No bar for Arbitrator to correct absolutely apparent error of procedure which goes to root of matter: Punjab and Haryana High Court

Read Order: M/s. Globus Projects Pvt. Ltd. v. Punjab State Power Corporation Ltd. (PSPCL) and Another

Monika Rahar

Chandigarh, March 15, 2022: The Punjab and Haryana High Court has observed that there is no bar for the Arbitrator to correct an error of procedure that is absolutely apparent and which goes to the root of the matter. 

In this matter, a dispute arose between the petitioner, a real estate developer and the Punjab State Power Corporation Ltd. (PSPCL). The matter was referred for arbitration. The petitioner was aggrieved by the order dated October 1, 2021, and a consequential order dated December 6, 2021, passed by the sole Arbitrator wherein the petitioner was directed to file its claim petition while observing that it was erroneously observed by the Arbitrator in its earlier order dated August 10, 2021, and September 10, 2021, that it was the PSPCL which was to file the claim petition before the Arbitrator. 

It was observed by the Arbitrator that it was the petitioner who was the claimant, therefore, the claim petition was to be filed by it. Aggrieved therefrom, the present petitions were filed in respect of three different projects.  

It was the petitioner’s case that it was not open for the Arbitrator to review its earlier orders passed in the months of August and September of 2021 and direct the petitioner to file a claim petition. It was urged that review is a creature of statute and unless and until it is specifically provided, it cannot be resorted to. In the present case, it was submitted that there was no provision for review of an order passed by an Arbitrator. Therefore, the impugned orders were per se illegal and liable to be set aside on this ground itself, argued the Counsel. 

It was contended that the claim if any was to be raised by PSPCL, therefore, Arbitrator rightly asked PSPCL to file its claim. Thus, the Counsel prayed for setting aside the orders passed by the sole Arbitrator in all the revision petitions. 

The counsel for PSPCL, while refuting the petitioner’s arguments, submitted that these petitions challenging the orders passed by the Arbitrator, in any case, were not subject to revisional jurisdiction under Article 227 of the Constitution of India. It was further submitted that the sole object of the petitioner was to delay the proceedings. 

Regarding the position of respondent-PSPCL, the Counsel argued that there was no dispute regarding the demand which was raised by it in terms of the applicable Regulations/Provisions and the franchisee agreement and that it was the petitioner who raised a dispute regarding the same, thus, the Counsel submitted that it did not have any objection in case the arbitration proceedings were closed. It was also submitted that PSPCL would proceed in accordance with the applicable Regulations & law in respect to the demand raised by it from the petitioner. 

It was also submitted that there was no question of the Arbitrator being handicapped in not being able to correct the error of procedure, which occurred due to an inadvertent mistake partly due to the fault of the respondent-PSPCL as well. Lastly, the counsel submitted that there was a bonafide lapse on the part of respondent-PSPCL, and the same was immediately rectified when it came to notice and the petitioner was not entitled to any benefit thereof in such a situation. 

The Court observed at the outset that in all the three separate projects/franchisee agreements, three separate proceedings were carried out, out of which the present three revision petitions arose. On the issue of maintainability of these revision petitions, the Court referred to judgment of the Supreme Court in Bhaven Construction through Authorised signatory Premjibhai K. Shah Vs. Executive Engineer Sardar Sarovar Narmada Nigam Ltd. and another2022(1) SCC 75, wherein, while observing that a legislative enactment cannot curtail a constitutional right the Court held that it is only in exceptional circumstances that interference should be there in the arbitral process.

In this light, the Court looked at the question of whether a case of exceptional circumstance or bad faith was made out before exercising jurisdiction under Article 227 of the Constitution of India. In the present case, the Court noted that demand for deposit of Voltage Surcharge and single point rebate was raised by PSPCL purportedly in terms of the applicable Regulations/Instructions/franchisee agreement/relevant provisions. Further, it was noticed that the said demand was subsequently revised and the demand raised by respondent-PSPCL was resisted by the petitioner, who approached PSERC challenging the same, raising various grounds in its petition under Regulation 45, 46 and 47 of the Supply Code, 2014 and Regulation 6 of Punjab State Electricity Regulatory Commission (Single Point Supply to Cooperative Group Housing Societies/Employers) Regulations and other relevant provisions. 

Further, the Court opined that the Petitioner duly submitted to arbitration and tendered its documents of ‘No Objection’ for appointment of the sole Arbitrator.  Further, negating the argument of the respondent’s counsel, the Court opined that there was no bar for the Arbitrator to correct an error of procedure that was absolutely apparent and which went to the root of the matter. At this stage, the Court referred to the decision of the Supreme Court in SREI Infrastructure Finance Ltd. Vs. TUFF Drilling Pvt. Ltd., (2018) 11 SCC 470, wherein it was held that an Arbitral Tribunal even after termination of proceedings under Section 25(a) of the Arbitration and Conciliation Act, 1996, on sufficient cause being shown can recall the order and recommence proceedings.

Therefore, keeping in view the facts and circumstances, the Court opined that it was crystal clear that the Arbitrator was entitled to rectify the error, which crept in the orders of August and September 2021. The Court also opined that the petitioner’s counsel was unable to point out any ground whatsoever to indicate that there was an exceptional circumstance, which called for interference by this Court in the exercise of jurisdiction under Article 227 of the Constitution of India. 

Accordingly, all three revision petitions were dismissed.