The purpose of the Arbitration and Conciliation Act, 1996 is to allow a party to challenge the existence and legality of the arbitration agreement before the Arbitral Tribunal; as a result, the High Court of Delhi upheld the orders made by the court allowing an application under Section 8 of the Act through the learned bench chaired by Hon'ble Mr. Justice Amit Bansal in the case of Arun Srivastava v. M/S Larsen & Toubro Ltd.
In the instant case titled Arun Srivastava v. M/S Larsen & Toubro Ltd. the issue raised for clarification before the Delhi High Court was:
Whether arbitration clauses can be raised by the petitioner?
With regard to this issue, Although petitions can be filed under Article 227 against decisions allowing or dismissing first appeals under the Arbitration Act, the Supreme Court noted in Deep Industries Ltd. v. ONGC (2020) 15 SCC 706 that the High Court would be extremely cautious in interfering with such decisions, taking into account the statutory policy so that interference is limited to orders that are obviously devoid of inherent jurisdiction. It was also noted that the entire arbitral process would be derailed and would not be completed for many years if applications under Articles 226 and 227 of the Indian Constitution against decisions made in appeals under the Arbitration Act were considered.
The Supreme Court's justification in the aforementioned decision would still hold true in the case of court orders approving applications under Section 8 of the Act.
As a result, the Court held that the petitioner may bring any arguments regarding the existence and legality of the arbitration clause before the Arbitral Tribunal. Since the petitioner did not contest the existence of the arbitration agreement, there was no merit in the current petition.
The Court categorically stated that,
“The present petition under Article 227 of the Constitution of India against the impugned order allowing the Section 8 application would not be maintainable. All grounds in respect of existence and validity of the arbitration clause can be raised by the petitioner before the Arbitral Tribunal. Even on the merits of the case, no grounds have been made for interference with the impugned order. The only case put by the petitioner is that in light of the admission made by the respondent, there is no arbitrable dispute to be referred for arbitration. No merit is found in the petition. Thus, dismissed.”