Supreme Court bars Article 227 challenge to arbitral tribunal’s Section 16 order

A Bench of Justices K.V. Viswanathan and Vijay Bishnoi held the Gauhati High Court wrongly entertained a revision under Article 227 against an arbitral tribunal’s jurisdictional order, and revived arbitration.

The Supreme Court has held that a revision petition under Article 227 of the Constitution is not the ordinary route to challenge an arbitral tribunal’s rejection of a jurisdictional objection under Section 16 of the Arbitration and Conciliation Act, 1996. In Manash Kamal Bezboruah v. M/s Bokahola Tea Company Private Limited & Ors. (2026 INSC 701), a Bench of Justice K.V. Viswanathan and Justice Vijay Bishnoi set aside two orders of the Gauhati High Court in CRP/120/2025 and dismissed the revision petition before that Court.

The Court found the High Court had stayed arbitral proceedings and held the revision maintainable without recording any prima facie finding of patent lack of inherent jurisdiction in the tribunal’s order. The remedy against a Section 16 rejection, the Court reiterated, lies under Section 34 after the final award. The dispute was sent back to the tribunal to decide the status of the non-signatory respondents independently.

How the dispute reached the Court

The underlying dispute concerns a family partnership. M/s Boloma Tea Company was constituted as a partnership firm on 19 September 1948. A fresh partnership deed dated 16 November 1976 allotted shares among the partners and, at Clause 5, contained an arbitration clause. The clause provided that disputes among partners would first be referred to the other partners and, if unresolved, to arbitration before a mutually agreed third party.

In July 2012 the appellant filed Title Suit No. 38 of 2012 before the Civil Judge (Senior Division), Jorhat, seeking rendition of accounts of the respondent companies. During the suit, Respondent No. 7 applied under Section 8 of the Act to refer the disputes to arbitration. On 7 August 2014 the Trial Court rejected the application, relying on Sukanya Holdings (P) Ltd. v. Jayesh H. Pandya (2003) 5 SCC 531, holding that several defendants, including Respondent Nos. 1 to 3, were non-signatories to the arbitration agreement and that the suit could not be split.

The High Court dismissed Respondent No. 7’s revision on 1 November 2021. On further appeal, this Court in Civil Appeal No. 13188 of 2024, by order dated 21 November 2024, with the consent of the parties referred the disputes to arbitration and appointed Justice (Retd.) B.P. Katakey as Sole Arbitrator. Respondent Nos. 1 to 3 were parties to that appeal and were served, but did not contest it.

The tribunal’s jurisdictional order

After proceedings began, Respondent Nos. 1 to 3 filed applications under Order 7 Rule 11 read with Order 1 Rule 10(2) and Section 151 of the Code of Civil Procedure seeking deletion of their names as non-signatories. The Court treated these as applications under Section 16 of the Act, being jurisdictional objections.

On 9 June 2025 the tribunal framed issues, including whether proceedings against non-signatories were maintainable. By order dated 4 August 2025 the tribunal rejected the deletion applications, reasoning that this Court’s consent order left no scope to reconsider whether non-signatories could be subjected to arbitration.

Respondent Nos. 1 to 3 then filed CRP/120/2025 under Article 227. The High Court, by interim order dated 2 September 2025, stayed the notices issued to them. By order dated 28 January 2026 it rejected the appellant’s objection to maintainability, relying on Deep Industries Ltd. v. ONGC (2020) 15 SCC 706 and Punjab State Power Corpn. Ltd. v. Emta Coal Ltd. (2020) 17 SCC 93, holding that its supervisory jurisdiction is not ousted where the tribunal’s order shows a patent lack of inherent jurisdiction.

What the Court held

The sole question framed was whether the High Court was justified in holding an Article 227 revision maintainable against the tribunal’s order. The Court accepted that the High Courts’ supervisory jurisdiction under Article 227 forms part of the basic structure and cannot be ousted by the non-obstante clause in Section 5 of the Act. But it held that this jurisdiction must be exercised with extreme circumspection in arbitration matters.

Interference at the interlocutory stage is warranted only where the tribunal’s order suffers a manifest jurisdictional defect. Orders under Section 16 are ordinarily challengeable only under Section 34 after the final award. The Court said the High Court had not recorded any specific finding of perversity or patent lack of inherent jurisdiction in the order dated 4 August 2025.

Reasoning on the statutory scheme

The Court described the Act as a Code in itself, with Section 5 limiting judicial intervention and Section 16 giving effect to the doctrine of kompetenz-kompetenz. It relied on the Constitution Bench in SBP & Co. v. Patel Engineering Ltd. (2005) 8 SCC 618, which disapproved High Courts correcting tribunal orders under Article 226 or 227 during pending proceedings.

From Deep Industries and the three-Judge Bench in Punjab State Power Corpn. Ltd., the Court drew the threshold: a patent lack of inherent jurisdiction “requires no argument whatsoever.” The perversity must “stare one in the face.” It also cited M/s Tarini Prasad Mohanty v. M/s Sunflag Iron and Steel Company Ltd. (2026 INSC 566) on the higher threshold for entertaining writ petitions given the Act’s scheme.

On the merits of the non-signatory question, the Court invoked the Constitution Bench in Cox and Kings Ltd. v. SAP India Pvt. Ltd. (2024) 4 SCC 1. Whether a non-signatory is a veritable party is a complex inquiry left to the tribunal; the referral court rules only prima facie on the existence of the agreement. The tribunal thus had full competence to decide the status of Respondent Nos. 1 to 3.

Guidance and the parties’ conduct

The Court advised that before entertaining Article 227 revisions against tribunal orders under Section 16, the High Courts should record a prima facie finding on patent lack of inherent jurisdiction, after hearing the rival party.

It observed that Respondent Nos. 1 to 3, though parties to the earlier Civil Appeal, did not contest it and never sought modification or review of the order dated 21 November 2024. Having failed to raise the point earlier, they could not do so now. Such practice, the Court said, produces multiple judicial interventions that delay proceedings and defeat the object of the Act.

Order

The Court set aside both impugned orders of the High Court and dismissed CRP/120/2025. Because the tribunal had already framed issues on the jurisdictional objections, it directed the tribunal to decide the status of Respondent Nos. 1 to 3 independently and uninfluenced by this Court’s decision, and to complete the arbitration expeditiously in accordance with law. The appeals were disposed of accordingly.