Arbitration is an alternative dispute resolution mechanism wherein parties with mutual consent resolve their dispute before an arbitrator or arbitral tribunal for a binding decision.The Arbitration and Conciliation Act, 1996, (the Act), is the cardinal law for arbitration in India. One of the Objectives of the Act is providing expeditious resolution of the dispute with minimum judicial interference. However, prior to 2015, the Act had not incorporated any timeline for the resolution of the dispute. Section 29A was introduced in the Act through the Arbitration and Conciliation (Amendment) Act, 2015 which imposed a time limit for arbitral tribunals to deliver their awards. Section 23(4) of the Act provides that the pleading should be completed within six months of the appointment of the arbitral tribunal. Section 29A of the Act provides that in domestic arbitration, the arbitral Tribunal shall pass the award within 12 months of completion of pleading under Section 23(4) of the Act1. Parties with mutual consent can extend the timeline of passing the award by a further six months2. Therefore, the Act provides a timeline of a maximum of two years since the appointment of arbitral tribunal for resolution of disputes unless3. Failing to comply with the timeline, the mandate of the arbitral tribunal will be terminated. However, for any further extension in timeline for pronouncement of award, parties must approach the Court under Section 29A (5) of the Act. A significant contention had been the determination of which courts possess the jurisdiction to entertain applications under Section 29A (5) of the Act. Therefore, this Article discusses which court should be approached for further extension of the mandate of the arbitral tribunal.
Court Under the Arbitration and Conciliation Act, 1996
Section 2(1)(e) of the Act defines the "Court", which provides that for domestic arbitration, the Principal Civil Court of original jurisdiction in a district and the High Court exercising ordinary original civil jurisdiction shall have jurisdiction to deal with litigation related to arbitration matter. In case of international commercial arbitration, the High Court exercising ordinary original civil jurisdiction shall have jurisdiction. It is pertinent to highlight that only five High Court i.e.,High Courts of Delhi, Bombay, Calcutta, Madras and Himachal Pradesh have ordinary original civil jurisdiction. The remaining High Courts only have appellate jurisdiction. Therefore, the meaning of the term "Court" under Section 2(1)(e) of the Act only includes Five High Court. However, under Section 11 of the Act, the party for the appointment of an arbitral tribunal can approach the High court in domestic arbitration and Supreme Court in international commercial arbitration.
Further, on the filing of Section 29A application, the mandate of the Arbitral Tribunal can only be extended only for sufficient cause4. Further, If the Court finds that the cause of delay is because of one or all the arbitrators then while extending the time, the Court has also the power to replace and substitute the Arbitrator. Therefore, if the Arbitral Tribunal was appointed under Section 11(6) of the Act exceeds stipulated or extended period, then whether District Court or High Court being the Court under Section 2(1)(e) of the Act has the authority to substitute the arbitrator appointed by their superior court i.e., High Court or Supreme Court respectively under Section 11(6) of the Act. Therefore, the quandary is on the issue that whether applications under Section 29A (5) of the Act to be filed before the "court" as defined under Section 2(1)(e) of the Act or before the appointing court i.e. the High Court or Supreme Court as provided under Section 11(6) of the Act.
Judicial Approach
Different High Courts are of different Opinion on the issue. The High Court of Delhi5, Calcutta6, Gujarat7 and Kerala8 have observed that the Section 29A application for extension of Arbitral Tribunal Mandate must be filed before the appointing court under Section11(6) of the Act i.e. High Court for domestic arbitrations and the Supreme Court for international commercial arbitrations because Section 29A also allows the court to substitute the arbitrator if the delay was caused by him and the District Court or High Court being the Court under Section 2(1)(e) of the Act cannot be allowed to substitute an arbitrator appointed by a superior court. The Courts have also substantiated their finding with the use of the phrase "unless the context otherwise requires" in Section 2(1)(e) of the Act.
The High Court of Allahabad in Lucknow Agencies v. U.P. Avas Vikas Parishad 9 was of same view as observed by the Courts in above cases, however another bench of the High Court of Allahabad in A'Xykno Capital Services v. State of U.P10, is of contrary opinion and held that Section 29A application for extension of Arbitral Tribunal Mandate can be filed before the Court as provided under Section 2(1)(e) of the Act. Similarly, Conflicting decisions11 were also given by the Bombay High Court on the issue, therefore the High Court of Bombay referred the issue to a larger bench12.
