Resolving the Jurisdictional Conundrum: Unpacking Section 29-A of the Arbitration and Conciliation Act, 1996

The Delhi High Court observed that from the definition of “court” under Section 2(1)(e)(i), it is plausible that the Principal Civil Court has the jurisdiction to entertain an application under Section 29-A(4).

Introduction

The ambiguity surrounding the “court” empowered to extend the mandate of an arbitrator for passing of an award under Section 29-A(4), Arbitration and Conciliation Act, 1996 (Act) has sparked intense debate and conflicting judicial pronouncements. This article seeks to contribute to the discourse by providing an alternative perspective on the interpretation of the term “court” under Section 29-A, with the aim of resolving the jurisdictional conundrum.

The ambiguity

Section 29-A(1) mandates that an award in a domestic arbitration shall be made within 12 months from the completion of pleadings by the parties under Section 23(4). The said time period is extendable by a period of six months with the consent of the parties. In the event of failure in passing of an award within the stipulated time, the mandate of the arbitrator(s) terminates unless the “Court” extends the period under Section 29-A(4). However, Section 29-A(4) does not prescribe the “Court” to which a party may apply for such extension which has raised some confusion. Though the term “court” for the purposes of domestic arbitration has been defined under Section 2(1)(e)(i) to mean the Principal Civil Court of Original Jurisdiction in a District and the High Court exercising its ordinary original civil jurisdiction, the additional power to substitute an arbitrator conferred upon the “court” under Section 29-A(6) while entertaining an application for extension, has also complicated the issue.

Conflicting judicial precedents

The interpretation of the term “court” under Section 29-A(4) came before the Delhi High Court in DDA v. Tara Chand Sumit Construction Co.¹, wherein it held that applications for extension of mandate in domestic arbitration must be filed before the High Court and in international commercial arbitration before the Supreme Court. The Delhi High Court observed that from the definition of “court” under Section 2(1)(e)(i), it is plausible that the Principal Civil Court has the jurisdiction to entertain an application under Section 29-A(4). However, the said interpretation would be in teeth of the powers under Section 11 which empowers the High Court to appoint an arbitrator in domestic arbitration. Since applications under Section 11 are filed irrespective of pecuniary jurisdiction, according to the Delhi High Court, the same analogy would apply to applications under Section 29-A. Notably, several other judgments of the Delhi High Court as well as other High Courts, have adopted this view.²

On the contrary, the Bombay High Court in Mormugao Port Trust v. Ganesh Benzoplast Ltd.³, has differed from the interpretation and held that the authority to extend the mandate of an arbitrator lies with the Principal Civil Court and not the High Court. In reaching this conclusion, the Bombay High Court held that the judicial dicta in State of W.B. v. Associated Contractors⁴ and Nimet Resources Inc. v. Essar Steels Ltd.⁵, squarely dispel any apprehensions regarding the substitution of an arbitrator while exercising the power to extend the time under Section 29-A of the Act. Notably, several other judgments of the Bombay High Court as well as other High Courts, have adopted this view.⁶

This issue also came to be dealt with by the Supreme Court in Chief Engineer (NH) PWD (Roads) v. BSC & C & C JV⁷. In a not so detailed order, the Supreme Court held that where the High Court lacks ordinary original civil jurisdiction, the power under Section 29-A(4) vests in the Principal Civil Court and the power to substitute an arbitrator under Section 29-A(6) is a consequential power vested in the “court” empowered to extend time, thus, implying that the Principal Civil Court can also exercise such powers.

In Sheela Chowgule v. Vijay V. Chowgule⁸, the Full Bench of the Bombay High Court, faced with conflicting judgments on this issue, held that in the event the arbitrator is appointed by the High Court under Section 11(6), the application under Section 29-A(4) would lie only to the High Court and in all other cases where arbitrator is appointed with the consent of the parties as per Section 11(2), to the Principal Civil Court. A special leave petition against the said order is currently pending before the Supreme Court.⁹

What was initially believed to be a resolution of the conflict by the Supreme Court in Chief Engineer¹⁰ has proven otherwise, as the lack of detailed reasoning in the judgment has allowed Sheela Chowgule¹¹ to reignite this debate.

