Supreme Court rejects Arcelor Mittal company plea against Gujarat HC order

The Supreme Court has dismissed a plea filed by Arcelor Mittal Nippon Steel (AM/NS) India Ltd and upheld a Surat court order rejecting the AMNS’ request to transfer proceedings over a cargo handling agreement dispute and non-payment with Essar Bulk Terminal to an arbitration tribunal constituted by the Gujarat High Court.

The Division Bench of Justices Indira Banerjee and J.K. Maheswari held that the trial court can consider the Section 9 Arbitration Act application filed by Essar against AMNS.

The commercial court in Surat rejected Arcelor Mittal Steel’s application on July 17 to shift the proceedings to the tribunal, which the HC constituted on July 9.

The Gujarat High Court had, on August 18, rejected a petition filed by Arcelor Mittal Nippon Steel India Ltd (AM/NS) against the Surat court’s order. The steel giant has approached the Supreme Court in appeal against the HC order.

The dispute arose with regard to an agreement that took place in February, 2011. The company initiated arbitration proceedings, including issuance of notice in 2020. It approached a court in Surat. While the case was pending in Surat court, both the companies agreed for an arbitration tribunal in July, 2021.

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AM/NS had approached the HC after a commercial court in Surat rejected its application on July 17 to shift the proceedings to the tribunal, which the HC had constituted on July 9. The Commercial court dismissed the application, terming it as misconceived.

The Gujarat High Court held that though the trial court has not given proper reasons for dismissing the application filed by the petitioner, the trial court has committed no error in not granting the prayer prayed for by the petitioner. “In our opinion, the trial court should be permitted to pronounce the order on both the applications under Section 9 pending before it, keeping in mind the observations made by us in this judgment and taking into consideration the provisions of Section 9(3) of the Act.

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“Referring to Section 9(3) of the Act and relying upon the judgment of Calcutta High Court in the case of Tufan Chatterjee (supra), as well as judgment of this Court in Manbhupinder Singh Atwal (supra), it is prayed that the Court may pass an order referring to all dispute of the parties to the Arbitral Tribunal for adjudication. Section 9(3) of the Act does not provide for referring of the dispute to the Arbitral Tribunal for adjudication. The scope and object of Section 9 is only limited to the interim measures and it is not akin to the provisions of Section 8 of the Act wherein the Court has power to refer the parties to the arbitration where there is an arbitration agreement.

“Section 9 of the Act only deals with the interim measures and it is not within the scope of this section for the Court to refer the dispute to the Arbitral Tribunal. Moreover, Section 9 can be resorted to by a party even before the arbitral proceedings and pendency of any arbitral proceeding is not a pre-condition for exercise of power by a Court under Section 9. In view of the aforesaid therefore, the prayer prayed for by the petitioner in the interim application before the trial court in opinion of this Court is beyond the scope and ambit of Section 9 of the Act and such prayer cannot be granted,”

-observed the High Court. while dismissing the petition.