Jurisdictional Limits of Appellate Court under Section 37 of the Arbitration Act

The case delves into the limits of the appellate court’s jurisdiction under Section 37 of the Arbitration and Conciliation Act. The focus is on the legal analysis conducted by the court, addressing the scope of interference in matters such as ongoing investigations. Stay tuned for a breakdown of the court’s examination in this complex legal scenario.

Facts

• The present appeals are against three interim orders passed by the Division Bench of the High Court of Rajasthan, Jaipur Bench.
• The appeals are directed against orders passed in appeals filed by the respondents under Section 37 of the Arbitration and Conciliation Act, 1996.
• The original order was passed by the Commercial Court No.1, Jaipur-II dismissing an application for interim relief filed by the respondents under Section 9 of the 1996 Act.
• The High Court restrained the appellants from alienating the property known as ‘Hotel Grand Uniara’ during the appeal process.
• High Court directed the appellants to produce original stamp papers for a Supplementary Partnership Deed allegedly antedated.
• FIR No.293/2021 registered against appellants and others based on a complaint regarding the Deed, investigation transferred to CID-CB.
• SIT constituted to investigate FIR No.211/2019 against respondents and FIR No.293/2021 against appellants.
• High Court ordered investigating agency to file a status report and produce case diary for FIR No.293/2021.
• High Court summoned Investigating Officer after perusing status report and case diary.

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Arguments

• Respondents approached the Sole Arbitrator for interim relief under Section 17, making the appeal under Section 37 infructuous.
• High Court’s jurisdiction being questioned for taking over the criminal investigation of FIR No.213/2021.
• Defense by respondents citing efforts put into business development and investment.
• High Court’s direction to transfer FIR No.293/2021 to SOG, Jaipur for fair investigation.
• Appellants arguing that the orders exceed the scope of interference under Section 37 of the 1996 Act.

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Analysis

• The High Court exceeded its jurisdiction under Section 37 of the 1996 Act.
• The Appellate Court is conducting an excessive inquiry into the investigation related to FIR No.293/2021.
• Status reports, case diaries, and the Investigating Officer were summoned by the Appellate Court.
• The investigation was transferred to the Special Operation Group, Jaipur.
• The scope of the appeal should have been limited to examining the Commercial Court’s order on the application under Section 9 of the 1996 Act.
• The respondents have diverted the appeal proceedings onto a different course.
• The Appellate Court should not have passed the impugned orders in proceedings related to an order under Section 9 of the 1996 Act
• If the respondents have issues with the investigation of the FIR, they should seek recourse in the criminal court
• Proceedings under Section 37 of the 1996 Act should not be misused for other purposes

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Decision

• The impugned orders dated 24 February, 2022, 11 March, 2022 and 29 March, 2022 are quashed and set aside.
• High Court to decide Appeal No. 431/2021 by respondents as per law and Section 37 of the 1996 Act.
• Interim order dated 26 February, 2021, restraining appellants from alienating the subject property is not overturned.
• The appeals are allowed and disposed of, with parties to bear their own costs.

Case Title: DALPAT SINGH NARUKA Vs. KARUNA BANSAL (2022 INSC 458)

Case Number: C.A. No.-003651-003653 / 2022

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