Introduction and background

  1. The Arbitration and Conciliation Act, 1996 ("Act") envisages a limited role for courts as facilitators and overseers of the arbitration process, through specific provisions which provide for their intervention at various stages. To this end, the Act expressly defines the term "Court" in section 2(1)(e) as:

    "2. Definitions:
    1. In this Part, unless the context otherwise requires.
      1. the principal civil court of original jurisdiction in a district and includes the High Court exercising its ordinary original jurisdiction."
  2. It merits mention in this regard that only the High Courts of Delhi, Bombay, Madras and Calcutta are vested with ordinary original jurisdiction. However, there are specific powers vested only upon High Courts and the Supreme Court under the Act, one of such power being the power of appointment of an arbitrator under Section 11 of the Act. This gives rise to an anomalous situation where in certain cases, the definition of the term "Court" contained in Section 2(1)(e) of the Act is materially different from the term "Court" used in is applicable, other provisions such as sections 29-A of the Act. This also causes an ambiguity in determining the appropriate Court having jurisdiction to entertain applications arising out of arbitration agreements as per section 42 of the Act.
  3. One specific anomaly that may arise is with respect to the powers vested with courts for appointment of arbitrators, and for extension of mandate of the arbitrator under Sections 11 and 29-A of the Act respectively. Under Section 11 (2) of the Act, the parties to an arbitration are free to agree upon a procedure for appointment of an arbitrator. This is subject to Section 11(6) of the Act, which provides that where such a procedure decided between the parties fails, the parties shall be entitled to approach the High Court, or the Supreme Court or an institution designated by such High Court or Supreme Court in order to appoint an arbitrator.
  4. Section 29-A of the Act which was inserted with effect from 23.10.2015 under the Arbitration & Conciliation Amendment Act, 2015 provides for the period within which the arbitration proceedings are to be completed. As per sub-section (1) of Section 29-A, for all domestic commercial arbitrations, this period is 12 months from the date of completion of pleadings. Under sub-section (3) of Section 29-A, this period of 12 months may be further extended by 6 months by the parties through mutual consent. However, if the award is not passed even within this extended period, the parties shall have to approach the court under sub-section (4) of Section 29-A in order to seek a further extension of time for completion of the arbitral proceedings. While passing an order for extension of the arbitrator's mandate under Section 29-A, the court is also empowered to replace/substitute an arbitrator, impose costs on one or both parties for the delay, and adjust/reduce the fee of the arbitrator if it finds that the proceedings have been delayed by the arbitral tribunal.
  5. Keeping the substantive scope of powers under Section 29-A in mind, it becomes relevant to examine as to which court which has the power to entertain and dispose off petitions under Section 29-A of the Act. Since the provision refers only to "court" and does not specify the exact definition, it stands to reason that the same refers to the term as defined under the Act itself i.e. Section 2(1)(e) of the Act. It merits mention in this regard, that Section 11(6) of the Act, expressly refers to the High Court and the Supreme Court while providing for Courts having jurisdiction to appoint arbitrators under the Act. Whereas, this reference is absent in Section 29-A, thereby giving rise to the question as to whether an application for extension of mandate of an arbitrator may be filed before any Court as defined under Section 2(1)(e) which is the principal civil court having jurisdiction in a district, and not only the High Court or the Supreme Court. This could present an anomalous situation, whereby an application seeking extension of mandate of an arbitrator appointed by a High Court or a Supreme Court, could come to be filed before a court satisfying the definition under Section 2(1)(e) of the Act. This poses an interesting question regarding whether the drafting of the Act contemplates such a situation and invites an examination of how various courts have interpreted Section 2(1)(e) of the Act.

    This article attempts to examine how various Courts have interpreted the word "Court" used in Section 29-A of the Act as opposed to other provisions in Part-I of the Act.
  6. Section 29-A of the Act came to be inserted by the Amending Act 3 of 2016 and was further thereafter amended again by way of Amendment Act 33 of 2019. Pursuant to the amendments, the implication is that after the expiry of the time granted under the Act to the tribunal to conclude proceedings, parties would have to approach the court for seeking an extension of the mandate of the tribunal.
  7. Section 29-A (4) of Act reads as follows:
    "(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."

