1999 (8) TMI 1011 - SC - Indian Laws

Supreme Court stresses societal good in PILs, overturns auction challenge, affirms arbitrator's award, imposes costs

Malik Brothers Versus Narendra Dadhich and Ors.

The Supreme Court criticized the High Court for entertaining a public interest litigation petition that resulted in setting aside an auction and an ... - Issues involved:1. Entertaining a public interest litigation petition by the High Court.2. Quashing of an auction and an award by the High Court.3. Legality of referring a dispute to an arbitrator.4. Justification of setting aside the award of the arbitrator.Entertaining a public interest litigation petition by the High Court:The Supreme Court analyzed the concept of public interest litigation and emphasized that it is meant to redress public injury, enforce public duty, and protect social rights. The Court highlighted that public interest litigation should not be used to benefit individuals but should focus on the betterment of society. Referring to past judgments, the Court cautioned against misusing public interest litigation for settling individual disputes and stressed that such petitions should address gross violations of fundamental rights or basic human rights. In this case, the Court found that the respondent's petition, filed as a taxpayer of the municipality, did not serve public interest and resulted in gross injustice to the parties involved. The Court criticized the High Court for entertaining the petition and setting aside the auction and arbitrator's award, thereby frustrating the provisions of the Arbitration Act.Quashing of an auction and an award by the High Court:The Supreme Court examined the facts leading to the judgment under appeal, where the Indore Development Authority held a public auction for a plot of land, with the appellant being the highest bidder. Despite the appellant's default in depositing the balance amount, the Authority referred the dispute to an arbitrator. The High Court, in a public interest litigation petition, quashed the auction and the arbitrator's award, alleging public injury. However, the Supreme Court found no evidence of impropriety in the auction process or the decision to refer the dispute to arbitration. The Court criticized the High Court for not considering the parameters for entertaining a public interest litigation petition and concluded that the High Court's decision to quash the auction and award was improper and lacked supporting materials.Legality of referring a dispute to an arbitrator:The Supreme Court examined the decision of the Indore Development Authority to refer the dispute to an arbitrator and found no indication of extraneous considerations or lack of bona fide intent. The Court noted that there was no material to suggest any infirmity in the auction process or the arbitrator's award. The Court emphasized that parties have the right to refer disputes to arbitration instead of common law courts, especially for expeditious resolution. The Court criticized the High Court for misinterpreting Section 21 of the Arbitration Act and intervening in the arbitration process without valid grounds.Justification of setting aside the award of the arbitrator:The Supreme Court concluded that the High Court erred in setting aside the award of the arbitrator without proper evidence of public injury or impropriety. The Court found no justification for entertaining the public interest litigation petition and quashing the decision to refer the dispute to arbitration. The Supreme Court set aside the High Court's judgment, upheld the arbitrator's award, and directed the parties to adhere to the legal process. The appellant's appeal was allowed, and the costs were imposed on the respondent for the appeal.This detailed analysis of the Supreme Court judgment highlights the key issues surrounding the public interest litigation, the quashing of the auction and award, the legality of arbitration referral, and the justification for setting aside the arbitrator's award.