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ARBITRATORS' ORDEAL AS (UN)NECESSARY PARTIES IN FRIVOLOUS WRITS

Author 1: Rajan Thakkar, Student at Gujarat National Law University, Gandhinagar.

Author 2: Manasvi Verma, Student at Gujarat National Law University, Gandhinagar.

 

Keywords, Necessary Parties, Frivolous Writs, Arraying of Arbitrators


Abstract


This article explores the contentious practice of impleading arbitrators as necessary parties in frivolous writs, a subject with limited judicial clarity. Drawing from key cases, including Sh Jogendrasinhji Vijaysinghji v. State of Gujarat and Ors, it highlights the principle that adjudicators without a personal stake (lis) should not be made necessary parties to frivolous writs. The quasi-judicial nature of arbitral tribunals and their alignment with this principle is examined, alongside notable exceptions that allow for arbitrators to be necessary parties in certain writs. The persistent misuse of this practice necessitates legislative action, judicial vigilance, and greater public awareness to uphold arbitration's efficacy and integrity.


Introduction

 

The scope of this article is to examine the practice of impleadment of arbitrators as necessary parties to frivolous writs. It is an understood position that impleadment of lower/subordinated authorities as necessary parties to writs is a deprecated practice but there is no clear-cut answer with regard to impleadment of arbitrators to frivolous writs. In this context, we will be analyzing some of the landmark judgements passed by the hon’ble Supreme Court and hon’ble High Courts to explore the limited circumstances in which arbitrators can be made necessary parties to writs. 

 

Deprecated practice of impleadment of judicial and quasi-judicial authorities in writs.

 

In the case of Sh Jogendrasinhji Vijaysinghji v. State of Gujarat and Ors[1], the Apex Court deprecated the practice of making judicial and quasi-judicial officers necessary parties to writ petitions. The Apex court observed that, if need be, the records can be called upon from the body whose decision      has been made subject to the said writ. Solely for such reasons, officers cannot be made necessary parties to the writs since the same leads to inefficiency; for the lower or subordinate bodies as well as for the high courts.

 

Furthermore, the court observed that if a body only adjudicates the dispute and has nothing to do with the lis, that party cannot be made a necessary party to the writ. Here, “having to do nothing with the lis” means that the adjudicating authority does not have a personal or direct interest in the dispute per se except just adjudicating the dispute.

 

The Apex Court took examples of the tribunals constituted under the Administrative Tribunals Act, 1985[2], the Custom, Excise & Service Tax Appellate Tribunal, the Income Tax Appellate Tribunals, the Sales Tax Tribunal and such others to elaborate upon this position. For instance, an income tax commissioner adjudicates, he has a direct interest in the lis i.e.; a direct interest of public duty and hence, the tax commissioner has to be made a necessary party to the writ so that he can defend his order. However, the same cannot be the case with a tribunal like NCLT or NCLAT.

 

In essence, the Apex Court in this landmark case had observed that if the authority whose order is being challenged by the way of the writ is entitled to defend his order then such a writ is not maintainable. However, if the authority has no interest in the order so being made subject to the writ the such an authority need not be made a party to a writ.

 

Arbitral Tribunal; a quasi-judicial body having nothing to do with the lis.

 

At this juncture, it becomes important to analyze whether an arbitral tribunal can be considered as a quasi-judicial body which can claim protection of the above-mentioned position.

 

In cases where a tribunal is established by a statute, it differs from an arbitral tribunal as a statutory tribunal is specifically mandated by law and operates within the confines of that particular law. The appointment of members and procedural aspects of its proceedings are determined by the statute or regulations derived from it. Additionally, statutory tribunals typically handle specific types of legal disputes. Conversely, an arbitration is a method of resolving disputes selected by the involved parties themselves. They have the autonomy, as outlined in their arbitration agreement, to determine the appointment process for tribunal members and the procedural framework for proceedings, within the limits set by relevant legislation i.e., the Arbitration and Conciliation Act 1996.

 

In the case of Srei Infrastructure Finance Ltd. v. Tuff Drilling Pvt. Ltd.[3] the Supreme Court had observed that arbitral tribunals, just like the statutory tribunals, decide upon the lis between the parties and follow principles of natural justice. Furthermore, the functions as well as the powers of the tribunals are regulated by the Arbitration and Conciliation Act. Even with regards to the procedural dynamics, both statutory tribunals and arbitral tribunals share similarities.

