Sanchayita Lahkar

The High Court of Judicature at Allahabad Division Bench of Chief Justice Arun Bhansali and Justice Kshitij Shailendra ruled that when a Commercial Court dismisses a challenge to an arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996 on the ground of lack of jurisdiction without indicating any alternate forum, such an order is tantamount to refusing to set aside the award. The Bench clarified that under Section 37(1)(c) of the Act, appeals lie not only against explicit refusals but also against orders that, in effect, foreclose the challenge to an arbitral award

The case arose from an application filed under Section 34 of the Arbitration and Conciliation Act, 1996 by Jaiprakash Associates Limited challenging an arbitral award dated 04.10.2017 passed by the U.P. State Micro & Small Enterprises Facilitation Council, Kanpur. During pendency of the Section 34 proceedings before the Commercial Court, Kanpur Nagar, the National Company Law Tribunal (NCLT) admitted an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 on 03.06.2024, imposing a moratorium under Sections 13 and 14.

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Following the NCLT order, the appellant placed Application 107Ga before the Commercial Court, asserting that proceedings against the company could not continue. The respondents contended that in view of the NCLT’s order, the matter could not proceed and should be returned. The Commercial Court, referring to Sections 14 and 33 of the Code and Section 63 barring civil court jurisdiction, concluded that it lacked jurisdiction to entertain the Section 34 petition and closed the proceedings on 13.09.2024. The Court ordered return of the application and later directed release of a bank guarantee furnished during proceedings on 19.10.2024. A subsequent restoration application filed by the appellant was dismissed on 07.03.2025.

In appeal, the respondents raised a preliminary objection on maintainability, arguing that Section 37(1)(c) allows an appeal only against an order expressly setting aside or refusing to set aside an award under Section 34. They relied on BGS SGS SOMA JV v. NHPC Limited (2020) 4 SCC 234, contending that mere closure of proceedings for lack of jurisdiction does not qualify. Counsel for the appellant countered that the effect of the Commercial Court’s order was final refusal of relief, leaving no other forum, and hence appeal was maintainable. Reliance was placed on Essar Constructions v. N.P. Rama Krishna Reddy (2000) 6 SCC 94 and Chintels India Limited v. Bhayana Builders Private Limited (2021) 4 SCC 602.

The Division Bench referred to Section 37(1)(c) of the Act, which provides appeal only from orders “setting aside or refusing to set aside an arbitral award under Section 34.” The Court recorded that “a plain reading of the above provision reveals that only orders setting aside or refusing to set aside an arbitral award under Section 34 are appealable.” The Bench examined BGS SGS SOMA JV, where the Supreme Court held that return of a Section 34 petition to the proper jurisdictional court is not appealable.

The Court noted that in Chintels India Limited, the Supreme Court applied the “effect doctrine” by holding that refusal to condone delay in filing a Section 34 application effectively amounts to refusal to set aside the award, thereby making an appeal maintainable. Quoting the Supreme Court, the Bench recorded: “the ‘effect doctrine’ referred to in Essar Constructions is statutorily inbuilt in Section 37 of the Arbitration Act, 1996 itself.” Further, “given the fact that the ‘effect doctrine’ is part and parcel of the statutory provision for appeal under Section 37, and the express language of Section 37(1)(c), it is difficult to accede to the argument” against maintainability.

Distinguishing BGS SGS SOMA JV, the Court noted: “The context…was a context in which an application under Section 34 would have to be returned…for presentation before the proper court… In this context, it was held that a mere preliminary step, which did not lead to the application being rejected finally, cannot be characterised as an order which would result in the application’s fate being sealed once and for all.”

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The Division Bench observed that the Commercial Court’s order 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.” The Bench also cited its own decision in Bharat Sanchar Nigam Limited v. M/s V.L.S. Diesel Engine Sales & Services (2025: AHC:9344-DB), which treated dismissal of a Section 34 application for non-compliance as appealable under Section 37(1)(c).

In conclusion, the Court stated: “In view of the above discussion, based on the ‘effect doctrine’ as laid down in the case of Chintels India Limited (supra), we do not find any substance in the preliminary objection raised by counsel for the respondents pertaining to the maintainability of the appeal under Section 37 of the Act.” The Court therefore ordered: “Consequently, the objection is overruled.”

“List the appeal for further proceedings on 23.09.2025, as fresh.”

Advocates Representing the Parties:
For the Appellant: Rohan Gupta, Pranay Kumar
For the Respondents: H.N. Singh (Senior Advocate), Sumit Daga

Case Title: Jaiprakash Associates Limited v. High Tech Tyre Retreaders Pvt. Ltd. and another
Case Number: Appeal under Section 37 of Arbitration and Conciliation Act 1996 Defective No. 112 of 2025
Bench: Chief Justice Arun Bhansali, Justice Kshitij Shailendra