Hon’ble High Court of Bombay set a precedent by holding that a third party to an arbitration proceeding can appeal against it if it stands affected by that award under section 37 of the Arbitration and Conciliation Act, 1996.
In the matter of Prabhat Steel Traders Pvt. Ltd. v. Excel Metal Processors Pvt. Ltd. and 2 Ors.. a bench comprising of Hon’ble Justice R. D. Dhanuka held that in section 37 of the Arbitration and Mediation Act, 1996 does not prohibit a third party who is affected by an arbitral award passed under section 17 of the Act to appeal against it. In this matter the bench heard 13 petitions filed before it, wherein the petitioners plead that the arbitration award shall be set aside as it granted injunction on respondents to hand over certain coils which formed the subject matter of this award, which originally belonged to the petitioners. An argument put up by the advocate for petitioners was that “just because the proceedings were between Respondent no. 1 and Respondent no. 2, it does not mean petitioners shall remain remedy less. No restriction is thus imposed under section 37 of the Arbitration Act for a third party who is affected by the impugned order passed under section 17 of the Arbitration Act to file an appeal under Section 37 of the Arbitration Act.”
Therefore, while setting aside the arbitration award, Hon’ble Bombay High Court held that a third party affected by the arbitration award is not prohibited from preferring an appeal against it.
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