Writ Court Interfering With Every Procedural Order In Arbitral Proceedings Is Contrary To Aim Of A&C Act: Gujarat HC

The bench of Justice Mauna M. Bhatt further held that if the Writ Court exercises its jurisdiction in curing every procedural lapse in arbitral proceedings, the same would amount to opening Pandora's box, which would be contrary to the principle of minimum judicial intervention.

Factual Matrix

Tata Power Renewable Energy Limited (“Original Claimant/ TPREL”) vide Power Purchase Agreement (“PPA”) dated 23.10.2019, was required to install and commission 250 MW of power plant, which was to be operational by 22.01.2021. The said deadline was extended to 22.06.2021. Per clause 7.3.3 of the Implementation and Support Agreement, TPREL was required to lay down 33 KV power cables, connecting its 50 MW Power Plants. TPREL also required an internal pooling station to be installed.

A dispute arose pertaining to the breach of the contract, and the Hon'ble Gujarat High Court referred the parties to arbitration u/s 11(6) of the A&C Act, before the Ld. Sole Arbitrator, GPCL filed its Statement of Claim (“SoC”) seeking damages to the tune of approximately ₹150 crores. The TPREL filed its Statement of Defence (“SoD”) denying the allegations and refuting the claim in toto. In responding to the SoD, GPCL filed an affidavit in Rejoinder. Subsequently, the terms of reference for the settlement of the dispute were framed, and both parties were directed by the Ld. Sole Arbitrator to file their Evidence Affidavit.

The TPREL's case is that they had fully installed the 250 MW power plant, and it was operating as of 21.06.2021. Due to GPCL's fault, TPREL could not sell power, as the power evacuation infrastructure was not available. GPCL filed an application on 21.10.2024 to file an amended version of the evidence affidavit of CW-2 and additional documents. The Ld. Sole Arbitrator vide order dated 30.11.2024 allowed the revised affidavit and documents to be brought on record.

During discovery, TPREL discovered the communications dated 27.12.2021 and 16.03.2022, which suggested that the power evacuation was not possible till 15.03.2022. The said documents were suppressed in the SoC by GPCL. Pursuant to this, GPCL filed an application u/s 23(3) to amend their SoD in order to bring the new documents on record. The Ld. Sole Arbitrator vide order dated 25.04.2025 dismissed the Section 23(3) petition of GPCL. Hence, GPCL assails the impugned order qua a Writ Petition under Article 226 and 227 of the Constitution.

Submissions:

The counsel for the Petitioner made the following submissions:

• TPREL had malafide intention when making the incorrect submission on the oath certificate concerning the 250 MW power plant, which was fully commissioned and ready for commercial operation as on 21.06.2021. Furthermore, GPCL was under a bona-fide belief that whatever has been stated by TPREL on oath certificate is true.
• Power evacuation from the power plant was not possible till 15.03.2022 pursuant to the communications dated 27.12.2021 & 16.03.2022, which were provided to GPCL for the first time. In light of the TPREL presenting an incorrect case, GPCL had no other option but to move an application u/s 23(3 ) of the A&C Act.
• The Ld. Sole Arbitrator placed a futile reliance on Order VI Rule XVII of the CPC. Wording used in Section 23(3) of the A&C Act suggests a wider interpretation and scope for amendment than Order VI Rule XVII of the CPC.

The counsel for the Respondent made the following submissions:

• Petition under Article 226/227 may not be entertained, as the same is used a alternative mechanism to bypass the legislative safeguards provided u/s 34 and 37 of the A&C Act.
• The Ld. Sole Arbitrator was correct in observing that there was a huge delay in filing the amendment application, and GPCL had not exercised due diligence in the matter.
• Mere reading of Section 19 of the A&C Act would not absolve the Tribunal from adopting the principles of CPC. Order VI Rule XVII of the CPC has to be read in conformity with Section 23 of the A&C Act. Furthermore, when an amendment to the pleadings is sought to be introduced after the trial has commenced, the test test of "due diligence" as referred to in the proviso of Order VI Rule XVII is the settled standard test for evaluating belated amendments.

Analysis of the Court

The bench at the outset observed that a writ petition under Article 226/227 of the Constitution can be entertained to challenge orders passed by the Arbitral Tribunal. The Supreme Court in Serosoft Solutions Pvt. Ltd. v. Dexter Capital Advisors Pvt. Ltd. (2025) had observed that the Writ Court can exercise jurisdiction only if the impugned order is “completely perverse”, or the impugned order is crippled with “bad faith”, or the impugned order falls in the category of “rarest of rare circumstances”.

The bench observed that the impugned judgment does not pass the test of either being “perverse” or having been passed in “bad faith” to warrant the Writ Court to exercise their jurisdiciton. The order passed by the Ld. Sole Arbitrator takes a plausible view, and cannot be considered to be falling in the category of “exceptional” or “rare”.

The bench observed that the impugned order was passed after taking into consideration Section 23 of the A&C Act, read with Order VI Rule XVII of the CPC. The Ld. The Sole Arbitrator has passed the impugned order after the applying the said provisions to the facts of this case. The Ld. Sole Arbitrator after undertaking that exercise took the view that the application u/s 23(3) warrants dismissal. Therefore, the impugned order cannot be termed as an order leading to the failure of justice. Furthermore, if the Writ Courts are to exercise their jurisdiction to supervise or rectify every procedural lapse of the arbitral tribunal, the same would result in opening a Pandora's box.

Therefore, in the above terms, the Writ Court dismissed the writ petition.

Case Name: Gujarat Power Corporation Limited v. Tata Power Renewable Energy Limited

Case Number: R/Special Civil Application No. 6910 of 2025

Counsel For The Petitioner: Mr Kamal Trivedi, Ld.Advocate General With Mr Anal S Shah(3988), Ld.Advocate With Mr Vinay Bairahra, Ld.Advocate With Mr Pranjal Buch, Ld.Advocate

Counsel For The Respondent: Mr Mihir Thakore, Ld.Senior Advocate With Mr Shaan M Munshaw(10825), Ld.Advocate With Mr Shryeshth Sharma, Ld.Advocate With Mr Aakash Lamba, Ld.Advocate With Mr Kunal Veer, Ld.Advocate

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