Case Overview
The dispute involved a contract dated March 23, 2015, between Damodar Valley Corporation (DVC) and Rites Ltd., pertaining to the construction of a bridge and approach road over the Gomoh-Barkakana railway line. Disagreements arose regarding the fulfillment of contractual terms, leading to arbitration proceedings that commenced on November 6, 2022.
The claimant, M/s Supreme BKB DECO JV, sought multiple declarations, including allegations of fundamental breach of contract by Rites Ltd., and demanded escalation and price variation payments. During the arbitration proceedings, the claimant filed an amendment petition under Section 23(3) of the Arbitration and Conciliation Act, 1996, and Order 6 Rule 17 of the Civil Procedure Code, seeking to introduce additional documents and claims.
The sole arbitrator allowed the amendment on October 6, 2024, prompting the petitioners, Rites Ltd. and DVC, to challenge the order in the High Court. They argued that the amendment petition lacked due diligence and was filed at a late stage without justification.
Legal Arguments
The petitioners contended that the documents introduced through the amendment were previously available to the claimant, and no valid explanation was provided for the delay. They argued that allowing the amendment violated the provisions of Order 6 Rule 17, which prohibits amendments after the commencement of trial unless justified by due diligence.
The petitioners also invoked Articles 226 and 227 of the Constitution, asserting that the arbitrator’s order rendered them “remediless” during the final stages of the arbitration.
Conversely, the claimant maintained that the amendment was necessitated by a recent Supreme Court judgment in Batliboi Environmental Engineers Ltd. v. Hindustan Petroleum Corporation Ltd. (2024) 2 SCC 379, which provided clarity on contractual terms. They further argued that amendments in arbitration are permissible to ensure the resolution of real issues in controversy, as arbitration tribunals are not bound by the strict procedural norms of the Civil Procedure Code.
High Court’s Analysis and Judgment
Justice Gautam Kumar Choudhary upheld the arbitrator’s decision, emphasizing the limited scope of judicial intervention during arbitration. The Court observed:
- The amendment was warranted in light of new legal precedents and did not introduce a new cause of action or alter the nature of the dispute.
- Articles 226 and 227 could only be invoked in cases of exceptional rarity where parties are left without remedy under the Arbitration and Conciliation Act, 1996.
Citing Serosoft Solutions Pvt. Ltd. v. Dexter Capital Advisors Pvt. Ltd. (2022) 1 SCC 75, the judgment noted:
"This power needs to be exercised in exceptional rarity, wherein one party is left remediless under the statute or clear bad faith is shown by one of the parties."
The Court reiterated that the Arbitration Act is a comprehensive code aimed at minimizing judicial interference. Parties must typically await the final award to challenge procedural orders, except where explicit appeal rights are granted under Sections 34 or 37 of the Act.
Key Takeaways
This judgment underscores the flexibility of arbitral tribunals in allowing procedural amendments and reinforces the principle of judicial restraint during arbitration proceedings. By upholding the arbitrator’s discretion, the High Court has reaffirmed arbitration as a robust and efficient alternative dispute resolution mechanism.
Read The Judgment Here
keywords: arbitration amendments, jharkhand high court ruling, rites ltd., damodar valley corporation, minimal judicial intervention, articles 226 and 227
