Competence of Courts to allow Application under Section 29a of the Arbitration and Conciliation Act, 1996
Section 29A of the Arbitration & Conciliation Act, 2019 (the Act), which serves the significant purpose of expeditiousness of the proceedings, was introduced vide the Amendment Act 3 of 2016.
Section 29A of the Arbitration & Conciliation Act, 2019 (the Act), which serves the significant purpose of expeditiousness of the proceedings, was introduced vide the Amendment Act 3 of 2016. This section was further amended in the year 2019, which framed a time limit for the conclusion of arbitration proceedings other than International Commercial Arbitration.
Earlier, several Civil Courts were dismissing applications under Section 29A of the Act on the ground that only the Supreme Court of India or the High Court would have the authority and power to extend the mandate of the Arbitrator as the power to appoint the Arbitrator under the act lies only with the Supreme Court or the High Court, as the case may be.
In the matter of DDA v. M/s Tara Chand Sumit Construction Co[1],(the case), the court clarified the uncertainty involved in the competence of a Court to entertain a petition under Section 29A. The Petitioner in the case relied on the decision of the High Court Bombay in Cabra Instalaciones Y Servicios, S.A. v. Maharashtra State Electricity Distribution Company Ltd,[2] and of High Court of Gujarat in the case of Nilesh Ramanbhai Patel and Ors. v. Bhanubhai Ramanbhai Patel and Ors., [3]wherein it has been held that Section 11 of the Act vests the power to extend the mandate of the Arbitrator only with the Supreme Court or the High Court, as the case may be.
The Respondent in the case submitted in his contentions that the District Court would have the jurisdiction to entertain the petition and that High Court does not have pecuniary jurisdiction, the respondent has relied on the judgment of the Allahabad High Court in Jai Bahadur Singh v. State of U.P.[4] and also the decision of the High Court of Bombay in the matter of Chief Engineer v. Devdatta P. Shirodkar,[5] wherein the respective High Courts dismissed the petitions as being not inadmissible, allowing it to the petitioners to approach the concerned District Courts.
The Pertinent Question that arises here is whether the power to extend the mandate of the Arbitrator under Section 29A of the act lies with the Civil Court of original jurisdiction in terms of the definition of the term “Court” referred to in Section 2(1)(e) of the Act. In order to understand the said issue in detail, it is crucial to take note of the definition of the term Court under the Arbitration and Conciliation Act, 1996, which is as under:
“2. Definitions:
(1)(e) “Court” means— (i) in the case of an arbitration other than international commercial arbitration, the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not include any Civil Court of a grade inferior to such principal Civil Court, or any Court of Small Causes;”
Section 11(5) and (6) of the Act are relevant for the appointment of Arbitrators by the High Court or the Supreme Court, as the case may be and guides the procedure to do so therein. In the case of International Commercial Arbitration, the power of appointment is conferred only with the Supreme Court while in other arbitrations, High Court has the power to make an appointment under Sections 11 (5) or Section 11 (6) of the Act.
Section 29A (6) confers on the Court a significant power of substituting one or all of the Arbitrators while extending the mandate under sub-Section (4), if the need arises. In case such substitution is made by the Court, the Arbitral proceedings shall continue from the stage already reached and on the basis of evidence or material already collected. Therefore, when it involves the time limits for passing the Award or the extension of the mandate, the Section is a complete Code in itself.
The Court interpreted the term “Court”. It was of the opinion that “the contention of the respondent will seem plausible that the power to extend the mandate of the Arbitrator would lie with the Principal Civil Court. However, on further careful analysis, this interpretation would lead to complications and would perhaps be in the teeth of the powers of the Courts under Section 11 of the Act.
Thus, the question that poses a challenge is whether the term Court? can be interpreted differently in the context of Section 29A. Sub-Section (1) of Section 2 of the Act itself gives that answer, as it begins with the expression “in this part unless the context otherwise requires.”
The court in this case was of opinion that “Petitions under Section 11 of the Act are filed irrespective of the pecuniary jurisdiction of the Court and the same analogy would apply to the petitions under Section 29A of the Act.”
Therefore, it was concluded that, in matters of International Commercial Arbitration, if one was to follow the definition of the term Court under Section 2(1)(e) f the Act and apply the same in a strict sense, then it would be the High Court exercising Original or Appellate jurisdiction which would have the power to extend the mandate and substitute the Arbitrator.
In such a situation, the High Court would be substituting an Arbitrator appointed by the Supreme Court, which would perhaps lead to the High Court overstepping its jurisdiction as the power to appoint the Arbitrator is exclusively in the domain of the Supreme Court. Thus, the court concluded that an application seeking an extension of the mandate of the Arbitrator under Section 29A of the Act would lie only before the Court, which has the power to appoint an Arbitrator under Section 11 of the Act and not with the Civil Courts. Section 11 of the Act vests the Supreme Court and High Court to appoint an Arbitrator, as the case may be.
Institution – Army Institute of Law, Mohali
[1] OMP (MISC.) (COMM) 236/2019
[2] 2019 SCC Online Bom 1437.
[3] Misc. Civil Application (O.J.) No.1 of 2018 in Petition under Arbitration Act No.56 of 2016, decided on 14.09.2018.
[4] 2019 SCC Online All. 3068.
[5] 2018 SCC Online Bom 368.
