Statutory Incorporation Of Judicial Restraint In Interfering With Matters Relating To Arbitration Agreement Overrides Any Other Law: SC
The Supreme Court has observed that the statutory incorporation of judicial restraint in interfering with matters relating to an arbitration agreement overrides any other law for the time being in force.
The Court had to determine whether the High Court in its supervisory jurisdiction under Article 227 of the Constitution can grant the claimant an opportunity to cross-examine a witness, despite the Arbitral Tribunal rejecting such a prayer.
The Bench of Justice Pamidighantam Sri Narasimha and Justice Manoj Misra observed that “there is yet another statutory obligation, which is imposed on the judicial authorities. That is the statutory incorporation of judicial restraint in interfering with matters governed under Part I of the Act relating to arbitration agreement, composition and jurisdiction of Arbitral Tribunal, coupled with the conduct of the proceedings and making, challenge and enforcement of the award. This objection of restraint on the judicial authority is overriding and notwithstanding anything contained in any other law for the time being in force.”
Senior Advocate Surat Singh represented the Appellant, while Advocate Manindra Dubey appeared for the Respondent.
The Appellant, a software startup company, entered into a Client Service Agreement with the claimant, a capital advisory company. Under the agreement, the claimant was to provide advisory services to the Appellant. Disputes arose between the parties with respect to non-payment of fee for the services rendered by the claimant to the Appellant, prompting the claimant to invoke dispute resolution mechanism through arbitration.
Following the constitution of the Arbitral Tribunal and the commencement of the proceedings, it was alleged that due to various applications for discoveries and interrogatories filed by the claimant, the cross-examination of the Appellant’s witness was cancelled. The said witness’s cross-examination concluded later and was thereafter discharged.
However, the claimant moved an Interlocutory Application before the Tribunal seeking extension of time for cross-examination of the same witness. The Tribunal stated that despite exhausting twice the allotted time for cross-examination, the claimant’s approach reflected lack of preparedness and a non-serious attitude and accordingly rejected the application.
The claimant challenged the Order by filing a petition under Article 227 of the Constitution. The High Court noted that judicial interference in such a matter was not warranted but concluded that in view of exceptional circumstances, the Tribunal can be directed to grant the claimant further opportunity to cross-examine.
The Supreme Court held that the Arbitral Tribunal gave “full opportunity” to all the parties. “On the other hand, the unrestrained cross-examination of RW-1 by the respondent/claimant has already exceeded 12 hours, but the respondent/claimant does not seem to be satisfied with it,” it remarked.
“High Court should have restrained itself from interfering,” the Bench stated. It reiterated that interference under Article 226 or 227 of the Constitution was permissible only if “the order is completely perverse i.e. that the perversity must stare in the face,”
“The High Court has not bothered to indicate under what circumstances the order passed by the Tribunal is perverse. All that the High Court has said is that cross-examination is one of the most valuable and effective means of discovering the truth. This is a normative statement, and nobody disputes the said principle,” the Court observed.
Consequently, the Court held that “we find no justification in the order passed by the High Court in interfering with the directions of the Arbitral Tribunal holding that full and sufficient opportunity to cross-examine RW-1 has already been given and no further extension of time is warranted. For the reasons stated, we allow the appeals and set aside the orders passed by the High Court.”
Accordingly, the Supreme Court allowed the Appeal.
Cause Title: Serosoft Solutions Pvt. Ltd. v. Dexter Capital Advisors Pvt. Ltd. (Neutral Citation: 2025 INSC 26)
Appearance:
Appellant: Senior Advocate Jayant Mehta; Advocates Suhaan Mukerji, Harsh Gursahani, Adarsh Kumar, Sayandeep Pahari, Tanmay Sinha and Jasleen Virk
Respondent: Advocates M.A. Niyazi, Advait Ghosh, Kratika Singhal, Tamjeed Ahmad, Mrinal, F.A. Khan, Anamika Ghai Niyazi, Kirti Bhardwaj, Nehmat Sethi and Arqam Ali; AOR Dawneesh Shaktivats
