Bombay High Court Rules On Jurisdiction For Extending Arbitration Deadlines

Bombay High Court Rules On Jurisdiction For Extending Arbitration Deadlines

The Bombay High Court Goa Bench clarified which court has the jurisdiction to extend the deadline for completing arbitration proceedings under Section 29A of the Arbitration and Conciliation Act, 1996.

This ruling came after a single judge observed inconsistencies in two earlier judgments by the Bombay High Court and subsequently referred the matter to a larger bench in April of this year.

The larger bench, consisting of Justices M.S. Karnik and Valmiki Menezes, clarified that the High Court has the jurisdiction to extend the time for completing arbitration if the arbitral tribunal was constituted by the High Court.

Additionally, the Court ruled that the principal civil court with original jurisdiction, which includes both the district court and the High Court, can handle time extension applications if the tribunal was constituted through an agreement between the parties.

"In the event an Arbitral Tribunal constituted by the High Court under Section 11(6) fails to complete the proceedings within the stipulated period/extended period, then an application under Section 29-A(4) would lie to the High Court in case of a domestic arbitration ... in the event an Arbitral Tribunal consisting of three Arbitrators is constituted as per Section 11(2) i.e. with agreement and consent of the parties, fails to complete the proceedings within the stipulated period/extended period, the application under Section 29-A(4) would lie to the principal Civil Court of original jurisdiction in a district and includes the High Court in exercise of its ordinary original jurisdiction," the August 7 judgment stated.

This ruling addresses a conflict within the Bombay High Court resulting from inconsistent interpretations of Section 29A of the Arbitration Act in earlier cases.

The controversy arose from two conflicting judgments that created uncertainty regarding which court holds the authority to extend the time for arbitration proceedings.

In Mormugao Port v. Ganesh Benzoplast Ltd. (2020), the Court determined that district courts have jurisdiction under Section 29A when the arbitral tribunal is constituted by an agreement between the parties. This allowed district courts to extend the time for arbitration proceedings.

Conversely, in the 2024 judgment of KIPL Vistacore InfraProjects JV v. Municipal Corporation of the City of Ichalkarnji, a different bench of the Bombay High Court ruled that only the High Court has the power to extend the time under Section 29A, even if the arbitral tribunal was established by agreement.

This inconsistency led to considerable legal uncertainty, prompting Justice Bharat P. Deshpande to refer the issue to a larger bench in April 2024 for a conclusive interpretation.

The issue came to the forefront through a writ petition challenging a January 2024 decision by a district commercial court to extend the deadline for certain arbitral proceedings. The petitioner contended that only the High Court had the authority under Section 29A, while the respondents argued that district courts also held jurisdiction under the Commercial Courts Act.

In its August 7 ruling, the larger Bench aligned with the Gujarat High Court’s interpretation in Nilesh Ramanbhai Patel v. Bhanubhai Ramanbhai Patel. The Gujarat High Court noted that Section 29A imposes strict time limits for completing arbitral proceedings and mandates that an award be made within twelve months. If the award is not made within this timeframe or an extended period, the arbitrator’s mandate ends unless the court grants an extension.

The Gujarat High Court clarified that the definition of "court" in Section 2(1)(e) of the Act—generally referring to the Principal Civil Court or the High Court in specific cases—does not apply to all situations under Section 29A. The Court reasoned that the legislature did not intend for the Principal Civil Court to have the authority to substitute an arbitrator appointed by the High Court or the Supreme Court.