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Alka Chandewar v. Shamshul Ishrar Khan

Civil Appeal · 2017 INSC 593Decided 6 Jul 2017
Civil Appeal No. 8720 of 2017
Justice Rohinton Fali Nariman · Justice Sanjay Kishan Kaul

Background

A sole arbitrator had passed an interim order restraining the respondent from disposing of certain flats without the tribunal's leave, but the respondent allegedly transferred five flats in breach of that order. The arbitrator found the breach proved and referred the matter to the Bombay High Court as a representation for contempt under Section 27(5) of the Arbitration and Conciliation Act, 1996. The Bombay High Court read Section 27(5) narrowly, holding it applied only to contempt relating to assistance in taking evidence, not to breach of other interim orders, and dismissed the contempt reference as not maintainable and time-barred.

Decision Breakdown

The Supreme Court held that the Bombay High Court's restrictive reading of Section 27(5) was wrong: the provision was intended to give real teeth to an arbitral tribunal's orders by allowing the tribunal to make a representation to the Court for contempt of any default or misconduct during the proceedings, not merely non-cooperation in evidence-taking. The Court also noted that a subsequent 2015 amendment inserting Section 17(2), which makes an arbitral tribunal's interim orders directly enforceable as if they were court orders, was enacted precisely to fill this gap, confirming the broader legislative intent rather than undermining the appellant's reading. It therefore allowed the appeal, set aside the Bombay High Court's judgment on the legal question of maintainability, and remanded the case to the High Court to decide, on the facts, whether the respondent had actually committed contempt, leaving it open to the respondent to argue on remand that no contempt occurred.

Lesson Learnt

A party who disobeys an arbitral tribunal's interim order (such as a freeze on disposing of property) can be proceeded against for contempt under the Arbitration Act: the remedy is not limited to non-cooperation with evidence-taking, and courts must give real enforcement teeth to arbitral interim orders rather than reading the law narrowly to defeat them.

Official source (sci.gov.in)View Judgment (PDF)

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