Scope & effervescence of contempt in arbitration proceedings

Purpose of arbitration is to expeditiously resolve the disputes between the parties. The same being not only for adjudication of final dispute(s) between the parties but also to avoid any default/breach of interim orders of any Arbitral Tribunal. Section 27(5) of the Arbitration & Conciliation Act, 1996 provides for this scope to the Arbitral Tribunal for thesame. The provision of Section 27(5) of the Arbitration & Conciliation Act, 1996 provides the remedy for any breach of an order passed by an Arbitral Tribunal. Failure to comply with the order of the arbitral tribunal would be deemed to be contempt to the arbitral tribunal during the conduct of the proceedings.

The contents of the provision are as follows:- 27 (5). Persons failing to attend in accordance with such process, or making any other default, or refusing to give their evidence, or guilty of any contempt to the arbitral tribunal during the conduct of arbitral proceedings, shall be subject to the like disadvantages, penalties and punishments by order of the Court on the representation of the arbitral tribunal as they would incur for the like offences in suits tried before the court.” As per the case of Sri Krishan v. Anand, (2009) 3 Arb LR 447 (Del) the remedy of the other party is to apply to the arbitral tribunal for making a representation to the court to meet out such punishment. The penalty herein shall be given in a similar fashion as would be the case under contempt of court. Now the arbitral tribunal however has to make such a representation to the courts only once it is satisfied that the party/person is in default or in contempt.

Upon receiving a representation from an Arbitral Tribunal, the court would be competent to deal with such party in default or in contempt as if in contempt of order of this court i.e., either under the provisions of the Contempt of Courts Act, 1971 or under the provisions of Order 39 Rule 2A under the Civil Procedure Code,1908. It must be clearly stated here that the legislative intent is clear in its view vide Section 27(5) of the Arbitration Act in holding that a person can be punished for contempt of the arbitral tribunal and any act which brings the administration of justice into disrespect; the same being held in Maharashtra State Electricity Board Vs Datar Switchgear Ltd MANU/MH/1187/2002 and in Saurashtra Chemicals Ltd Vs Hon’ble Mr Justice K Ramamoorthy (Retd.) MANU/GJ/0329/2005. Even in the case of M/s Anuptech Equipments Private Ltd v. M/s Ganpati Cooperative Housing Society Ltd AIR 1999 Bombay 219, a clear cut inference as to the power of the Arbitral Tribunal is made through Section27(5) as the same being for the Tribunal discharging its function as that of the State. The amplitude of Section 27(5) was interpreted more exemplary when the Hon’ble Supreme Court in the case of Delta Distilleries Limited v. United Spirits Ltd. & Anr. (2014) 1 SCC 113 (India), held that the expression “any person” used in Section 27 is wide enough to cover not merely the witnesses, but also the parties to the proceedings.

The Hon’ble Supreme Court however has also made it amply clear in the case of Alka Chandewar v. Shamshul Ishrar Khan, 2017 SCC OnLine SC 758 that a contempt proceeding for violation of an interim order of the arbitral tribunal could be made directly under the provisions of Section 17 itself. This is since Section 17(2) of the Arbitration & Conciliation Act, 1996 clearly states that orders by a tribunal would be deemed to be orders of the court for all purposes and would be enforced under the Civil Procedure Code, 1908 in the same manner as if they were orders of the court, a party seeking enforcement of tribunal’s orders may apply to the court directly to seek enforcement thereof. Therefore any violation of an interim order of the Arbitral Tribunal can be made directly under the provisions of Section 17(2) of the Arbitration Act without having to seek permission to approach the court under Section 27(5) of the Act. The advantage of Section 27 of the Arbitration & Conciliation Act, 1996 however can be stated as in giving powers to an Arbitral Tribunal through the Court as the Court can be of assistance to an Arbitral Tribunal in issuing directions to produce documents or witnesses if the Arbitral Tribunal requires such assistance. Hence vide recent judgments of the Hon’ble Supreme Court it is clear that Section 27, along with 17(2) of the Arbitration Act, 1996 upgrades the spirit of arbitration with both having their own advantages in their spheres in making the arbitration proceedingseffective.

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