Unpacking the ambiguity: A possible solution

A plain reading of the provisions of the Act suggests that the term “court” used in Section 29-A, when read with Section 2(1)(e)(i), refers to either the Principal Civil Court or the High Court with ordinary original civil jurisdiction, depending on the pecuniary jurisdiction in a given case. This interpretation is supported by several arguments.

Firstly, if the legislature had intended to restrict the power to substitute arbitrators under Section 29-A(4), as it did under Section 11 in relation to appointment of an arbitrator, it would have specifically provided in Section 29-A or used language similar to that in Section 15(2) (i.e. “where the mandate of an arbitrator terminates, a substitute arbitrator shall be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced”). The omission of any such language in Section 29-A suggests that reference to the definition of “court” under Section 2(1)(e) can be made. The view taken by the Supreme Court in Chief Engineer supports this argument.

Further, Section 14(2) also reinforces this view, as it allows a party to apply to the “Court” for termination of the mandate of an arbitrator, a provision that has also raised questions about which “Court” holds jurisdiction. However, the courts have consistently rejected the notion that such applications must only be brought before High Courts, affirming the jurisdiction of the Principal Civil Court in these matters.¹² Moreover, Sections 9 and 34, akin to Section 29-A, use the term “court”, and in such cases as well, the definition under Section 2(1)(e) is applied for determining the appropriate forum for filing these applications.

Secondly, the reasoning in Sheela Chowgule¹³ and other similar judgments, holding that “Court” should be the same which has appointed the arbitrator, is incorrect. This view overlooks the principle laid down in Nimet Resources¹⁴, where it was held that once an arbitrator is appointed under the Act, the Court loses jurisdiction and becomes functus officio. Therefore, the role of the High Court in appointing the arbitrator does not necessarily extend to the power to substitute the arbitrator or extend time under Section 29-A(4). The Supreme Court in Chief Engineer¹⁵ correctly recognised that the power to substitute an arbitrator is consequential and must be exercised by the “Court” empowered to extend the time under Section 29-A(4) of the Act, which may, in some cases, be the Principal Civil Court, rather than the High Court.

Thirdly, once the apprehension that the substitution of an arbitrator is a consequential power exercisable by the “Court” empowered to extend time is dispelled, there remains no basis to suggest that the “context otherwise requires” assigning any meaning to “Court” under Section 29-A(4) different from that provided in Section 2(1)(e). Therefore, from a bare reading of Section 2(1)(e)(i), what emerges is that in domestic arbitrations, the term “court” includes the Principal Civil Court, which also encompasses High Courts with ordinary original civil jurisdiction.

Interpreting Section 29-A(4) to mean that only the Supreme Court or High Court can extend the mandate of an arbitrator appointed by it would, therefore, contradict the legislative intent. Instead, Section 29-A(4) allows for a broader interpretation that aligns with the framework established under the Act.

Conclusion

The interpretation of the term “court” under Section 29-A(4) of the Act remains contentious with conflicting judicial pronouncements adding to the uncertainty. Despite these inconsistencies, a contextual and harmonious reading of the provisions suggests that the definition of “court” under Section 2(1)(e) could be applied to determine the appropriate forum. Accordingly, in domestic arbitrations, either the Principal Civil Court or the High Court with ordinary original civil jurisdiction, depending on the pecuniary limits in a given case, may be approached to extend the mandate of the arbitrator. While the judgment in Chief Engineer offers valuable guidance, a detailed and reasoned decision by the Supreme Court in Sheela Chowgule¹⁶ is necessary to bring finality and clarity to this jurisdictional ambiguity.