Karnataka High Court: The Division Judge Bench of Tara Vitasta Ganju* and Jayant Banerji, JJ., dismissed a writ petition challenging an Arbitral Tribunal’s decision to recall an earlier order and reopen evidence. The Court held that an Arbitral Tribunal possesses substantial procedural autonomy under Section 19, Arbitration and Conciliation Act, 1996 (1996 Act) and the High Court’s supervisory jurisdiction under Articles 226 and 227 should ordinarily not be used to correct interlocutory procedural orders of an Arbitral Tribunal unless there is a patent jurisdictional defect or exceptional perversity. The Court reiterated the principle of minimal judicial intervention in pending arbitration.
Background
The instant proceedings arose from an alleged illegal termination of the contract concerning the Information and Communication Technologies (ICT) Phase III Project. The Everonn Education Ltd. (Respondent 1), which was in provisional liquidation, initiated arbitration proceedings against the State of Karnataka, Karnataka Electronics Development Corporation Limited (Respondent 2) and Siddharth Infotech Pvt. Ltd. (Respondent 3), claiming approximately ₹732.82 crores, together with interest and costs on allegation of illegal termination of the contract and breach of contractual obligations. Respondent 1 filed their statement of claim and Respondent 2 filed its statement of defence but, Respondent 3 did not file pleadings or a counterclaim in those proceedings.
Respondent 1 commenced its evidence, where CW 3, Managing Director of Respondent 3, was examined at the instance of Respondent 1. He was examined and cross-examined in his individual capacity. Thereafter, the State and Respondent 2 led their evidence through RWs 1 and 2 respectively. On 8 November 2024, the Arbitral Tribunal held that Respondent 3 did not have a right to cross-examine RW 1 because its representative had already been examined as CW 3 on behalf of Respondent 1.
Respondent 1 subsequently sought permission to produce an additional document and examine another witness. The State also filed an application to amend its statement of objections. The State filed an application under Section 16, 1996 Act seeking termination of the arbitration proceedings on the ground that they were allegedly barred by law. By July 2025, 5 applications were pending before the Arbitral Tribunal. Against this background, Respondent 3 filed 2 applications under Section 151, Civil Procedure Code, 1908 (CPC). One application sought recall of the Tribunal’s order dated 8 November 2024, while the other sought reopening of the evidence so that Respondent 3 could cross-examine RWs 1 and 2.
Respondent 3 contended that although it supported Respondent 1’s claim, the State and Respondent 2 had taken positions adverse to its interests. It argued that RWs 1 and 2 had made statements prejudicial to Respondent 3 and that, as a separate legal entity, it should have an opportunity to challenge those statements through cross-examination. It also relied upon principles of natural justice and equality of parties.
The State opposed the applications. It argued that the earlier order of 8 November 2024 had already conclusively determined Respondent 3’s right to cross-examine RW 1. According to the State, the Arbitral Tribunal had no statutory power of review under allowed both applications on 24 July 2026. It recalled its earlier order to the relevant extent, reopened the evidence of the State and Respondent 2 and directed that RWs 1 and 2 be recalled for cross-examination by Respondent 3 the 1996 Act. It contended that although the Tribunal described its action as recall under Section 151 CPC read with Order 18 Rule 17 CPC, the substance of the exercise was a review of its earlier decision. The State further argued that Respondent 3 had not established any genuine conflict of interest with the other respondents and that reopening evidence after considerable delay would prejudice the State and prolong the arbitration.
The Arbitral Tribunal allowed both applications on 24 July 2026. It recalled its earlier order to the relevant extent, reopened the evidence of the State and Respondent 2, and directed that RWs 1 and RW 2 be recalled for cross-examination by Respondent 3. The State challenged this order before this Court under Articles 226 and 227 of the Constitution. The State principally contended that the Tribunal had exceeded its authority by recalling its previous order and reopening evidence at an advanced stage of the arbitration.
