HYDERABAD: The Telangana High Court has dismissed two writ petitions filed by the Hyderabad Metropolitan Development Authority (HMDA) and Hyderabad Growth Corridor Limited (HGCL), holding that objections to arbitral proceedings must be raised before the Arbitral Tribunal under the Arbitration and Conciliation Act, 1996.
A bench of Justices Moushumi Bhattacharya and Gadi Praveen Kumar held that HMDA and HGCL have an effective statutory remedy under Section 16(1) of the Act, which empowers the Tribunal to rule on its own jurisdiction and the validity of the arbitration agreement.
The petitions challenged notices issued by the Indian Council of Arbitration (ICA) directing the authorities to complete procedural formalities in arbitration arising from a concession agreement dated August 17, 2007, with Hyderabad Expressway Limited (HEL).
HMDA and HGCL argued that the arbitration clause had become unenforceable owing to an alleged unauthorised dilution of HEL’s shareholding and insolvency proceedings involving a consortium partner. Rejecting the contention, the bench held that these issues fall within the scope of the arbitration agreement and must be decided by the Arbitral Tribunal.
It observed that the ICA merely performs an administrative role in facilitating arbitration and is neither a “state” nor an authority performing public functions under Article 12 of the Constitution and was therefore not amenable to writ jurisdiction in the present case.