Sec 29A Arbitration Act :Power To Appoint Governs Power To Extend?

Kanika Singh
7 Jun 2020 4:56 AM GMT
Sec 29A Arbitration Act :Power To Appoint Governs Power To Extend?
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The Arbitration & Conciliation (Amendment) Act, 2015 ushered in several sweeping changes in the Arbitration & Conciliation Act, 1996 ('Act') with the laudable objective to make arbitration a preferred mode of dispute resolution of commercial disputes by seeking to make it efficacious, expeditious and cost effective. The Amendment, as is the case with all new legislations, also brought with it, its share of controversies in so far as the interpretation of several of the amended provisions and has engaged Courts of law and practitioners of arbitration law since then with regards to their interpretation and applicability. That one such amended provision which has raised several questions with regards to its implementation and interpretation has been the newly introduced Section 29 A.

S.29 A : Scope & Ambit

By introduction of Section 29A, the Legislature has sought to introduce fixed time lines for conclusion of arbitral proceedings with a view to ensure timely and prompt completion of the proceedings and to avoid delays that were the scourge of arbitral proceedings prior 2015. That while introducing the fixed time lines in S. 29A(1), the Legislature was conscious of the fact that in the facts of a particular case it may not be possible to achieve completion of proceedings within these time lines and thus provided in S. 29 A(3), a further extension with the consent of parties, and thererafter in case of parties not being at ad idem or further extension being needed, empowered the Court in S 29A(5) to further extend the time period for completion of arbitral proceedings. That while extending the period, the Amendment also empowered the Court under S. 29A(6) to substitute all or any of the Arbitrators, as the case may be.

'Court' in the Context of S29A : The Genesis of the Controversy

When confronted with applications filed under Section 29A (5) & (6), one of the questions that emerged before the courts was which would be the Court for the purpose of deciding such applications. This question emerged as while the word used in S. 29A is 'Court', which would then attract the definition of 'Court' as defined in Section 2(1)(e) of the Act for domestic arbitrations as "being the principal Civil Court jurisdiction 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". However, the nature of powers that were being exercised under S 29A included powers to substitute an arbitrator, which was essentially in the nature of and linked to the powers of appointment exercisable by the High Court or the Supreme Court alone, as the case maybe, and for this reason, should the term Court in Section 29A be read as the competent High Court, in case of domestic arbitration, which has exclusive power to appoint an Arbitrator and not the District Court, as per Section 2(1)(e) of the Act.

The Controversy over 'Court' goes to Court: Views of Different High Courts

A consistent and uniform answer to the above question has proved elusive so far, with different High Courts having taken different and at times contradictory views.

One of the earliest decisions on the controversy is the judgment by a Single Judge of the Kerala High Court in M/S Urc Construction Pvt Ltd vs Beml Limited[1] where in the context of sub­section (4) of Section 29A of the Act the learned Judge has concluded that the power would vest only with the civil court as defined under S 2(1)(e) of the Act. However, the judgment does not consider or discuss the impact of exercising of powers to appoint a substitute arbitrator and whether that would pose a challenge in the context of determining the appropriate Court in the context of S 29A.

Next came a judgment by a Single Judge of the Hon'ble Gujarat High Court in Nilesh Ramanbhai Patel and Ors. v. Bhanubhai Ramanbhai Patel and Ors.[2], which in this author's opinion takes a more nuanced view, to hold, that having regard to the provisions contained in S 29A(6) of the Act, the term 'Court' in S29A of the Act should be read to mean the Court that appointed the Arbitrator.

In Cabra Instalaciones Y Servicios, S.A. v. Maharashtra State Electricity Distribution Company Limited[3], a Single Judge of the Bombay High Court was confronted with the question of which would be the appropriate 'Court' for purposes of a S29A application in an international commercial arbitration. That the Court held that it would only be jurisdiction of the Supreme Court to pass orders on such application under S29A of the Act when the arbitration is an international commercial arbitration. It would be pertinent to note that the question with regards to appropriate Court in the context of S 29A in an international commercial arbitration no longer survives for n consideration in view of the 2019 Amendment to the Act which takes international commercial arbitration away from the ambit of the time-lines as provided in S29A.

That Delhi High Court had, so far, not had the occasion to deal with the controversy leading to much confusion in the District Courts as to which Court would be the competent Court for entertaining an application under S29A of the Act. The controversy seems to have been set at rest for now by a Single Judge of the Hon'ble Delhi High Court in the case of 'Delhi Development Authority v Tara Chand'[4], which has held that the term 'Court' in the context of Section 29A of the Act, would be a Court which has the power to appoint an Arbitrator under Section 11 of the Act and 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.. That while deciding as aforesaid, the Ld. Single Judge has placed reliance on the opening words of sub-Section (1) of Section 2 of the Act which begins with the expression "in this part, unless the context otherwise requires" and held that the term 'Court' would have to be interpreted differently in the context of S. 29 A. That the Court has also held 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.

With this judgment, the Delhi High Court has provided much needed clarity on an issue that confronted lawyers while filing the application under S. 29A of the Act and which had resulted in several applications being bounced around from High Court to District Court and back, due to divergent views on which would be the appropriate Court in the context of Section 29A of the Act.

Controversy, Resolved? What remains & the S14 Debate:

However, this may not be the last that is heard of the controversy in view of the divergent views of the various High Courts and in fact, the controversy may need to be re-visited for future arbitrations when the 2019 amendments to S. 11 of the Act are notified as the appointing Court would no longer be the High Court or the Supreme Court, thus taking away one of the limbs on which some of the present decisions on the controversy rest.

Another limb of the controversy, a satisfactory resolution of which so far eludes, is what constitutes 'Court' in the context of S14 of the Act, with the argument being largely similar to that in the context of S29A. Like in S29A, the word used in S.14 is 'Court' which then attracts the definition of 'Court' as defined in Section 2(1)(e) of the Act but the same is juxtaposed with the power exercised being in the nature of termination of mandate of an arbitrator, which begets the question that would a District Court have the power to terminate the mandate of an arbitrator appointed by a High Court being virtue of being a Court in terms of S. 2(1)(e) or would the 'Court' for purposes of S14 also be the Court that appointed the Arbitrator. So far, there is not much case law on this controversy and in actual practice the District Courts are entertaining and deciding applications under S14. Thus, it remains for the courts to settle this issue in an appropriate matter going forward and till then it continues to provide authors of artciles, like yours truly, and practitioners of arbitration law, food for thought.

[1] 2017 SCC Online Ker 20520

[2] Misc. Civil Application (O.J.) No.1 of 2018 in Petition under Arbitration Act No.56 of 2016, decided on 14.09.2018

[3] 2019 SCC Online Bom 1437

[4] OMP(Misc.)(Comm)236/2019, decided on 12.05.2020

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