The Kerala High Court, led by Justice Harisankar V. Menon, recently held that a writ petition under Articles 226/227 of the Constitution of India can be entertained against a Commercial Court’s order passed under Section 9 of the Arbitration and Conciliation Act, 1996, when such order neither grants nor refuses the relief, thereby making it non-appealable under Section 37 of the Act.
The case involved Flemingo (DFS) Private Limited (petitioner), who approached the High Court challenging the invocation of bank guarantees by the Airports Authority of India (respondent). The petitioner sought a declaration that the encashment was illegal and requested either restoration of the guarantees or transfer of the realized amount into an interest-bearing fixed deposit, pending arbitration.
The petitioner argued that the respondent acted unfairly despite the court’s interim orders and a pending dispute in W.P.(C) No. 24021 of 2023. It was also pointed out that a new sole arbitrator had been appointed on 21.06.2024, and invoking the guarantees had caused serious loss to the petitioner.
The respondent contended that the writ petition was not maintainable due to the availability of alternative remedies under the Arbitration Act.
The High Court observed:
“An appeal under Section 37 of the Arbitration Act is maintainable only if the order under Section 9 grants or refuses relief. Here, the Commercial Court merely closed the petition based on the commencement of arbitration proceedings. Thus, it cannot be treated as an order refusing relief.”
The Court noted that the Commercial Court misunderstood the facts and wrongly directed the petitioner to seek relief under Section 17 before the arbitrator, assuming that arbitration proceedings had already started. Since the order did not amount to granting or refusing relief, it was not appealable under Section 37, making the writ petition maintainable.
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Referring to the Supreme Court's ruling in Asian Resurfacing of Road Agency Pvt. Ltd. v. CBI (2018), the High Court said:
“A stay order, even if extended for a short time, cannot be vacated merely due to delay if the litigant is not at fault. Interim orders passed after hearing both parties retain their legal force until properly vacated.”
Considering the appointment of a new arbitrator and the pending challenge before the Supreme Court, the High Court found merit in the petitioner’s claim.
The Court concluded:
“Given the facts and the Apex Court's stay order on the appointment of the arbitrator, the respondent is directed to retain the amounts from the encashment of the two bank guarantees in an interest-bearing fixed deposit account.”
Accordingly, the present petition was disposed of.
Case Title: Flemingo (DFS) Private Limited Versus Airports Authority Of India
Case Number: Wp(C) No. 24021 Of 2023
Judgment Date: 11/04/2025
For Petitioner: G.Harikumar (Gopinathan Nair) Akhil Suresh Santhosh Mathew
For Respondent: By Adv.V.Santharam
