In an important ruling on arbitration law, the Karnataka High Court has clarified that not every order passed by an arbitrator can be challenged under the Arbitration and Conciliation Act, 1996. The Division Bench held that a preliminary order deciding whether a company official was authorised to sign agreements does not qualify as an arbitral award or even an interim award.
The court allowed an appeal filed by ITW Consulting Private Limited and set aside an order of the Bengaluru Commercial Court that had interfered with the arbitral proceedings.
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Background of the Case
The dispute arose from two agreements executed in June 2018 between ITW Consulting Private Limited and Intellicomm Solutions and Enterprises Private Limited. A cheque issued by Intellicomm, signed by its Marketing Director Mohammad Shoaib, was later returned unpaid due to insufficient funds.
When disputes escalated, ITW Consulting approached the High Court seeking arbitration. An arbitrator was appointed, with specific directions to first examine whether Mr. Shoaib was authorised to execute the agreements on behalf of Intellicomm.
During arbitration, this question of authorisation became a preliminary issue. After hearing both sides, the arbitrator ruled in April 2022 that Mr. Shoaib was indeed authorised to sign the agreements.
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Unhappy with this finding, Intellicomm approached the Commercial Court under Section 34 of the Arbitration and Conciliation Act, which allows challenges to arbitral awards. The Commercial Court accepted the plea and set aside the arbitrator’s order.
ITW Consulting then moved the High Court, arguing that the Commercial Court had exceeded its jurisdiction. According to the appellant, the arbitrator’s decision was neither a final award nor an interim award and therefore could not be challenged under Section 34.
Court’s Observations
After closely examining the law and the sequence of events, the High Court agreed with the appellant.
The Bench explained that the Arbitration Act allows challenges only against arbitral awards, including interim awards. An interim award, the court noted, must finally decide a substantive issue or have the potential to end the arbitration altogether-such as a ruling on limitation or jurisdiction.
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“The order passed by the arbitrator merely resolved an incidental factual issue,” the Bench observed, adding that it did not decide any claim between the parties nor bring the arbitration to an end.
The judges also clarified that an arbitrator’s power to rule on preliminary issues does not automatically convert such rulings into interim awards. Only those decisions that conclusively determine rights or jurisdiction can be treated as awards under the Act.
The court emphasised that Section 34 proceedings are strictly limited in scope. Since the arbitrator’s order on authorisation did not qualify as an award, the Commercial Court had no authority to examine it.
“The very entertaining of the petition under Section 34 was without jurisdiction,” the court noted, holding that such interference disrupted the arbitral process contrary to the scheme of the law.
Earlier judgments cited by the respondent were also distinguished, as those cases involved decisions on limitation or jurisdiction-issues capable of terminating arbitration-unlike the present case.
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Final Decision
Allowing the appeal, the Karnataka High Court set aside the Commercial Court’s order dated 1 July 2024. The arbitrator’s preliminary finding was restored, and the arbitration proceedings were allowed to continue. No order was passed on costs.
Case Title: ITW Consulting Pvt. Ltd. vs Intellicomm Solutions & Enterprises Pvt. Ltd.
Case No.: COMAP No. 297 of 2024
Case Type: Commercial Arbitration Appeal
Decision Date: 16 December 2025
