‘Court’ In Section 29A Vis-à-Vis ‘Court’ In Section 2(1)(e) Of The Arbitration And Conciliation Act, 1996: Analysis Of Supreme Court’s Order In Chief Engineer (NH) PWD (Roads) v. M/s BSC &C JV

‘Court’ In Section 29A Vis-à-Vis ‘Court’ In Section 2(1)(e) Of The Arbitration And Conciliation Act, 1996: Analysis Of Supreme Court’s Order In Chief Engineer (NH) PWD (Roads) v. M/s BSC &C JV

I. Introduction

The Arbitration and Conciliation Act, 1996 (“Act”) under Section 29A provides that award in domestic arbitration shall be made within a period of twelve months from the date of completion of pleadings. In cases where award is not made within the stipulated timeline, Section 29A of the Act provides that the mandate of the arbitrator(s) shall terminate unless the ‘Court’ has extended the period. However, Section 29A of the Act does not define the term ‘Court’ and correspondingly, a reference is made to Section 2(1)(e) of the Act which provides that in domestic arbitration, Principal Civil Court of original jurisdiction in a district including the High Court in exercise of its ordinary original civil jurisdiction would have the jurisdiction for the purposes of the Act.¹ A decision on extension of mandate under Section 29A of the Act involves not only extension of mandate but also substitution of the arbitrator, reduction in the fees of arbitrators and termination of the mandate of arbitrators. Under such circumstances, a textual interpretation of “Court” under Section 29A would mean that an arbitrator appointed by High Court or Supreme Court under Section 11 may be substituted by Principal Civil Court of ordinary jurisdiction in a district in exercise of Section 29A of the Act.

Multiple judgments have given rise to confusion as to which Court should be approached for the purpose of seeking extension of mandate of arbitral tribunal under Section 29A of the Act especially in cases where appointment of arbitrator is made by different Court under Section 11 of the Act from the Court as understood in terms of Section 2(1)(e) of the Act.

II. Supreme Court Judgment in Chief Engineer (NH) PWD (Roads) v. M/s BSC&C and C JV

A recent Supreme Court order in Chief Engineer (NH) PWD (Roads) v. M/s BSC&C and C JV² (“Chief Engineer (NH) PWD”) has attempted to clarify the position vis-à-vis the interpretation of “Court” in Section 29A of the Act. In Chief Engineer (NH) PWD, the Hon’ble Supreme Court held that power under sub-section (4) of Section 29A of the Arbitration Act vests in the Court as defined in Section 2(1)(e) of the Arbitration Act. As such, when High Court does not have ordinary original civil jurisdiction, the power of Sub-section (4) of Section 29A of the Act is exercisable by the Principal Civil Court of Original Jurisdiction in a district. The Hon’ble High Court of Meghalaya had ruled that it did not possess original Civil Jurisdiction and that Commercial Court, East Khasi Hills, Shillong would have jurisdiction as the Principal Court of original jurisdiction. It is critical to note that Chief Engineer (NH) PWD (Roads) was not a case where appointment of arbitrator/tribunal was done by High Court under Section 11 of the Act. Additionally, Chief Engineer (NH) PWD (Roads) did not involve exercise of power under Sub-section (6) of Section 29A of the Act.

III. Judgments interpreting ‘Court’ in Section 29A of the Act to mean High Court

Broadly, the interpretation put forward by the judgments of the High Court is that once the arbitrator is appointed by the High Court, only the High Court will have power to regulate the proceedings including Section 29A of the Act. This essentially creates a distinction between Section 11 appointments and non-section 11 appointments when it comes to the Court to which recourse would be sought for extension of mandate under Section 29A of the Act. Accordingly, disputes where arbitrator is appointed under Section 11(6) of the Act by High Court would require a Section 29A application to be made before High Court whereas in cases where arbitrator is appointed by the parties themselves, Section 29A application must be made before the Principal Civil Court of ordinary jurisdiction in a district.

In Lots Shipping Company v. Cochin Port Trust³, Hon’ble Kerala High Court observed that a contextual interpretation is required since the power conferred on the court under Section 29A, especially under sub-sections (4) and (5), are more akin to the powers conferred on the Supreme Court and High Court under Section 11(6), 14 & 15 of the Act, for appointment, termination of mandate and substitution of the arbitrator. In Lots Shipping Company, Hon’ble Kerala High Court ruled that the absence of any provision for an appeal with respect to the exercise of such power under Section 29A would indicate that the power under Section 29A is not to be exercised by the principal civil court of original jurisdiction.