However, before the division bench of the Bombay High Court could pronounce the order, the Hon'ble Supreme Court in Chief Engineer (NH) PWD (Roads) v. M/s. BSC & C and C JV. 13 observed that applications under Section 29A of the Act for extension of Arbitral Tribunal Mandate must be filed before the "court" as defined under Section 2(1)(e) of the Act. Therefore, in the domestic arbitration for disputes below Rs. 2 crores, the principal civil court of original jurisdiction and for dispute above Rs. 2 crores, the High Court exercising ordinary original civil jurisdiction have jurisdiction to entertain applications under Section 29A of the Act. Similarly, in international arbitration, the High Court exercising ordinary original civil jurisdiction have jurisdiction to entertain applications under Section 29A of the Act. The Hon'ble Apex Court also observed that the power to substitute Arbitrator under Section 29A(6) of the Act is merely a consequential power of the power given to the Court under Section 29A(4) of the Act.
Conclusion
The Hon'ble Supreme Court has given a much-needed clarity for meaning of the term "Court" used in Section 29A of the Act. Therefore, application under Section 29A of the Act cannot be filed before the High Court does not exercising ordinary original civil jurisdiction. Further, the District Court with original civil jurisdiction can substitute the arbitrator while extending the mandate of an arbitral tribunal, when required. It is pertinent to note that the observation made by the Supreme Court was in the context that whether the High Court does not exercising ordinary original civil jurisdiction has the jurisdiction to entertain the application under Section 29A of the Act. The Judgment of the Hon'ble Supreme Court did not make observation on the event that if an Arbitral Tribunal constituted by the High Court under Section 11(6) fails to complete the proceedings within the time, then an application under Section 29A would be maintainable before such High Court. Or, whether a lower court can substitute the arbitrator appointed by superior court. Therefore, Quandary on the issue continued.
Subsequent to the Judgment of the Hon'ble Supreme Court, a Division Bench of the Bombay High Court in Sheela Chowgule v. Vijay V. Chowgule14, observed that if the arbitral tribunal is constituted by virtue of procedure agreed by the Parties under Section 11(2) of the Act, then the application under Section 29A would lie to the Court as defined in Section 2(1)(e) of the Act. However, if the arbitral tribunal is appointed by the Court under Section 11(6) of the Act, then the application under Section 29A would lie to the appointing Court. The observation of the Division Bench of Bombay High Court is a balanced one and strengthens the principle of judicial hierarchy. It interprets the term court in Section 29A in terms of Court defined in Section 2(1)(e) of the Act, but at the same time carves out the exception for the arbitral tribunal appointed by the court under Section 11(6) of the Act. This interpretation also avoided any substitution by the lower court of arbitrator appointed by superior court. As the Judgment of the Bombay High Court is not in conflict but the advancement of the observation of the Hon'ble Supreme Court in Chief Engineer (NH) PWD (Roads) v. M/s. BSC & C and C JV. 15, the issue needs to be settled by the Hon'ble Supreme Court so that it can be binding upon other High Courts.
Footnotes
1. The Arbitration and Conciliation Act, 1996 (Act 26 of 1996), Section 29A
2. The Arbitration and Conciliation Act, 1996 (Act 26 of 1996), Section 29A (3)
3. The Arbitration and Conciliation Act, 1996 (Act 26 of 1996), Section 23(4) and Section 29A (1)
4. The Arbitration and Conciliation Act, 1996 (Act 26 of 1996), Section 29A (5)
5. DDA v. Tara Chand Sumit Construction, 2020 SCC OnLine Del 2501
6. Amit Kumar Gupta v. Dipak Prasad, 2021 SCC OnLine Cal 2174
7. Nilesh Ramanbhai Patel v. Bhanubhai Ramanbhai Patel, 2018 SCC OnLine Guj 5017
8. Lots Shipping Company Ltd v. Cochin Port Trust, 2020 SCC OnLine Ker 21443
9. Lucknow Agencies v. U.P. Avas Vikas Parishad, 2019 SCC OnLine All 4369
10. A'Xykno Capital Services v. State of U.P, 2023 SCC OnLine All 159
11. Cabra Instalaciones Y. Servicios v. MSEDCL, 2019 SCC OnLine Bom 1437; and Mormugao Port v. Ganesh Benzoplast Ltd., Writ petion No. 03/2020 decided on 15.01.2020
12. Sheela Chowgule v. Vijay V. Chowgule, 2024 SCC OnLine Bom 1069
13. Chief Engineer (NH) PWD (Roads) v. M/s. BSC & C and C JV., MANU/SC/0850/2024
14. Sheela Chowgule vs. Vijay V. Chowgule and Ors., MANU/MH/5153/2024
15. Chief Engineer (NH) PWD (Roads) v. M/s. BSC & C and C JV., MANU/SC/0850/2024
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