Allahabad High Court: While dealing with applications under Section 2A of the Arbitration and Conciliation Act, 1996 (‘the Act’), for extending the mandate of the Arbitral Tribunal, Shekhar B. Saraf, J., held that when there exists conflicting judgments from two coordinate benches, an earlier decision by a coordinate bench binds subsequent benches unless specifically overruled by a larger bench.
Background
This case concerns applications filed under Sections 29A(4) and 29A(5) of the Act, for extending the mandate of arbitral tribunals. The applications involve two distinct arbitration disputes, however, the primary legal issue was to determine which judgment would be considered binding when there exists conflicting judgments from coordinate benches, especially when a matter has been referred to a larger bench for adjudication.
Decision and Analysis
The Court’s decision is divided into two main issues: the binding nature of conflicting judgments from coordinate benches and the application of Section 29A of the Arbitration & Conciliation Act.
Issue 1: When there are conflicting judgments of different benches of co-equal strength of a Court on a similar question of law, which one assumes the status of binding precedent when the said question of law has been referred to a larger bench for adjudication?
The Court emphasized the principle of judicial discipline and the doctrine of stare decisis, which mandates that Courts follow their own previous decisions to ensure consistency, predictability, and respect for judicial authority. The Court further elucidated that the principle of stare decisis is essential for maintaining the integrity and coherence of judicial decisions and that it promotes legal certainty, fosters public confidence in the legal system, and enhances judicial efficiency by reducing the need for Courts to revisit settled legal issues.
The Court referred to the Supreme Court’s decision in State of U.P. v. Ajay Kumar Sharma, (2016) 15 SCC 289 to point out that that an exposition of law must be followed and applied by all coordinate benches and smaller benches and noted that this doctrine ensures that similar cases are decided uniformly, fostering a sense of stability and continuity in the law.
The Court acknowledged the challenges posed by conflicting precedents from benches of equal strength, noting that such conflicts may arise due to divergent interpretations or evolving societal norms. The Court suggested that one approach to resolving such conflicts is the principle of distinguishing, where meaningful differences between the conflicting precedents are identified and the most applicable precedent is applied to the case at hand while another approach was referring the matter to a larger bench for a more comprehensive review.
The Court referred to National Insurance Co. Ltd. v. Pranay Sethi, (2017) 16 SCC 680 wherein the Court stated that an earlier decision by a coordinate bench binds subsequent benches unless specifically overruled by a larger bench.
The Court said that doctrine of precedent, is not without its nuances and complexities, thus an earlier decision, even if considered incorrect by a later Bench, retains its binding effect on subsequent Benches of coordinate jurisdiction. The Court remarked that the principle which emerges is that the earlier decision must be followed until the decision of the larger bench is returned, which serves to promote certainty and predictability in the administration of justice. This principle is rooted in tradition, certainty, and the integrity of precedent itself.
The Court said that precedents are not mere legal doctrines, they are the embodiment of centuries of legal wisdom and collective judicial experience. When Courts deviate from established precedents without due consideration, they risk undermining the credibility and legitimacy of the legal system. Therefore, the Bench suggested that it is imperative for Courts to uphold the sanctity of legal precedents and adhere to established principles of judicial discipline, even in the face of conflicting opinions or pressures to depart from precedent.
Issue2: Which judgment will govern the field of law on Section 29A of the Act as far as this Court is concerned?
The Court discussed the conflicting judgments regarding the application of Section 29A of the Act, particularly whether an application for extension of the arbitral tribunal’s mandate should be made before the Court that appointed the arbitrator or the Court as defined under Section 2(1)(e) of the Act.
In Indian Farmers Fertilizers Coop. Ltd. v. Manish Engineering Enterprises, 2022 SCC OnLine All 150, it was held that when the Court has exercised its jurisdiction under Section 11 of the Act to appoint an arbitrator, an application under Section 29A for extension of the mandate should be maintainable before the same Court. This decision was considered the binding precedent on the issue until any contrary decision by a larger bench. The Court emphasized that, following the principle of stare decisis, the earlier decision in Indian Farmers Fertilizers (Supra) should govern the field of law on Section 29A until the larger bench provides its ruling. The Court further reiterated that in the absence of a specific order restraining the Court from deciding matters on issues referred to a larger bench, the existing precedents should be followed.
The Court concluded that based on the principles of judicial discipline and stare decisis, the earlier decision in Indian Farmers Fertilizers (Supra) should be followed. Consequently, the Court exercised its jurisdiction under Section 29A of the Act and granted the extension of the time period for making the arbitral award in Applications.
The Court also issued the following directions:
-
Since the appointment of the arbitrator was made by this Court in exercise of its powers under Section 11 of the Act, the instant applications filed under Section 29A(4) and Section 29(A(5) of the Act are maintainable before this Court.
The Court allowed the arbitration proceedings and extended the mandate of the arbitrator for 8 months from the date of this judgment.
[Geo Miller & Co. Pvt. Ltd. v. UP Jal Nigam, 2024 SCC OnLine All 1676, Decided on 17-05-2024]
Advocates who appeared in this case:
Advocates for the Applicants: S.D. Singh, Shadab Alam, Sujeet Kumar, Chhaya Gupta
Advocates For the Respondents: Vimlesh Kumar Rai, Anand Prakash Paul
Buy Arbitration and Conciliation Act, 1996 HERE
