High Court, As A Constitutional Court Of Record, Possesses The Inherent Power To Correct Its Own Record: Bombay High Court

Bombay High Court delivered a significant ruling in Shailesh Ranka & Ors. v. Windsor Machines Limited & Anr., addressing the maintainability of review petitions in arbitration matters post-amendment of the Arbitration and Conciliation Act, 1996. Justice Manish Pitale allowed the review petition filed by the petitioners, reviving their arbitration application that had previously been dismissed. This decision clarifies the High Court’s authority to review its own orders in arbitration cases, challenging previous limitations based on earlier versions of the law.

Background of the Case: The original dispute centered around an investment agreement executed in 2018 between R-Cube Energy Storage Systems LLP (later converted to R-Cube Energy Private Limited) and Windsor Machines Limited. Due to unresolved disputes, the petitioners, associated with R-Cube Energy, invoked arbitration under Section 11(6) of the Arbitration Act. However, the initial application was dismissed on December 19, 2023, based on the objection that R-Cube Energy was considered a partnership firm requiring joint consent from all partners to invoke arbitration, as per Section 19(2)(a) of the Indian Partnership Act, 1932.

Following this dismissal, the petitioners approached the Supreme Court, which allowed them to withdraw and file for a review in the High Court. The review petition argued that the dismissal was based on an error, as R-Cube Energy had been restructured as a private limited company in 2019, not a partnership firm.

The respondents argued that the Arbitration and Conciliation Act, 1996 is a “complete code,” leaving no provision for review unless explicitly stated. They cited the Division Bench ruling in Antikeros Shipping Corporation v. Adani Enterprises Limited, which held that orders under Section 11 of the Arbitration Act could not be reviewed. However, Justice Pitale acknowledged that recent amendments to the Act now place the power of appointment under the jurisdiction of the High Court itself, allowing the High Court, as a court of record, to correct its own orders if errors are apparent on the face of the record.

Justice Pitale’s analysis emphasized the High Court’s inherent powers under Article 215 of the Constitution. He stated that the 2015 amendment to Section 11(6) of the Arbitration Act shifted the appointing power from the Chief Justice or a delegate to the High Court itself. Thus, the High Court, acting as a court of record, may exercise inherent powers to rectify errors, distinguishing the current case from precedents set under the pre-2015 legal framework.

Justice Pitale concluded that the original dismissal of the petitioners’ arbitration application was based on an incorrect factual assumption—that R-Cube Energy was a partnership firm. Since R-Cube had become a private limited company in 2019, the basis for applying Section 19(2)(a) of the Partnership Act was erroneous. Justice Pitale held that this constituted an “error apparent on the face of the record,” warranting the review and recall of the earlier order.

The High Court found the review petition maintainable, relying on cases such as Municipal Corporation of Greater Mumbai v. Pratibha Industries Limited, where the Supreme Court acknowledged the High Court’s review powers post-amendment.The Court rejected the respondent’s contention that oral submissions indicated R-Cube Energy was a partnership firm, pointing out that factual assertions in the original petition confirmed its status as a private limited company.

Justice Pitale ordered the recall of the December 19, 2023 order, reviving the Section 11 arbitration application. He refrained from appointing an arbitrator himself, instead directing the revived application to be placed before the appropriate bench.

This ruling underscores the Bombay High Court's capacity to review its decisions in arbitration matters, particularly where statutory amendments redefine judicial functions. The case serves as a pivotal reference on the High Court's inherent powers to rectify errors under the amended Arbitration Act.

Date of Decision: November 12, 2024