High Court Doesn't Qualify As Civil Court Under Section 2(1)(e) Of Arbitration Act, Has Jurisdiction Under Section 11(6): Punjab And Haryana High Court

The Punjab and Haryana High Court bench of Justice Jagmohan Bansal has held that the High Court itself does not qualify as a Civil Court under Section 2(1)(e) of the Arbitration and Conciliation Act, 1996. Consequently, the High Court held that it has jurisdiction under Section 11(6) of the Arbitration Act, which grants it authority where the principal Civil Court of original jurisdiction would have the power to address the issues that are subject to arbitration, if those issues were to be considered in a suit. Brief Facts: I Care Consultancy (Applicant) filed an application in the High Court under Section 11(6) of the Arbitration and Conciliation Act, 1996 and sought the appointment of an arbitrator. The Applicant, engaged in the business of recovering vehicles, equipment, products, and assets from defaulting customers on behalf of various finance companies and banks, entered into an agreement with L & T Finance Ltd (Respondent). This agreement stipulated that the Applicant would take possession of vehicles from the Respondent's defaulting customers. The agreement contained an arbitration clause (Clause 14) specifying that disputes between the parties should be resolved through arbitration conducted in accordance with the Arbitration Act. The clause further stated that the venue of arbitration shall be Mumbai. A dispute arose between the parties which prompted the Applicant to issue a legal notice demanding payment of outstanding dues. The Respondent responded by requesting the applicant to submit the bills which were submitted on September 30, 2022. Despite this, the Respondent did not take any further action. Subsequently, the Applicant issued a notice which requested the Respondent to appoint an arbitrator by mutual consent. When the Respondent failed to resolve the issue or appoint an arbitrator within the stipulated 30-day period, the Applicant approached the court for relief under Section 11(6) of the Arbitration Act. The Respondent contended that the court lacked the authority to appoint an arbitrator since the agreement specified Mumbai as the venue for arbitration. It argued that the parties had the freedom to select the venue of arbitration, and the venue cannot be overridden by the provisions of the Civil Procedure Code. The relevant arbitration clause is reproduced below: “Any dispute and/or difference and/or claim that arises between parties or any of them touching or concerning this Agreement or any condition herein/therein contained or as to the rights, duties or liabilities of parties hereto or any of them either during the continuance of the Agreement or after the completion or termination or purported termination hereof shall be referred to the sole Arbitrator to be appointed by LTF, according to the provisions of Arbitration & Conciliation Act, 1996 and rules thereunder and any amendment thereto from time to time. The Service Provider shall not have any dispute relating to the appointment of such Sole Arbitrator for any reason whatsoever. It is agreed between the parties hereto that nothing contained in Section 17 of Arbitration & Conciliation Act, 1996, shall in any way, affect the right of any of or preclude the parties to/from seek/seeking such interim relief/s in any Court of competent jurisdiction, including interim relief u/s 9 of the Arbitration & Conciliation Act, 1996, and the rules framed thereunder. The decision of the Arbitrator whether on questions of law or of fact shall be final and binding on the parties. The venue of arbitration shall be Mumbai or such other place that LTF may at its sole discretion determine and courts in Mumbai or such other place shall have exclusive jurisdiction.” Observations by the High Court: The High Court considered the definition of 'Court' under Section 2(1)(e) of the Arbitration Act. This section defines 'Court' to include the principal Civil Court of original jurisdiction and the High Court, which, in its ordinary original civil jurisdiction, could decide matters that would have been the subject of a suit. The High Court noted that it does not possess ordinary original civil jurisdiction over such matters, as all civil suits within its territorial jurisdiction are filed before the District Court. Consequently, the High Court held that it does not fall within the definition of 'Court' under Section 2(1)(e) of the Arbitration Act. Therefore, it cannot entertain civil suits or arbitration matters on its original side. The High Court further examined Section 42 of the Arbitration Act, which stipulates that if an application under Part I of the Arbitration Act is made to a particular court concerning an arbitration agreement, that court alone will have jurisdiction over all subsequent applications related to that agreement and arbitration proceedings. Since the High Court does not fit the definition of 'Court' under Section 2(1)(e), it held that it...

High Court Doesn't Qualify As Civil Court Under Section 2(1)(e) Of Arbitration Act, Has Jurisdiction Under Section 11(6): Punjab And Haryana High Court

Rajesh Kumar

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