The Delhi High Court has reiterated that the writ petition remedy under Articles 226 and 227 of the Constitution of India is only available against orders passed by an Arbitral Tribunal in exceptional circumstances, and in cases where there is bad faith or perversity.
Facts
IDFC and Hitachi entered into a Strategic Partnership Agreement and Business Development Agreement. Disputes arose between them. The agreements were terminated and IDFC invoked
arbitration.
During the subsistence of the arbitration proceedings, the Supreme Court delivered its decision in Vidya Drolia & Ors v Durga Trading Corporation[2] holding that disputes governed by the
Recovery of Debts and Bankruptcy Act 1993 were not arbitrable.
Relying on Vidya Drolia, IDFC made an application to the Tribunal under §16 of the Arbitration and Conciliation Act 1996 seeking the termination of the Tribunal’s mandate. IDFC contended that
the amount recoverable from Hitachi was a “debt” under the Recovery of Debts and Bankruptcy Act 1993 and the Debt Recovery Tribunal had exclusive jurisdiction. IDFC’s application was
dismissed by the Tribunal.
The Arbitration Act does not provide for an appeal mechanism in cases where an application under §16 is rejected. Accordingly, IDFC sought to challenge the Tribunal’s order by invoking the
writ jurisdiction of the Delhi High Court.
Decision
