Rejecting Appeal U/S 34 A&C Act On Grounds Of Jurisdiction Without Indicating Alternate Remedy Amounts To Refusal To Set Aside Award: Allahabad HC

Recently, the Allahabad High Court has held that rejecting an appeal under Section 34 of the Arbitration and Conciliation Act on grounds of lack of jurisdiction without providing alternate remedy amounts to refusing to set aside award, making such order appealable under Section 37 of the Act.

Section 37(1)(c) of the Arbitration and Conciliation Act, 1996 provides for appeals against orders setting aside or refusing to set aside an arbitral award under Section 34 of the Act.

While dealing with the maintainability of an arbitration appeal filed under Section 37 by Jaiprakash Associates Limited which is undergoing Corporate Insolvency Resolution Process , the bench of Chief Justice Arun Bhansali and Justice Kshitij Shailendra held

“it would be seen that the Commercial Court, based on the application made essentially for the purpose of placing on record the order passed by the NCLT has, by referring to certain provisions of the Code, come to the conclusion that the Court did not have the jurisdiction to hear and decide the matter, closed the proceedings for lack of jurisdiction and ordered for return of the application.”

The Court held that

“The order passed returning the application without indicating alternative forum under the Code, which factually does not exist, seals the fate of the application once and for all, therefore, the same amounts to refusing to set aside the award impugned under Section 34 of the Act.”

Appellant, Jaiprakash Associates Limited (JAL), filed an application under Section 34 of the Act against arbitration award passed by the U.P. State Micro & Small Enterprises Facilitation Council, Kanpur. Since during the pendency of the application, the petitioner was admitted into CIRP by the NCLT, the Commercial Court, Kanpur Nagar returned the application stating that it had no jurisdiction qua the proceedings after the NCLT order on insolvency.

This was challenged by JAL before the High Court. Counsel for respondent raised a preliminary objection regarding maintainability of the application on grounds that appeal under Section 34 can lie only against an order passed by Commercial Court setting aside or refusing to set aside an arbitral award and not where the appeal has been rejected for lack of jurisdiction.

Counsel for JAL pleaded that the appeal was maintainable as the order of the Commercial Court was ex facie illegal, contrary to the law and dismissed appellant's appeal having the effect of refusing to set aside the award.

In Chintels India Limited Vs. Bhayana Builders Private Limited, the Apex Court had held that order refusing condonation of delay was an order refusing to set aside the award and was appealable under Section 37(1)(c) of the Act and discussed the 'effect doctrine' by referring to its earlier judgment in ESSAR Constructions Vs. N.P. Rama Krishna Reddy.

Relying on the aforesaid, the bench lead by Chief Justice Bhansali held that

“it would be seen that the effect of the order passed by the Court under Section 34 of the Act is required to be seen for the purpose of examining the maintainability of the appeal under Section 37(1)(c) of the Act as to whether the order passed leaves any other avenue for the applicant to seek redressal against the award or the order passed puts an end to the challenge laid to the award passed by the Arbitral Tribunal, which in the present case is the Council.”

It held that order of dismissal refusing to condone delay was not on the same footing as a order returning appeal to be presented before appropriate forum and the effect of the order needs to be seen for maintainability of the appeal.

The Court also referred to its earlier decision in Bharat Sanchar Nigam Limited Vs. M/s V.L.S. Diesel Engine Sales & Services, where the appeal under Section 37 was dismissed on grounds that the order refusing to entertain appeal on grounds of territorial jurisdiction was not final.

Accordingly, the Court held that the JAL's appeal was maintainable as the Commercial Court had returned the appeal under Section 34 without indicating any other forum for challenging the award which amounted to refusing to set aside the award.

The appeal was directed to be listed for further hearing.

Case Title: Jaiprakash Associates Limited Versus High Tech Tyre Retreaders Pvt. Ltd. and another [APPEAL UNDER SECTION 37 OF ARBITRATION AND CONCILIATION ACT 1996 DEFECTIVE No. - 112 of 2025]

Counsel for Appellant: Rohan Gupta, Pranay Kumar

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