Only Civil Court Of Original Jurisdiction Can Extend Arbitral Tribunal's Mandate, Not Referral Courts : Supreme Court

The Supreme Court on Thursday (January 29) held that applications for extending an arbitral tribunal's mandate under Section 29A (4) of the Arbitration & Conciliation Act, 1996 must be filed exclusively before the 'Court' as defined in Section 2(1)(e) i.e., the principal civil court of original jurisdiction, regardless of which authority appointed the arbitrators. A bench of Justices PS Narasimha and R Mahadevan set aside the Bombay High Court's decision which invalidated the Commercial Court's decision to extend the time limit under Section 29A (4). The High Court held that the application seeking an extension of the time limit needs to be filed before the 'Court', which had appointed the arbitrator. Disagreeing with the High Court's approach, the Court observed: “…we are of the opinion that the conclusion on the ground that there will be hierarchical difficulties, conflict of power or jurisdictional anomaly if a Civil Court entertains application under Section 29A for extension of time of an arbitral tribunal if the High Court under Section 11(6) of the Act has appointed the arbitrator(s) is untenable. This approach is hereby rejected.” The true purport of the word 'Court' mentioned under Section 29A would be a civil court of original jurisdiction, not the one which appointed the arbitrator, the court said. “The 'Court' under Section 29A shall be the Civil Court of ordinary original jurisdiction in a district and includes the High Court in exercise of its original civil jurisdiction under Section 2(1)(e), and shall not be the High Court or the Supreme Court under Section 11(6) of the Act.”, the court observed. The Court reasoned why the referral courts lack jurisdiction to supervise the arbitration or to decide upon an application seeking a time extension for passing of an award. It said that the “exercise of jurisdiction under Section 11 stands exhausted upon the constitution of the arbitral tribunal. There is no residual supervisory or controlling power left with the High Court or the Supreme Court over the arbitral proceedings after appointment is made.” “It is a misconception to assume that the Supreme Court or the High Court keeps a watch on the Conduct of Arbitral Proceedings or on Making of the Arbitral Award like the Orwell's “Big Brother is watching you”, the court added, reiterating that “the referral Court becomes functus officio once appointment has been made, it has no role or function as a Subjudice Sentinel.” The Court also addressed and rejected a potential argument based on Section 42 of the Act. While Section 42 grants exclusive jurisdiction to the court before which the first application in an arbitration is filed, the Court clarified that this provision does not apply to applications made under Section 11 for arbitrator appointment. Relying on the Constitution Bench precedent in State of Jharkhand v. Hindustan Construction Co., (2018) 2 SCC 602, the Court held that a High Court acting under Section 11 is not a 'Court' as defined under the Act for the purposes of Section 42. Therefore, its prior involvement does not confer exclusive jurisdiction over subsequent procedural applications, such as those under Section 29A. Background The bench heard the case where an arbitration was invoked out of a dispute arise out of a Memorandum of Family Settlement. The arbitration began, however during the course of the proceedings, an application under Section 29A (4) was made before the Commercial Court by the Appellant seeking an extension of time for passing of an arbitral award. However, during the pendency of the application before the commercial court, the arbitrator resigned, which led to filing of an application by the Respondent No.2 before the High Court to seek substitution of an arbitrator The Commercial Court's decision to extend the time limit was challenged by the Respondent No.1 before the High Court on the ground that the Commercial Court did not have jurisdiction to extend the duration under Section 29A on account of the appointment of the arbitrator by the High Court under Section 11. Setting aside the Commercial Court's order, the High Court observed that the application under Section 29A(4) is not maintainable before the Commercial Court as the presiding arbitrator was appointed by the High Court of Bombay at Goa in exercise of power under Section 11 of the Act. It was against this High Court's decision that the Appellant moved to the Supreme Court, which set aside the High Court's decision and restored the Commercial Court's decision to extend the time limit.HeadnoteArbitration and Conciliation Act, 1996; Section 2(1)(e), Section 11, and Section 29A — Jurisdiction to extend the mandate of an Arbitral Tribunal — Held that the expression "Court" used in Section 29A for the extension of time or substitution of arbitrators refers strictly to the Court as defined under Section 2(1)(e) of the Act - This definition encompasses the Principal Civil Court of original...

Only Civil Court Of Original Jurisdiction Can Extend Arbitral Tribunal's Mandate, Not Referral Courts : Supreme Court

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Yash Mittal

Only Civil Court Of Original Jurisdiction Can Extend Arbitral Tribunal's Mandate, Not Referral Courts : Supreme Court

Yash Mittal

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Yash Mittal

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