    Interpretation of the term 'Court'

  8. In terms of Section 2(1)(e) of the Act, court, not in the case of international arbitration, means the principal civil court of original jurisdiction in a district, and includes High Court exercising ordinary original jurisdiction. Further, section 11(5) and 11(6) of the Act relate to the appointment of the arbitrators by the High Court or the Supreme Court, as the case may be. Unlike the remaining Sections of the Act that use the word "court", Section 11 specifically uses the words "High Court" or "Supreme Court" as the case maybe.
  9. Section 29-A of the Act provides the power to extend the mandate of the arbitrator, which has expired or to substitute an arbitrator. From the reading of Section 2(1)(e)of the Act, it is clear that in case of an arbitration other than international commercial arbitration, the principal Civil Court of original jurisdiction or the High Court, which exercises its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration, shall be the court. Ordinarily, the term defined in Section 2(1)(e) of the Act in the context of the power to extend the mandate of the arbitrator under Section 29-A(4) of the Act would be with the principal civil court. However, the Courts have consistently interpreted the term 'Court' in Section 29-A to mean the various High Courts or the Supreme Court.
  10. The definition in Section 2 of the Act, like most other definition starts with a qualification 'in this part, unless otherwise requires'. As such, if the context, otherwise requires that the said term should be understood differently, so much joint in the play by the statute is not taken away. Under Section29-A of the Act, the Court has the power to extend the period of the arbitrator. While doing so, the Court could also choose to substitute one or all the arbitrators and this is where the definition of 'Court' contained in 2(1)(e) of the Act does not fit. It is conceivable that the legislature would vest the power in the Principal Civil Judge to substitute an arbitrator who may have been appointed by the High Court or the Supreme Court. 1

  11. The Bombay High Court in Cabra Instalaciones Y. Servicios, SA v. Maharastra State Electricity Distribution Company Limited2, observed that for seeking extension of the mandate of an arbitral tribunal, there are substantive powers which conferred on the Court and more particularly when the Court has to substitute one or all the arbitrators, which is in fact a power to make appointment of a new/substitute arbitrator or any member of the arbitral tribunal. Thus, the Bombay High Court concluded that once the arbitral tribunal was appointed by the Supreme Court exercising powers under section 11(5) read with section 11(9) of the Act, it would only be the jurisdiction of the Supreme Court to pass orders on application under Section 29-A of the Act.
  12. In DDA v. Tara Chand Sumit Construction Co3, the Delhi High Court has categorically held that filing of a petition under section 29-A of the Act before the principal civil court for substitution of an arbitrator who had been appointed by the Supreme Court or the High Court would lead to a situation where the conflict would arise between the power of superior Courts to appoint arbitrators under Section 11of the Act and those of the Civil Court to substitute those arbitrators under Section 29-A of the Act. The Delhi High Court has thus interpreted the term "Court" in the context of Section 29-A of the Act, to be a court which has the power to appoint an arbitrator under Section 11 of the Act.
  13. Similarly, in Nilesh Ramanbhai Patel and Ors. v. Bhanubhai Ramanbhai Patel and Ors.4, the Gujarat High Court had considered Section 29-A of the Act and held that since the provisions of Section 29-A of the Act empowers the Court in seisin of such proceedings to substitute an arbitrator, "court" used in section 29-A of the Act should be understood to be the Court appointing the arbitrator.
  14. The Delhi High Court referred to the judgments of Gujarat High Court in the matter of Nilesh Ramanbhai Patel and Ors. v. Bhanubhai Ramanbhai Patel and Ors.5 as well as of the Bombay High Court in the case of Cabra Instalaciones Y Servicios, S.A. v. Maharashtra State Electricity Distribution Company Ltd.6, for concluding that an application under Section 29A of the Act seeking extension of mandate of the arbitrator would lie only before the Court which has power to appoint the arbitrator under Section 11 of the Act and not with the Civil Court.
  15. The Division Bench of Kerala High Court rendered in Lots Shipping Company Limited vs. Cochin Port Trust Board of Trustees7held that the term "court" contained in section 29A(4) requires a contextual interpretation apart from the meaning contained in section 2(1)(e)(i) of the Act. The Court asserted that the contextual interpretation is clearly permissible in view of the rider contained in sub-section (1) of Section (2), "unless the context otherwise requires". Contextual interpretation is required since the power conferred on the court under Section 29A, especially under sub-sections (4) and (5), are more akin to the powers conferred on the Supreme Court and the High Court, as the case may be, under Sections 11(6), 14 & 15 of the Act, for appointment, termination of mandate and substitution of the arbitrator.
  16. The Allahabad High Court in Indian Farmers Fertilizers Cooperative Limited v. Manish Engineering Enterprise8, while agreeing with and citing the above judgments in the context of arbitrations where the arbitrators were appointed by the High Court or Supreme Court, has differentiated a situation where an application for extension of mandate is filed in respect of an arbitration where the arbitrator was appointed by an authority other than the High Court or the Supreme Court. The Allahabad High Court held that in such cases, the principal district court having jurisdiction in terms of Section 2(1)(e) will be entitled to entertain and decide applications under Section 29-A as had been done in a coordinate bench of the Allahabad High Court in Lucknow Agencies v. U.P Avas Vikas Parishad9.
  17. Taking note of the principle enunciated herein above, the term "court" used in Section 29-A(4)has to be given an contextual and purposive interpretation, which may be in variance with the meaning conferred to the said term under sub-section Section 2(1)(e)(i) of the Act.10

