Arbitration and Conciliation Act, 1996 : Violation of Arbitral Tribunal's Order and Its Consequences and Procedure

Arbitration and Conciliation Act, 1996 : Violation of Arbitral Tribunal's Order and Its Consequences and Procedure

S.17(2) of Arbitration and Conciliation Act, 1996 treats certain Orders of Arbitral Tribunal to be "deemed to be an Order of Court". S.17 is applied "during the arbitral proceedings". In an important case of Alka Chandewar v. Shamshul Ishrar Khan [2017] GCtR 5591 (SC), it was held that S.27 (5) of Arbitration and Conciliation Act, 1996 specifically states that persons guilty of any contempt to the Arbitral Tribunal during the conduct of the Arbitral proceedings is within its ken. This case arose when flats were transferred despite an Order of Arbitral Tribunal to the contrary. Here, Apex Court found the argument of a particular Senior Advocate  without "any substance."

It was noted that "if Section 27(5) is read literally, there is no difficulty in accepting the plea, because persons failing to attend in accordance with the court process fall under a separate category from “any other default”. Further, the Section is not confined to a person being guilty of contempt only when failing to attend in accordance with such process. The aforesaid language is, in fact, in consonance with the Chapter heading of Chapter V, “Conduct of arbitral proceedings”. Further, it is well settled that a marginal note can be used as an internal aid to interpretation of statutes only in order to show what is the general drift of the section. It may also be resorted to when the plain meaning of the section is not clear."

Also, in consonance with the modern rule of interpretation of statutes, the entire object of providing that a party may approach the Arbitral Tribunal instead of the Court for interim reliefs would be stultified if interim orders passed by such Tribunal are toothless. It is to give teeth to such orders that an express provision is made in Section 27(5) of the Arbitration and Conciliation Act. 

It was explained that "sub-section(2) to Section 17 of A&C Act, 1996 was added by the Amendment Act 2015, so that the cumbersome procedure of an Arbitral Tribunal having to apply every time to the High Court for contempt of its orders would no onger be necessary. Such orders would now be deemed to be orders of the Court for all purposes and would be enforced under the Code of Civil Procedure, 1908 in the same manner as if they were orders of the Court."