 

Furthermore, it cannot be said that an arbitral tribunal has any personal or direct interest in lis while merely adjudicating the dispute before it since the role of an arbitral tribunal is to act as a neutral third party and act according to the constraints of the statute.

 

Hence, it is clear that the position laid down in the Sh Jogendrasinhji case with respect to the quasi-judicial bodies having nothing to do with the lis will be applicable to       arbitral tribunals as well.

 

Drawing from this analogy, the Indore Bench of the Madhya Pradesh High Court, in the case of Sankat Pratap Singh v. Bhopal Motors[4] observed that it was unnecessary to make an arbitrator a necessary party when the order was challenged before the trial court under Section 34 of the Arbitration and Conciliation Act.[5] There is no reason why this understanding cannot be extended to writ petitions. Rather, in the same case, the High Court of Madhya Pradesh while relying on the case of Savitri Devi v. District Judge, Gorakhpur[6] observed that since the quasi-judicial authorities should not be unnecessarily made parties to writs and SLPs, the same analogy would apply to a quasi-judicial body like an arbitrator. 

 

However, this protection is not absolute and, in some cases, the arbitrator can indeed be made a necessary party to a writ.


Understanding the exceptions.

 

In 2019, a full bench of the Nagpur Bench of the Bombay High Court in the case of Motilal s/o Khamdeo Rokde & Ors v. Balkrushna Baliram Lokhande & Ors.[7] while assessing the position in Sh Jogendrasinhji further clarified on the position of whether the authorities passing the challenged orders are required to be made parties to the writ petitions under Article 226 or Article 227 of the Constitution.

 

While reiterating the position of Sh Jogendrasinhji     , the High Court clarified upon certain exceptions to this general rule. First, even though the lower/subordinate court/authority cannot be a necessary party, it will still be a proper party. Second, if the party has a direct and personal interest in lis then that party will be a necessary party (in line with the Sh Jogendrasinhji judgement). Third, when the concerned order has been alleged to be on the basis of factors like bias, mala fide, etc. (it is obvious that allegations of bias, mala fide, etc. cannot be defended by the concerned subordinate/lower authority without being made a necessary party to the writ). The arbitral tribunal or a sole arbitrator being a quasi-judicial authority will therefore enjoy the protection subject to the above exceptions.

 

Conclusion & Way forward

 

Even after the practice of impleading the Judges from the subordinate/lower courts being deprecated time and again by the Apex Court as well as by several High Courts, the practice still subsists. 

 

One may blame registry errors for letting arbitrators being impleaded as necessary parties but registries are not to be blamed because the petitioners who seek to waste constitutional courts’ time despite having filed a statutory appeal under the Arbitration and Concil     iation A     ct invariably raise baseless allegations of mala fide, bias, etc against the arbitrators. This falls within the third exception and hence, registries are bound to allow impleadment of the arbitrators as necessary parties in light of such an exception.

 

It seems then that      the only recourse available is for the legislature to step up to outline the scenarios in which the arbitrators can be made necessary parties to writs, while at the same time keeping in mind the constitutional authority of the High Court. In the meantime, firstly, our Hon’ble Judges should actively dismiss attempts at baseless allegations against arbitrators, and secondly, considering that not every writ before the High Courts is a sinister attempt at delaying the resolution process, awareness has to be spread with regards to the position that arbitrators need not be made necessary parties for the maintainability of such a writ.

 

In summary, the persistent inclusion of arbitrators in frivolous writs hampers the swift resolution that arbitration offers. Despite judicial disapproval, this practice endures, fuelled by petitioners exploiting loopholes. Legislative clarity, judicial vigilance, and public awareness are essential to curb this inefficiency and uphold the integrity of arbitration.


[1] Sh Jogendrasinhji Vijaysinghji v. State of Gujarat and Ors, SC Civil Appeal No. 2374/2015.

[2] The Administrative Tribunals Act, 1985, No. 13, Acts of Parliament, 1949 (India).

[3] Srei Infrastructure Finance Ltd. v. Tuff Drilling Pvt. Ltd. (2018) 11 SCC 470.

[4] Sankat Pratap Singh v. Bhopal Motors (2012) 111 AIC 749.

[5] The Arbitration and Conciliation Act, 1996, § 34, No. 26, Act of Parliament, 2006.

[6] Savitri Devi v. District Judge, Gorakhpur (1999) 2 SCC 577.

[7] Motilal s/o Khamdeo Rokde & Ors v. Balkrushna Baliram Lokhande & Ors. BOM HC Letters Patent Appeal No 177 of 2012).

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