It asked to be joined in the arbitration so that its own joint venture's claim could be dismissed. It also holds 22.57 per cent of the company on the other side

The only solvent member of a construction joint venture went to the Calcutta High Court under Article 227 after the arbitrator refused it entry. Justice Om Narayan Rai finds bad faith, and a letter it never answered.

A company that is one of two members of a construction joint venture asked the arbitrator hearing the venture's money claim to let it intervene — and then to dismiss that claim and terminate the arbitration. The arbitrator refused and imposed Rs 51,000 in costs. The Calcutta High Court has now declined to interfere under Article 227 of the Constitution. Justice Om Narayan Rai held that the company had been formally asked, three years earlier, to clarify whether it disputed the liquidator's authority to act for the venture and had never replied; that it holds 22.57 per cent in the very company the claim is against; and that the Court's equitable supervisory jurisdiction will not be used to aid a member acting against the interest of its own joint venture.

A highway, a liquidation, and a power of attorney

The project was the four and two-laning of the Rimuli-Roxy-Rajamunda section of National Highway 215 in Orissa, awarded by the National Highways Authority of India on a build, operate and transfer basis. A concessionaire company was incorporated to execute the work and entered into the Concession Agreement with the Authority.

When only part of the work had been done, the petitioner and another company offered to execute the balance as engineering, procurement and construction contractor. On 26 July 2013 the two formed a joint venture, and on 30 July 2013 the venture executed a power of attorney in favour of an individual attorney. The concessionaire then contracted with the venture for the remaining work.

The Authority subsequently closed the project and terminated the Concession Agreement. The Authority and the concessionaire arbitrated, and an award was passed in the concessionaire's favour on 31 March 2019, communicated to the joint venture that May. The venture then issued its own notice invoking arbitration against the concessionaire on 30 September 2019.

That is where the corporate position changed. On a petition by the State Bank of India under Section 7 of the Insolvency and Bankruptcy Code, 2016, the petitioner's co-venturer was admitted to the corporate insolvency resolution process by the National Company Law Tribunal at Amravati. The process failed and liquidation was ordered. The attorney of the joint venture then executed a second power of attorney in favour of the liquidator, authorising him to act on behalf of the venture.

On the strength of that document, the liquidator applied under Section 11 of the Arbitration and Conciliation Act, 1996 for appointment of an arbitrator to decide the venture's disputes with the concessionaire. The application was heard on 19 September 2023 and allowed on 27 September 2023.

During the arbitration the petitioner applied under Section 32(2) read with Section 19 of the Act, seeking leave to intervene, to withdraw the claims made on behalf of the venture, and for termination of the proceeding. The arbitrator dismissed that application at the thirty-first sitting on 21 January 2026 with costs of Rs 51,000. The revisional application under Article 227 followed.

How narrow the window is

The judgment first fixes the jurisdictional threshold. The plenary supervisory authority of the High Courts under Article 227 forms part of the basic structure and cannot be abrogated by legislation, so Section 5 of the Act does not oust it. But the Supreme Court has repeatedly cautioned that in matters under the 1996 Act the power must be exercised only in exceptional cases where a patent lack of inherent jurisdiction is manifest on the face of the record.

The Act is a code in itself, and that phrase has consequences: the non-obstante clause in Section 5 limits judicial intervention to what the Act contemplates, reflecting the legislative choice to adopt the UNCITRAL Model Law and reduce excessive judicial interference, while Section 16 gives effect to the doctrine of kompetenz-kompetenz. The Constitution Bench in SBP & Co. v. Patel Engineering Ltd. expressly disapproved High Courts correcting orders of an arbitral tribunal under Article 226 or 227 while the arbitration is pending, pointing out that Section 34 gives the aggrieved party an avenue against the award including any in-between orders. The judgment treats Manash Kamal Bezboruah as the latest addition to that line, and Bhaven Construction v. Executive Engineer, Sardar Sarovar Narmada Nigam Limited as fixing the standard: interference is for cases of exceptional rarity, such as where a party would otherwise be left remediless.

Measured against that, the Court held there was no patent lack of inherent jurisdiction here. The existence of the arbitration agreement and its invocation were undisputed. What was disputed was the authority to represent the venture — a question the arbitrator decided on the second power of attorney read with the joint venture agreement, which he plainly had jurisdiction to do. The petitioner's arguments that the delegation under the second power of attorney was unauthorised, that the first power of attorney permitted delegation only of the powers listed before the clauses dealing with legal proceedings, and that the liquidator had no power under Section 35(1)(d) and (k) of the Insolvency and Bankruptcy Code to represent the venture, could all be taken to a court under Section 34. They did not amount to a manifest jurisdictional defect.

