Introduction

The Delhi High Court, while hearing an interlocutory application in the matter between Delhi Development Authority vs. M/s Tara Chand Sumit Construction Company1 , had held that the court having jurisdiction to appoint an arbitrator under Section 11 of the Arbitration and Conciliation Act 1996 (Act) shall have the jurisdiction to extend the mandate or substitute the arbitrators under Section 29A of the Act i.e. the High Court or the Supreme Court as the case may be will have the jurisdiction to extend the mandate of the Arbitrator or substitute one or all the arbitrators in an arbitration under Section 29A of the Act.

Facts in brief

. The petitioner had filed a petition under Section 29A of the Act for extension of mandate of the arbitrator in the Delhi High Court. The court had issued notice to the respondent. However, the respondent in its reply objected to maintainability of the petition on the ground of lack of pecuniary jurisdiction of the Delhi High Court as the value of the claims was less than Rs. 2 Crores.

. Consequently, the petitioner sought the leave of the hon'ble court to withdraw the petition, with the liberty to file a fresh petition in the court of competent jurisdiction. The Delhi High Court therefore passed an order dated 31.07.2019, dismissing the petition as withdrawn granting the liberty sought by the petitioner.

. However, the petitioner had then filed the present interlocutory application under Section 151 of the Code of Civil Procedure 1908 for the recall of the aforesaid order.

Issue before the Court

. Whether the power to extend the mandate of the arbitrator lies with the Civil Court of original jurisdiction in terms of the definition of the term "Court" in Section 2(1)(e) of the Act.

Contentions in Brief

. Petitioner's Contention: The counsel for the petitioner argued that under Section 29A (3) and 29A (4) of the Act, the power to extend the mandate of an arbitrator rests with the court. The court can also substitute one or all of the arbitrators under Section 29A (6) and 29A (7). It was further argued that the term 'Court' in Section 29A would be the High Court, in case of domestic arbitration, which has the power to appoint an arbitrator and not the District Court as per Section 2(1)(e) of the Act.

. The counsel for the petitioner argued that the power of extending the mandate of an arbitrator also includes power to substitute the arbitrator and a court which does not have the power to appoint an arbitrator can certainly not have the power either to substitute the arbitrator or even to extend the mandate of the arbitrator under Section 29A of the Act.

. The petitioner relied on the judgment of the Gujarat High Court in the case of Nilesh Ramanbhai Patel and Ors. v. Bhanubhai Ramanbhai Patel and Ors2., and also of the Bombay High Court in Cabra Instalaciones Y Servicios, S.A. v. Maharashtra State Electricity Distribution Company Limited3 , to argue that in both the judgments, it had been held that the power to extend the mandate of the arbitrator lies only with the Supreme Court or the High Court, as the case may be, under Section 11 of the Act.

. Respondent's Contention: The counsel of the respondent argued that the Delhi High Court does not have the pecuniary jurisdiction to entertain the petition and the petitioner had clearly admitted to the fact and withdrawn the earlier petition and therefore it was not open for it to seek a recall of the said order.

. The respondent relied on the judgment of the Bombay High Court in the case of Chief Engineer v. Devdatta P. Shirodkar4, and the judgment of the Allahabad High Court in Jai Bahadur Singh v. State of U.P.5 , wherein the respective High Courts had refused to entertain the petitions as being not maintainable, leaving it to the petitioners to approach the concerned District Courts.

Decision of the Court

. The court took note of the important provisions of the Act as under:

Section 2- Definitions

(1) "In this Part, unless the context otherwise requires, -

(e) "Court"6 means-

(7) in the case of an arbitration other than international commercial arbitration, the principal Civil Court 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; (ii) in the case of international commercial arbitration, 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, and in other cases, a High Court having jurisdiction to hear appeals from decrees of courts subordinate to that High Court."

Section 29 A - Time limit for arbitral award7

".

(3) The parties may, by consent, extend the period specified in sub-section (1) for making award for a further period not exceeding six months.

