The Supreme Court has held that an Arbitral Tribunal exercising powers under Section 17 of the Arbitration and Conciliation Act 1996 does not exercise appellate jurisdiction over an order passed by a competent Court under Section 9 of the Act.

The Apex Court was considering an appeal filed against an order remitting the proceedings under Section 37 to the Arbitral Tribunal and directing that they be treated as an application under Section 17.

The Division Bench of Justice Aravind Kumar and Justice Prasanna B. Varale held, “The appellate jurisdiction under Section 37 is vested exclusively in the “Court” as contemplated under Section 2(1)(e) of the Act. An Arbitral Tribunal exercising powers under Section 17 does not exercise appellate jurisdiction over an order passed by a competent Court under Section 9. Consequently, the effect of the impugned direction would be to require the Arbitral Tribunal to examine the subject matter of a statutory appeal under Section 37 by treating the appellate proceedings as an application under Section 17. The nature and source of the powers exercised by an appellate Court under Section 37 are distinct from the powers conferred upon an Arbitral Tribunal under Section 17 and same cannot be interchanged merely by transmitting or remitting the appellate proceedings to the Tribunal.”

Additional Solicitor General K. Ravindra Kumar represented the Appellant while Senior Advocate Aditya Sondhi represented the Respondent.

Factual Background

The Respondent Company was awarded a contract by the Appellant for the provision of Administrative and Training Infrastructure (Phase-I) at NDA Khadakwasla. During the execution of the contract, disputes arose between the parties concerning adjustments, payment calculations and design issues. The Respondent filed a Writ Petition seeking a direction to the Appellant to constitute a Dispute Resolution Board (DRB), which came to be allowed. The DRB so constituted rejected all the claims of the Respondent.

The Respondent invoked the Arbitration Clause and sought appointment of a Sole Arbitrator. The Appellants issued a Show Cause Notice to the Respondent, alleging deficiencies in the performance of its contractual obligations. The Respondent filed an application under Section 9 before the District Judge seeking an injunction restraining the Appellants from cancelling, terminating or repudiating the contract, along with other interim reliefs. The Appellants filed their reply to the said application, which came to be dismissed.

The Respondent then filed an Arbitration Appeal under Section 37 and also filed a Commercial Arbitration Petition under Section 11 seeking appointment of an Arbitrator. The High Court, vide the impugned order, while appointing an Arbitrator, held that the proceedings before the Court should be remitted to the Arbitral Tribunal to be treated as an application under Section 17. Challenging the above direction, the Union of India approached the Apex Court.

Reasoning

The Bench, at the outset, noted that the appeal under Section 37 of the Arbitration and Conciliation Act, 1996 arose from the order passed under Section 9 rejecting the Respondent-Claimant’s application for interim reliefs, which included the prayer for restraining the Appellants from cancelling, terminating or repudiating the contract/work order. During the pendency of the appeal under Section 37, the Appellants terminated the contract/work order. The effect and operation of the said termination were thereafter stayed by the High Court and in the connected proceedings under Section 11, the Sole Arbitrator was appointed by consent of the parties.

The Bench was of the view that the nature and source of the powers exercised by an appellate Court under Section 37 are distinct from the powers conferred upon an Arbitral Tribunal under Section 17 and the same cannot be interchanged merely by transmitting or remitting the appellate proceedings to the Tribunal.

According to the Bench, upon constitution of the Arbitral Tribunal, the High Court could have granted liberty to the Respondent-Claimant to independently approach the Arbitral Tribunal under Section 17 of the Act for some interim measures. Considering the prayer sought under the application filed under Section 9 to restrain the Appellants from terminating the contract/work order had got spent itself, by virtue of termination of work order/ contract, the Bench clarified, “Any further or consequential interim protection thereafter would necessarily have to be considered in the light of the subsequent events and the relief specifically sought by the Respondent-Claimant.”

The Bench thus set aside the impugned order to the extent it remitted the proceedings under Section 37 to the Arbitral Tribunal and directed that they be treated as an application under Section 17 of the Act.

The Bench thus disposed of the appeal by directing, “Therefore, at this stage, we are of the opinion that all other issues relating to the disputes between the parties shall be adjudicated by the Tribunal, and both the parties would be at liberty to raise all contentions as permissible in law. We have passed this order only to clarify the position of law.”

Cause Title: Union of India & Others v. Hariom Projects Pvt. Ltd. (Neutral Citation: 2026 INSC 1044)

Appearance

Appellant: Additional Solicitor General K. Ravindra Kumar, Advocates Alakh Alok Srivastava, AOR Shreekant Neelappa Terdal, Advocates Ritik Rathore, Devraj Bhattacharjee, Aditya Kumar, Harmeet Rupesh, Ishan Kapoor

Respondent: Senior Advocate Aditya Sondhi, Saurabh Seth, AOR Sukrit Seth, Advocates Sumer Dev Seth, Shyam Dewani, Sahil Dewani, Saket Bansal, Devika Dhawan, Sukhvir Singh

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