The letter that went unanswered

The petitioner's real argument was that it would be left remediless: as a constituent of the venture it would be bound by the award, but having been refused intervention it could not challenge the award under Section 34.

The judgment records that the argument appears compelling on the surface and then says it fails to bear the weight of the stark facts. Those facts are a correspondence trail.

On 12 March 2023 the concessionaire wrote to the petitioner informing it that the liquidator was acting for the venture. On 28 March 2023 the petitioner wrote to the concessionaire saying it had given the liquidator no such authority. That letter was forwarded to the liquidator on 30 March 2023, and on 6 April 2023 the liquidator wrote to the petitioner setting out in detail how he derived authority under the two powers of attorney read with the joint venture agreement, pointing out that the arbitration notice had been issued to recover amounts due to the venture, asking whether the petitioner wished to share the costs of the proceedings, requesting the venture's accounting records and bank statements, and asking it to revert within a week so that a response could be formulated to the concessionaire's demand that the liquidator cease and desist.

The petitioner admitted receiving that letter in its own affidavit. There is nothing on record to show it ever replied.

That silence decided the case. Having been directly confronted with the liquidator's claim of authority and expressly called upon to clarify its stance, the petitioner had a distinct duty to speak. It could not sit idly by, await the result of the Section 11 application, and then seek intervention in the arbitration asking for termination on the ground of an incompetent reference. The Court applied the settled principle that a person may be precluded by his conduct or by silence, where it was his duty to speak, from asserting a right he would otherwise have had, and that silence when there is a duty to speak may lead to forfeiture of contractual rights. This was not passive silence in an ordinary commercial setting; it followed an express demand for clarification on the very matter on which the petitioner now asserted a decisive contractual right.

The judgment also notes that the concessionaire, knowing the petitioner's stand, did not raise the authority point before the Section 11 court in September 2023, and that both the concessionaire and the petitioner later moved applications — a review, and an intervention in that review — on the exact same ground. The reason for not taking the point earlier, the Court held, smacks of an ulterior motive to delay and derail the arbitration.

Twenty-two and a half per cent

The arbitrator had recorded a finding of collusion, and the Court found no reason to disagree with it.

The petitioner holds 22.57 per cent of the shareholding in the concessionaire — the respondent in the arbitration — as disclosed in the concessionaire's audited financial statements for 2021-22 and 2022-23, and its own audited statements indicate that it is one of the concessionaire's promoters. The concessionaire has already obtained an award of Rs 322,77,58,577 against the Authority for the same project, which the Authority has deposited with the Registrar of the Delhi High Court. The arbitrator inferred that the petitioner may have been assured protection of its financial interest by the concessionaire, which explained its change of stand.

Found to be actively communicating with and siding with the concessionaire while maintaining stoic silence towards the liquidator's request for clarification, the petitioner's conduct taken cumulatively denoted bad faith.

On the remediless argument, the Court supplied the answer from the petitioner's own prayer. It did not seek intervention to protect the venture's interest but to have the venture's claims dismissed. If the arbitration ends in dismissal on merits, its prayers are answered; if the claims are allowed, it may be entitled to its dues under the joint venture agreement; and if it feels aggrieved about its share, it has its own arbitral remedy against the co-venturer under that agreement.

The authorities it cited on consortium representation were distinguished. A decision where one constituent individually issued the arbitration notice without express authority did not apply, because here the venture itself invoked the clause, because Clause 22 of the agreement states that the relationship between constituents is that of a consortium and not a partnership, and because that judgment was rendered at the Section 34 stage. A decision on the desirability of making every consortium member a party was held to turn on its own facts: here the petitioner sought to be added only to kill the claim, not to augment it or to advance a claim of its own.

Order

A major member of the venture had gone into liquidation and the liquidator had stepped into its shoes to protect its assets. The petitioner, the Court held, cannot be permitted to use its status as the only other member to completely paralyse a pre-existing claim initiated by the venture, especially after failing to object when formally called upon to do so.

Power under Article 227 is supervisory in ambit, equitable in essence and discretionary in application, and the Court recorded that it will not exercise that extraordinary equitable jurisdiction to aid a member of a joint venture acting in bad faith and against the interest of the venture. It also noted that the concessionaire had filed an affidavit in the proceeding which clearly ran the petitioner's case, so the petitioner's battle was already being actively fought by someone else.

Finding no reason to interfere with the arbitrator's order, the Court dismissed C.O. 577 of 2026. The connected application for recalling the interim order was disposed of accordingly. No costs were awarded.