Case Name: Nagireddy Srinivasa Rao V. Chinnari Suryanarayana and Anr.

Case Citation: Rev.I.A.No.1/2022 in ARRB APPL.No.138 of 2017

Court: In the High Court of Andhra Pradesh at Amaravati

Coram: Hon’ble Sri Justice R. Raghunandan Rao

Date: 30th September 2022

Keywords: Section 11 of the Arbitration and Conciliation Act, 1996; Review Application; Procedural Review.

Overview

The High Court of Andhra Pradesh at Amaravati held that a review petition on merits is not permissible unless a specific provision exists for such a review. However, the court also stated that in case there is a procedural irregularity, the order can be subjected to a procedural review.

Facts

The respondent in the Arbitration Application is the review petitioner, and the respondents in this review petition are the applicants.

On 14th December 2011, the applicants (respondents) and the respondent (review petitioner) entered into a development agreement for the development of a piece of land to construct an apartment complex in the said land in Pata Srikakulam Village, Srikakulam Mandal and District. However, a dispute arose between the parties, and an application was filed before the Court under Section 11 of the Arbitration and Conciliation Act, 1996 (“the Act”) for the appointment of an arbitrator. Accordingly, an Arbitrator was appointed to adjudicate the disputes between the parties after the court allowed the application.

Later, the respondent filed a review application in the High Court of Andhra Pradesh at Amaravati against the order given by the arbitrator. The review petitioner contended that even though he claimed in paragraph 14 of the order that the application was barred by limitation, the learned Judge had not taken the said claim into account, due to which, the right of the review petitioner to object to the arbitration on the ground of limitation was lost.

ISSUE

The main issues, in this case, were as follows –

1. Whether a review petition under Section 11 of the Act against the order was maintainable or not?

2. If there were any provision in the “the act” which provided for a review of an order passed under Section 11 of the Act?

2.1 In case of the absence of such a provision, would the review fall under the category of procedural irregularity or under the category of review on merits?

ANALYSIS

The court, in the judgement, noted several precedents in context to the sub-issues before arriving at the verdict. The Judge first noted the case of SBP & Co. vs, Patel Engineering Ltd. and Anr. (2005 (8) SCC 618), and affirmed that the proceedings under Section 11 of the Act were judicial proceedings, in the light of the fact that court had appointed the arbitrator in this case. The Judge next, moving to the main issue of the case, observed that unlike in the case of Jain Studios Ltd., vs. Shin Satellite Public Co. Ltd. (2006 (5) SCC 501), where the supreme court had the mandate to review the petition under Article 137 of the Constitution of India, the present application before the High Court did not have that benefit. Additionally, the judgement also noted the case of Grindlays Bank Ltd. v. Central Govt. Industrial Tribunal (1980 Supp SCC 420: 1981 SCC (L&S) 309) wherein the Supreme Court highlighted sub-sections (1) and (3) under section 11 of the Act to draw a distinction between procedure and powers of the Tribunal under the Act, and also further elucidated upon the expression “review”. The judge explained “review” in two senses First, either as a procedural review where the order was erroneous on procedural grounds. Secondly, as review on merits where the error was in context the correct application of law. This expression is crucial to the case as it laid down the essentials of categorising a review application under merit or procedural error.

In context to the main issue raised in this case, the court cited the case of Smt. Chandra Dickshit vs. Smart Builders (AIR 2008 All 95), wherein the High Court of Allahabad took the view that the power of review is a creature of the statute and in the absence of such specific power, it would not be appropriate to hold that a review is maintainable, unless the review is a procedural review. Thus, the Judge noted, ‘in the extant case’, that since there is no provision in “the Act” providing for a review of an order passed under Section 11 of the “Act”, the review in question, cannot be held maintainable. Consequently, the only other circumstance under which the order would be subject to review would be on procedural grounds, which was again something in question before the court.

Thus, the court on the question of whether the review sought by the review petitioner fell under the category of procedural irregularity or under the category of review on merits, inferred that the complaint of the review petitioner is on the merits of the order passed by the learned Judge and hence, the review sought by the review petitioner would have to be treated as a review on merits.

Conclusion

The court thus held two major verdicts in this case –

1. Since no provision in the Arbitration and Conciliation Act provides for a review of an order passed under Section 11 of the Act, the order could not be reviewed. Furthermore, it was held that the provisions of the Act do not make out a case for holding that such a power of review was available by implication.

2. The only other way to review the order in case of the absence of a provision was if there was a procedural irregularity. However, in this case, the court inferred that the complaint of the review petitioner is on the merits of the order passed by the learned Judge and that there was no procedural irregularity in terms of non-service of notice to the affected party or passing of an order without hearing the affected party. Thus, it was held that the review could not be allowed on the grounds of procedural irregularity either.

Considering the above holdings, the court rejected the review application. It established that the High Court had the jurisdiction to review the order under section 11 of “the act” only on the grounds of procedural irregularity and not based on merits. The judgement has therefore brought further clarity regarding High Court’s jurisdiction on reviewing Arbitral orders under section 11.

[This case note has been authored by Kaushiki, an Editor at Mapping ADR.]