant before the Supreme Court.

Legal Issues

1. Whether the High Court could entertain a petition under Article 227 against an interlocutory order passed under Section 16 of the Arbitration and Conciliation Act.
2. Whether supervisory jurisdiction under Article 227 could be exercised in the absence of a patent lack of inherent jurisdiction.
3. Whether the Arbitral Tribunal was competent enough to determine the status of non-signatories under Section 16 of the Act.
4. Whether Respondents Nos. 1-3, who had accepted the earlier referral order, could subsequently challenge the jurisdiction of the Tribunal.

Decision

The Supreme Court allowed the appeals, set aside the orders of the Gauhati High Court and dismissed the revision petition.

It was held that the purpose of the Arbitration and Conciliation Act is minimising judicial intervention. Challenges to orders under Section 16 must usually be raised after the final award has been passed through proceedings under Section 34. 

The jurisdiction under Article 227 can be exercised only in exceptional circumstances involving a patent lack of inherent jurisdiction, which was absent here.

It was further held by the Court that the Tribunal was competent to examine the issues relating to non-signatories under the principle of kompetenz-kompetenz, which was explained in Cox and Kings Ltd. v. SAP India Private Ltd.

It was also noted by the Court that Respondent Nos. 1-3 never opposed the referral order before the Supreme Court. They could not reopen the same issue through fresh proceedings. The Tribunal was directed to continue the arbitration in an independent manner and conclude it expeditiously. No order as to costs was made.

Case Reference :- Manash Kamal Bezboruah Vs. M/S Bokahola Tea Company Pvt. Ltd. & Ors. Civil Appeal Nos. OF 2026 (Arising out of SLP (Civil) Nos. 7233-7234 of 2026) (DB, Before K.V. Viswanathan and Vijay Bishnoi, JJ.)