The Hon’ble Calcutta High Court in Amit Kumar Gupta v. Dipak Prasad⁴ interpreted “Court” used in Section 29A of the Act as partaking the character of the appointing authority as has been prescribed in Section 11 of the Act. Thus, the term” Court” used in Section 29(4) was understood as being in variance with Section 2(1)(e)(i) of the Act and the term “Court” as contained in Section 29(4) of the Act was interpreted as the “Supreme Court’ in the case of international commercial arbitration and as the ‘High Court’ in the case of domestic arbitration.

In DDA v. Tara Chand Sumit Construction Co⁵, wherein Hon’ble Delhi High Court ruled that the term ‘Court’ in Section 29A of the Act can be interpreted differently as it begins with the expression “in this part, unless the context otherwise requires”. Accordingly, the Court held that an application under Section 29A of the Act seeking extension of the mandate of the Arbitrator would lie only before the Court which has the power to appoint Arbitrator under Section 11 of the Act and not with the Civil Courts. Notably, Section 2 of the Act starts with “unless the context otherwise requires” which implies that a defined term may have a different meaning in different sections of an Act depending upon the subject or context. In Magnum Opus IT Consulting Private Limited v. Artcad Systems⁶, there was no appointment of the Arbitrator by the High Court. Yet, the Hon’ble Bombay High Court ruled that the meaning of the word ‘Court’ as defined in Section 2(1)(e) of the Arbitration and Conciliation Act is subject to the requirement of the context. Hence, when the High Court appoints the Arbitrator in exercise of jurisdiction under Section 11, the term ‘Court’ would require contextual interpretation, which is permissible in view of the rider contained in Sub Section 1 of Section 2 of the Arbitration and Conciliation Act.

Similar view was taken in Indicus Software Pvt. Ltd. v. Infinite Uptime India Pvt. Ltd.⁷ Also ruled that when the Arbitrator/Arbitral Tribunal is appointed by the order of the High Court under Section 11 of the Act, an application seeking extension of mandate under Section 29 can be filed only before the High Court so as to avoid an anomalous situation of the mandate of the Arbitrator/Arbitral Tribunal being extended or extension of mandate being refused by the District court under Section 29A of the Act.

IV. Judgments interpreting ‘Court’ in Section 29A to mean Principal Civil Court of Original Jurisdiction

Another dimension to the determination of Court under Section 29A of the Act is the difference between states where High Court exercises ordinary jurisdiction in contrast to High Courts which do not exercise ordinary jurisdiction. As has been mentioned above, not all High Courts exercise ordinary original jurisdiction. Thus, in such cases as well, the High Court is interpreted as having jurisdiction over Section 29A application considering that appointment of arbitrator was made by the High Court under Section 11(5) of the Act. Under Section 2(1)(e) of the Act, if the High Court does not exercise original civil jurisdiction, it would not be a ‘Court’ within the meaning of clause (e) of sub-section (1) of Section (2) of the Act.⁸ Hence, only Chartered High Court under the Letters Patent can exercise original civil jurisdiction. In A'Xykno Capital Services⁹, it was observed that the powers of a Civil Court of a district having original jurisdiction can be inferred to the exclusion of the High Court only when such High Court exercises power as indicated in Section 2(1)(e)(i) of the Act. The Hon’ble Allahabad High Court held that the intention of legislature is including a High Court only in case where it has original jurisdiction is clearly discernible. It is relevant that prior to current explanation inserted vide Act No.3 of 2016 in Section 47, it was the principal Civil Court of original Jurisdiction in a district which came within the definition of Court and included a High Court in exercise of its ordinary original civil jurisdiction but by means of the new explanation inserted in 2016, it is now only the High Court having original jurisdiction which comes within meaning of the word Court under the explanation and the principal civil court of original jurisdiction in a court has been deleted.

V. Conclusion

In order to interpret ‘Court’ in Section 29A of the Act, the key question was about reconciling the appointment of arbitrator by High Court under Section 11 of the Act who can be substituted by a lower Court i.e. Principle Civil Court of Ordinary Jurisdiction in a district under Section 29A of the Act. Hon’ble Supreme Court in Chief Engineer (NH) PWD has clarified that Principle Civil Court of Original Jurisdiction would exercise power to substitute arbitrator under Section 29A (6) of the Act. Given that Chief Engineer (NH) PWD case did not involve a question of arbitral appointment under Section 11 of the Act, the Hon’ble Supreme Court has not expressly stated that either appointment of arbitrator under Section 11 of the Act would not impact the jurisdiction of the Principle Civil Court of ordinary jurisdiction under Section 29A of the Act. Thus, while there is clarity on the interpretation of ‘court’ when it comes to cases where High Court was not approached for appointment of arbitrator under Section 11 of the Act, there is still some confusion regarding how ‘Court’ under Section 29A of the Act would be interpreted in cases where appointment of arbitrator has been made under Section 11 of the Act.

Disclaimer: This article was first published in the S&A Law Offices - 'Indian Legal Impetus' newsletter in June 2024.