Decision and Analysis
The Court began by examining the established principle of minimal judicial intervention in arbitral proceedings. It relied on Bhaven Construction v. Sardar Sarovar Narmada Nigam Ltd., (2022) 1 SCC 75, where the Supreme Court held that the Arbitration Act is a self-contained Code and, having regard to Section 5 thereof, judicial intervention in matters governed by the Arbitration Act must remain within its statutory framework. It was further held that, although the constitutional jurisdiction under Article 227 remains available, the High Court ought to be extremely circumspect in exercising the same, and interference should be restricted to cases where the impugned order is patently lacking in inherent jurisdiction.
While considering the judgment in Manash Kamal Bezboruah v. Bokahola Tea Co. (P) Ltd., 2026 SCC OnLine SC 1330, the Court reiterated that judicial intervention at the interlocutory stage is to be kept to a minimum and that, except in cases of patent lack of inherent jurisdiction, an order of the Arbitral Tribunal ought not to be interfered with under Article 227. The Court particularly noted that interference at the interlocutory stage should ordinarily be confined to cases involving patent lack of inherent jurisdiction or a completely perverse order. A party ordinarily has to await the conclusion of the arbitral proceedings and challenge the resulting award through the mechanism provided under Section 34, unless the 1996 Act itself provides an earlier right of appeal.
The Court also rejected the argument that reopening evidence would necessarily cause substantial delay. Although the State contended that the matter had already reached final arguments, the record showed that 5 applications were still pending before the Tribunal when the impugned order was passed. The Court therefore found that the proceedings had not reached a stage at which the reopening of evidence could, on the facts before it, be characterised as an impermissible disruption of an otherwise concluded arbitration.
The Court further stated that the power of an arbitrator to decide its procedure during the conduct of the redressal proceedings is set out in Section 19, 1996 Act. Under Section 19(1), an Arbitral Tribunal is not bound by the CPC or the Evidence Act, 1872. Where the parties have not agreed upon a procedure, Section 19(3) permits the Tribunal to conduct proceedings in the manner it considers appropriate, subject to the Act. Section 19(4) further recognises the Tribunal’s power concerning the admissibility, relevance, materiality and weight of evidence.
The Court referred to Serosoft Solutions (P) Ltd. v. Dexter Capital Advisors (P) Ltd., 2025 SCC OnLine SC 22, wherein it was held that the Arbitral Tribunal had examined the matter and after giving a full opportunity to the parties had passed the impugned judgment declining the right to cross-examine. It was further held that excessive judicial interference is not encouraged and that unless the order is completely perverse, it would not be prudent to interfere.
The Court further considered the petitioner’s contention that the mandate of the Arbitral Tribunal had come to an end. However, the record clearly reflects that the arbitral proceedings had not been concluded but extended by consent up to 26 November 2024. Subsequently, pursuant to proceedings initiated by Respondent 1, the Commercial Court had extended the Tribunal’s mandate up to 31 May 2026 by order dated 5 March 2026. The Court noted that the arbitral proceedings had not been concluded and that the State had not produced material demonstrating that no further extension had been granted by the competent court.
Applying the principles of limited judicial intervention, the Court concluded that the Tribunal’s order did not suffer from the degree of perversity or jurisdictional defect necessary to warrant interference under Articles 226 or 227. The Court found that Respondent 3 had asserted a specific prejudice arising from the evidence of RWs 1 and 2, that those witnesses had given evidence only after Respondent 3’s representative had testified, and that the Tribunal possessed procedural authority under Section 19, 1996 Act to regulate the conduct of the arbitration.
The Court accordingly dismissed the writ petition. It held that there was no sufficient ground to interfere with the Arbitral Tribunal’s decision to recall its earlier order and permit Respondent 3 to cross-examine RWs 1 and 2. The Court clarified that its order was without prejudice to the rights and contentions of the parties, which remained open to be raised before the appropriate forum.
[State of Karnataka v. Everonn Education Ltd., WP No. 26431 of 2026, decided on 7-9-2026]
*Judgment authored by: Justice Tara Vitasta Ganju
Advocates who appeared in this case:
For the Petitioner: Aditya Vikram Bhat, AGA
For the Respondent:
Buy Arbitration and Conciliation Act, 1996 HERE
