Supreme court: High court cannot remit section 37 appeal to arbitral tribunal to be treated as section 17 application, even by consent

Supreme Court Clarifies Limitations: High Court Cannot Remit Section 37 Appeals to Arbitral Tribunals as Section 17 Applications, Even with Consent.

Case Title: Union of India and Ors. v. Hariom Projects Pvt. Ltd.

Coram: Justice Aravind Kumar and Justice Prasanna Bhalachandra Varale

Citation: (2026) ibclaw.in 649 SC (Special Leave Petition (Civil) No. 33087 of 2026, decided on 18 September 2026) The Supreme Court has held that a High Court, while exercising statutory appellate jurisdiction under Section 37(1)(b) of the Arbitration and Conciliation Act, 1996 against rejection of an application under Section 9, cannot remit the appellate proceedings to the Arbitral Tribunal and direct it to treat them as an application under Section 17. The Bench set aside that direction to the limited extent challenged.

Leave was granted. The question before the Court was whether the High Court can do so by consent of the parties.

Hariom Projects was awarded a contract for Administrative and Training Infrastructure (Phase-I) at NDA Khadakwasla. After disputes arose, a writ petition led to a direction to constitute a Dispute Resolution Board, which rejected all the claims by its order dated 26 April 2025. Hariom Projects invoked the arbitration clause on 6 May 2025. The Union issued a show cause notice on 18 May 2025 and, on 21 July 2025, demanded recovery of Rs. 1,46,40,147.32, contending that the amount had been overpaid on the basis of a corrected escalation formula.

Hariom Projects then filed an application under Section 9 before the District Judge, Pune, seeking, among other reliefs, an injunction against cancellation, termination or repudiation of the contract. It was dismissed on 15 October 2025. Hariom Projects filed an appeal under Section 37 and a petition under Section 11 for appointment of an arbitrator. On 3 January 2026, the Union terminated the Work Order, and the High Court stayed the termination on 5 January 2026.

On 13 January 2026, the High Court appointed Maj. Gen. R.K. Mattu as Sole Arbitrator. It continued the status quo for two more weeks, left it open to the Arbitral Tribunal to extend, vary or modify the interlocutory arrangements, and remitted the proceedings before it to the Tribunal to be treated as an application under Section 17.

The Union of India, represented by Additional Solicitor General Kanakamedla Ravindra Kumar, did not challenge the appointment of the arbitrator. It confined its challenge to the remittal direction. It argued that an order under Section 9 can be challenged only by a statutory appeal under Section 37(1)(b), which vests exclusively in the Court, and that an Arbitral Tribunal, being a creature of contract, cannot exercise appellate or supervisory jurisdiction conferred on Courts, even by consent. It was further submitted that the direction amounted to an impermissible delegation of the High Court's appellate function, contrary to the statutory scheme and judicial hierarchy.

Senior Counsel Aditya Sondhi, appearing for Hariom Projects, fairly submitted that the direction cannot be sustained in law. He, however, prayed that the constitution of the Arbitral Tribunal not be disturbed, since the Tribunal had commenced proceedings and the parties had entered into a Supplementary Agreement dated 24 April 2026, under which the Union permitted Hariom Projects to complete the work.

The Court held that the direction cannot be sustained. The appellate jurisdiction under Section 37 is vested exclusively in the "Court" as contemplated under Section 2(1)(e). An Arbitral Tribunal exercising powers under Section 17 does not exercise appellate jurisdiction over an order passed by a competent Court under Section 9. The effect of the direction would be to require the Tribunal to examine the subject matter of a statutory appeal by treating the appellate proceedings as a Section 17 application.

The Bench further held that the nature and source of the powers exercised by an appellate Court under Section 37 are distinct from the powers conferred on an Arbitral Tribunal under Section 17, and that they cannot be interchanged merely by transmitting or remitting the appellate proceedings to the Tribunal.

The Court observed that, at the highest, upon constitution of the Arbitral Tribunal, the High Court could have granted liberty to Hariom Projects to independently approach the Tribunal under Section 17 for such interim measures as are available in law. It also noted that the prayer in the Section 9 application to restrain termination of the contract had spent itself upon the termination on 3 January 2026, and that any further interim protection would have to be considered in light of subsequent events and the relief specifically sought.

The impugned order was accordingly set aside to the limited extent that it remitted the Section 37 proceedings to the Tribunal for treatment as a Section 17 application. Since the Tribunal is seized of all issues and has passed several orders, the Court left all other issues between the parties to be adjudicated by the Tribunal, with both sides at liberty to raise all contentions permissible in law. The Court clarified that it had passed the order only to clarify the position of law, and the appeal was disposed of with that modification.