10 June 2024


High Court of Bombay

Godrej Properties Ltd vs Goldbricks Infrastructure Pvt. Ltd.




Arbitration tribunal cannot pass an ex-parte order on mere filing of an interim application as the Arbitration Act mandates sufficient advance notice for any hearing

Present is an appeal filed under Section 37 of the Arbitration and Conciliation Act,1996 (Arbitration Act) assailing an ex-parte order passed by the learned Sole Arbitrator on a Section 17 application filed by the Respondent. By the impugned order, the learned Sole Arbitrator has granted ex-parte ad-interim reliefs in terms of prayer clauses (a), (b), (c) and (d) of the respondent's application.

It is submitted that, when the parties were already before the arbitral tribunal, it is a legitimate expectation of the parties and certainly of the Appellant in the present facts, that the arbitral tribunal would hear the parties, before any order on any fresh Section 17 application was passed by the arbitral tribunal. It is submitted that a perusal of the respondent's averments in the second Section 17 application would clearly demonstrate that it was never the prayer of the respondent to seek any ex-parte ad-interim order.

The issue which arises for consideration is as to whether in the facts of the case, was it appropriate for the learned Arbitrator to pass an ex-parte ad-interim order on the Respondent's Section 17 application.

The Act postulates that in conduct of the arbitral proceedings the fundamental requirement would be that the parties are not only treated with equality but each party 'shall be' given a full opportunity to present his case. This would be more imperative, when the parties are already before the arbitral tribunal. Sub-section (2) of Section 19 of Arbitration Act recognizes the role of the parties, when it provides that the parties are free to agree on the procedure to be followed by the tribunal in conducting its proceedings, which places an arbitral tribunal in a different position from that of a Court, when it confers such choice on the parties. The crucial provision however, is of Section 24.

Sub-Section (2) of Section 24 of Arbitration Act mandates that, the parties 'shall be' given sufficient advance notice of 'any hearing'. It is incumbent upon the arbitral tribunal to give sufficient notice of any hearing to the parties before it.

Even if the arbitral tribunal is recognized to have the same power for making orders as that of the Court, for the purposes of and in relation to any proceedings before it, due meaning to the provisions of sub-section (2) of Section 24 read with Section 18 of Arbitration Act would be required to be given, when it prescribes that a party shall be given sufficient advance notice of any hearing and further qualified with an obligation of the tribunal to treat all the parties equally and that each party shall be given a full opportunity to present its case, which is required to be recognized to be applicable at all stages of the proceedings before the arbitral tribunal.

It appears that even the Respondent was not heard before passing the ex parte ad-interim orders and only on perusal of the averments in the application, such an order has been passed by the arbitral tribunal. The impugned order is set aside. The Respondent is at liberty to move the arbitral tribunal on its second Section 17 application, with notice to the Appellant, even before the returnable date assigned by the arbitral tribunal. Appeal disposed off.

Tags : Ex-Parte order Legality

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