(4) If the award is not made within the period specified in sub-section (1) or the extended period specified under sub-section (3), the mandate of the arbitrator(s) shall terminate unless the Court has, either prior to or after the expiry of the period so specified, extended the period:

Provided that while extending the period under this sub-section, if the Court finds that the proceedings have been delayed for the reasons attributable to the arbitral tribunal, then, it may order reduction of fees of arbitrator(s) by not exceeding five per cent for each month of such delay.

Provided further that where an application under sub-section (5) is pending, the mandate of the arbitrator shall continue till the disposal of the said application:

Provided also that the arbitrator shall be given an opportunity of being heard before the fees is reduced.

(5) The extension of period referred to in subsection (4) may be on the application of any of the parties and may be granted only for sufficient cause and on such terms and conditions as may be imposed by the Court.

(6) While extending the period referred to in sub-section (4), it shall be open to the Court to substitute one or all of the arbitrators and if one or all of the arbitrators are substituted, the arbitral proceedings shall continue from the stage already reached and on the basis of the evidence and material already on record, and the arbitrator(s) appointed under this section shall be deemed to have received the said evidence and material.

(7) In the event of arbitrator(s) being appointed under this section, the arbitral tribunal thus reconstituted shall be deemed to be in continuation of the previously appointed arbitral tribunal."

. The court after referring to the definition of term "Court" was of the opinion that the contention of the respondent that the power to extend the mandate of the arbitrator would lie with the Principal Civil Court seems plausible. However, it would lead to complications and would be perhaps be in teeth of the powers of the court under Section 11 of the Act. The question before the court was whether the term "Court" can be interpreted differently in the context of Section 29 A and it opined that Section 2 (1) of the Act gives the answer itself as it beings with the expression "in this part, unless the context otherwise requires".

. The court while commenting on a scenario where in a petition under Section 29A of the Act before the Principal Civil Court required substitution of the arbitrator, then the Principal Civil Court will be called upon to exercise the power of substituting the arbitrator, stated that, the arbitrator being substituted could be an arbitrator who had been appointed by the Supreme Court or the High Court. This would lead to a situation where the conflict would arise between the power of superior courts to appoint arbitrators under Section 11 of the Act and those of the Civil Court to substitute those arbitrators under Section 29A of the Act. This would be clearly in the teeth of provisions of Section 11 of the Act, which confers the power of appointment of arbitrators only on the High Court or the Supreme Court, as the case may be. The only way, therefore, this conflict can be resolved or reconciled, in my opinion, will be by interpreting the term "Court" in the context of Section 29A of the Act, to be a court which has the power to appoint an arbitrator under Section 11 of the Act.

. The court further stated 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.

. The court while coming to above conclusion referred to the judgments relied on by the counsel for the petitioner and distinguished the judgments relied by the counsel for the respondent with the case at hand.

. The Delhi High Court therefore, allowed the application and extended the mandate of the arbitrator while holding that the court having the jurisdiction to appoint an arbitrator under Section 11 of the Act would have the jurisdiction to extend the mandate of an arbitrator or substitute one or all the arbitrators under Section 29A of the Act.

Footnotes

1 Delhi Development Authority vs. M/s Tara Chand Sumit Construction Company, OMP (Misc.) (Comm.) 236/2019 decided on 12.05.2020.

2 Nilesh Ramanbhai Patel and Ors. v. Bhanubhai Ramanbhai Patel and Ors., Misc. Civil Application (O.J.) No.1 of 2018 in Petition under Arbitration Act No.56 of 2016, decided on 14.09.2018.

3 Cabra Instalaciones Y Servicios, S.A. v. Maharashtra State Electricity Distribution Company Limited, 2019 SCC Online Bom 1437

4 Chief Engineer v. Devdatta P. Shirodkar, 2018 SCC Online Bom 368.

5 Jai Bahadur Singh v. State of U.P., 2019 SCC Online All. 3068.

6 Arbitration and Conciliation Act 1996, Section 2(1)(e).

7 Arbitration and Conciliation Act 1996, Section 29A

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