Arbitrability of Criminal Matters

The Supreme Court has reiterated a generally well-established principle that criminal matters cannot be arbitrated. In the case of State of Orissa v. Ujjal kumar Burdhan, a Two Judge Bench of the Supreme Court consisting of DK Jain & Anil R . Dave has held that "the existence of an arbitration agreement cannot take the criminal acts out of the jurisdiction of the Courts of law." The case related to the quashing of investigation by the State Government's Vigilance Department in respect of allegations of irregularities by a Rice Mill owned by ujjal Kumar Burdhan. The High Court of Orissa had quashed the investigation in exercise of its powers under Section 482 of the Code of Criminal Procedure, 1973 (CrPC). Section 482 reads:

"Nothing in this Code shall be deemed to limit or affect the inherent powers of the High Court to make such orders as may be necessary to give effect to any order this Code, or to prevent abuse of the process of any Court or otherwise to secure the ends of justice."

The Supreme Court disagreed with the High Court that the circumstances considered by the High Court warranted the exercise of its jurisdiction under Section 482 of the CrPC. One of the reasons for the High Court to quash the investigation was the existence of an arbitration agreement with the Government. The Supreme Court disagreed with the High Court and held that the existence of an arbitration clause would not prevent prosection if a prima facie case of an act constituting a criminal offence is made out. The court relied on a decision of a two judge Bench of the Supreme Court in S.W. Palanitkar and Ors. v. State of Bihar and Anr. MANU/SC/0672/2001 : (2002) 1 SCC 241.