The Supreme Court has reiterated that the Arbitration and Conciliation Act, 1996 is a self-contained code intended to ensure minimal judicial interference during arbitral proceedings. The Court held that although the constitutional jurisdiction of High Courts under Article 227 cannot be ousted, such jurisdiction must be exercised with extreme restraint. Consequently, an order of an arbitral tribunal rejecting a jurisdictional objection under Section 16 cannot ordinarily be challenged under Article 227, unless the tribunal’s order suffers from a patent lack of inherent jurisdiction that is apparent on the face of the record.
Background
The dispute originated from a partnership firm constituted under a partnership deed containing an arbitration clause. The Appellant instituted a civil suit seeking rendition of accounts and alleging mismanagement by various Respondents, including several companies that were not signatories to the partnership deed. During the pendency of the suit, one of the Respondent filed an application under Section 8 of the Arbitration and Conciliation Act, 1996 seeking reference of the disputes to arbitration. The said application was initially rejected by the Trial Court, and the rejection was affirmed by the Gauhati High Court. Aggrieved by the same, the Respondent No. 7 filed an appeal before the Supreme Court, during the pendency of which, all contesting parties consented to resolve the disputes through arbitration. The Supreme Court accordingly appointed a sole arbitrator. The same was not contested by the Respondent Nos. 1 to 3, even though they were parties to the Supreme Court proceedings.
During the arbitral proceedings, Respondent Nos. 1 to 3, who were non-signatories to the partnership deed, sought deletion of their names from the arbitration proceedings by filing applications. Treating the applications as objections under Section 16 of the Act, the Tribunal rejected them, observing that the Supreme Court’s referral order left no scope for reconsidering the maintainability of proceedings against the non-signatories.
Aggrieved thereby, the non-signatories invoked the supervisory jurisdiction of the Gauhati High Court under Article 227 of the Constitution of India. The High Court entertained the revision petition, stayed the arbitral notices issued to the non-signatories and held that the petition was maintainable on the ground that the Tribunal’s order suffered from patent lack of inherent jurisdiction.
The Appellant challenged the High Court’s order before the Supreme Court in the present proceedings.
Appellant’s Contentions
The Appellant contended that Respondent Nos. 1 to 3 were veritable parties to the dispute in view of the interrelationship between the entities, the commonality of the subject matter, and the manner in which the companies were incorporated. Relying upon the Constitution Bench decision in Cox and Kings Ltd. v. SAP India Pvt. Ltd., it was argued that non-signatories could be referred to arbitration where there exist a direct relationship, composite transactions, and conduct evidencing an intention to be bound by the arbitration agreement.
The Appellant further submitted that Respondent Nos. 1 to 3 were estopped from challenging the arbitral reference, as they had been served in the earlier proceedings before the Supreme Court but neither appeared nor objected to the consent order referring the disputes to arbitration. It was argued that the High Court’s interference under Article 227 with the Tribunal’s rejection of the jurisdictional objections defeated the statutory scheme of the Arbitration and Conciliation Act, 1996, under which rejection of a Section 16 application is challengeable only under Section 34 after the final award.
Lastly, it was contended that the High Court mechanically entertained the revision petition without recording any finding of patent lack of inherent jurisdiction or perversity in the Tribunal’s order. Since the Tribunal had already framed jurisdictional issues for adjudication, no interference under Article 227 was warranted at the interlocutory stage.
Respondents’ Contentions
Respondent Nos. 1 to 3 contended that the Appellant had himself consistently maintained in the earlier civil proceedings that Respondent Nos. 1 to 3 were not parties to the arbitration agreement. Having successfully opposed the reference to arbitration on that basis before the Trial Court and the High Court, the Appellant could not now approbate and reprobate by contending that the Respondent Nos. 1 to 3were veritable parties to the arbitration agreement.
The Respondents further submitted that they did not satisfy the test of a “veritable party” laid down by the Constitution Bench in Cox and Kings Ltd. v. SAP India Pvt. Ltd., nor had they demonstrated any intention to be bound by the arbitration agreement. It was argued that the Supreme Court’s consent order dated 21 November 2024 bound only those parties who had consented to arbitration, and Respondent No. 7 had neither the authority nor any board resolution to consent on behalf of Respondent Nos. 1 to 3.
Lastly, the Respondents contended that the Arbitral Tribunal had erroneously assumed jurisdiction over non-signatories solely on account of their non-appearance before the Supreme Court. According to them, the Tribunal’s order suffered from a patent lack of inherent jurisdiction, thereby justifying the High Court’s exercise of supervisory jurisdiction under Article 227.
Arbitration Act is a Self-Contained Code
The Supreme Court began by reiterating that the Arbitration and Conciliation Act is a self-contained legislative framework designed to minimise judicial intervention. Referring to Section 5 of the Act, the Court observed that the legislative policy underlying the Act is to permit court intervention only in circumstances expressly contemplated by the statute. This policy is reinforced by Section 16, which embodies the doctrine of kompetenz-kompetenz by empowering arbitral tribunals to determine their own jurisdiction in the first instance.
Accordingly, jurisdictional objections ordinarily form part of the arbitral process itself and are intended to be examined by the Tribunal before being subjected to judicial scrutiny under Section 34 after the final award.
Article 227 jurisdiction must be exercised sparingly
The Court clarified that although Article 227 forms part of the Constitution’s basic structure and cannot be excluded by legislation, its exercise in arbitration matters must remain extremely limited. Reaffirming the settled law, the Court held that High Courts should interfere with interlocutory orders of arbitral tribunals only where the order demonstrates a patent lack of inherent jurisdiction.
The Supreme Court observed that the High Court had interfered with the Tribunal’s order without recording any prima facie finding of patent lack of inherent jurisdiction or perversity.
Parties Cannot Reopen Issues They Earlier Chose Not to Contest
The Court also noted that Respondent Nos. 1 to 3 had been parties to the earlier proceedings before the Supreme Court in which the disputes were referred to arbitration. Despite being served, they neither opposed the reference nor sought review or modification of the referral order. Having failed to challenge that order at the appropriate stage, they could not subsequently invoke Article 227 to reopen issues that ought to have been raised earlier. The Court observed that such successive challenges generate avoidable judicial intervention and frustrate the objective of expeditious dispute resolution underlying the Arbitration Act.
Decision
Allowing the appeals, the Supreme Court set aside the order of the Gauhati High Court.
Case Details
Case Name: Manash Kamal Bezboruah v. M/s Bokahola Tea Company Private Limited & Ors.
Court: Supreme Court of India
Neutral Citation: 2026 INSC 701
Date of Judgment: 14 July 2026
Coram: Justice K.V. Viswanathan and Justice Vijay Bishnoi.