The Kerala High Court, in a significant ruling, has emphasized that once arbitration has commenced, parties must wait until the final award is pronounced before filing a challenge. However, if an appeal is allowed under Section 37 of the Arbitration and Conciliation Act, 1996, an earlier challenge is permissible. This decision reinforces the principle of minimal judicial intervention in arbitration proceedings.

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Case Background

The dispute in this case stemmed from a construction agreement related to the Multidisciplinary Research Laboratory and Animal House at the Medical College, Thiruvananthapuram.

• The contract stipulated an 18-month completion period ending on June 2, 2015, but the project was delayed and completed only on May 15, 2018.
• After the contract expired, the agreed contractual rates became unenforceable.
• The petitioner then demanded payment at prevailing market rates for the extended work caused by the respondents' delays.
• The court initially directed the respondents to settle the admitted amount within three months.
• Their failure to comply led to contempt proceedings, during which partial payments were made.

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Subsequently, a Dispute Redressal Committee was formed by the respondents. However, the committee rejected the petitioner’s demand for ₹7,11,41,406 as compensation for unpaid work.

Arbitration Process:

• Aggrieved by the committee’s decision, the petitioner invoked arbitration.
• A sole arbitrator was appointed, who ruled in favor of the petitioner.
• The respondent, dissatisfied with the award, challenged it under Section 34 of the Arbitration & Conciliation Act, 1996.
• The court nullified the arbitration award.
• The petitioner then challenged this decision under Article 227 of the Indian Constitution.

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The Kerala High Court dismissed the petition and ruled that:

1. Article 227 Cannot Be Used to Challenge Arbitration Awards

• The court held that using Article 227 to challenge arbitration orders is improper.
• The correct legal remedy lies in filing an appeal under Section 37 of the Arbitration Act.
• The court cited SBP & Co. v. Patel Engineering (2005), stating: "When a remedy to challenge the arbitrator’s order is available under the Act, filing a writ petition is not appropriate."

2. Arbitration Must Proceed Without Premature Judicial Intervention

• The court emphasized that judicial intervention should be minimal while arbitration is ongoing.
• If parties approach the High Court under Article 227 after every arbitration order, it would disrupt the arbitration process.
• The court made it clear: "Once arbitration has commenced, parties must wait until the final award is pronounced unless an appeal is allowed under Section 37 at an earlier stage."

3. High Court Intervention Under Article 227 Is Not Permissible

• The court reiterated that intervention by High Courts should be avoided.
• The only remedies available are through Sections 34 and 37 of the Arbitration Act.
• The petition was dismissed accordingly.

Case Title: M.I. MOHAMMED versus M/S. HLL LIFE CARE LTD.

Case Number: OP(C) NO. 316 OF 2024

Counsel for the Petitioner: Adv K.Babu Thomas, Marykutty Babu, Drisya Dileep

Counsel for the Respondent: Four Pillars Chambers headed by Advocate Nikhilesh Krishnan, assisted by Abhishek Bhushan Singh, Aju Mathew, and Abu Mathew, Advocates.

Date of Judgment: 26.03.2025