  18. In Amit Kumar Gupta v. Dipak Prasad11, the arguments placed was since a petition under section 9 of the Act had been filed and entertained by the District Court, the High Court should not exercise jurisdiction under section 29-A of the Act, in view of section 42 of the Act. The Court observed that the word "court" used in section 29-A of the Act partakes the character of the appointing authority as has been prescribed in section 11 of the Act as the Court exercising jurisdiction under section 29-A of the Act may be required to substitute the arbitrator in the given case. The High Court of Calcutta confirmed that the non obstante clause of section 42 will get attracted only when the Courts are dealing with matters other than appointment and removal of arbitrators under section 11 and section 29-A of the Act.

  19. From the above judgment, it is clear that section 42of the Act will not be attracted and it is only the High Court which has the power to grant extension to the Arbitral Tribunal for making award.12

Conclusion

  1. The term "court" contained in section 29-A(4) of the Act has been provided a contextual interpretation apart from the meaning contained in Section 2(1)(e) of the Act. Section 42 of the Act only applies to application made under Part-I of the Act. It is clear from the mere reading of section 8 of the Act, where the application is made to judicial authorities and application under section 11 is made to Chief Justice or his designate, such applications would be outside the scope of section 42 of the Act. Applications under section 9 of the Act, being application made to Court and application under section 34 of the Act to set aside arbitral award are applications within section 42 of the Act. However, even though the word "Court" is used in section 29-A of the Act, various Courts have connoted different meaning to the word "Court" used in section 29-A of the Act and section 2(1)(e)(i)of the Act. The reasoning provided by the Courts is that the powers of substitution of an arbitrator are interpreted to be concomitant to the principal powers for granting an extension. Further, the absence of any provision for an appeal with respect to the exercise of power under Section 29-A of the Act, would indicate that such power is not to be exercised by the principal civil court of original jurisdiction.
  2. While Courts have through harmonious construction of Sections 2(e) and 29-A of the Act, provided a solution to the anomalous situation of overlap between the district courts and the High Courts in relation to exercise of powers under Section 2(e), 29-A and 42. There is still a need for the Act to be amended in order to bring in the same clarity into the statutory framework.

Footnotes

1. Nilesh Ramanbhai Patel & Ors. v. Bhanumahai Patel & Ors, Misc. Civil Application (O.J) No. 1 of 2018

2. 2019 SCC Online Bom 1437

3. 2020 SCC Online Del 2501

4. (2019)2 GLR 1537

5. supra

6. 2019 SCC Online Bom 1437

7. 2020 AIR (Kerala) 169

8. Indian Farmers Fertilizers Cooperative Ltd v. Manish Engineering Enterprises, 2022 SCCOnline All 150

9. 2019 ADJ Online 0169

10. Lots Shipping Company Limited v. Cochin Port Trust, 2020 SCC Online Ker 21443

11. 2021 SCC Online Cal 2174

12. Indian Farmers Fertilizers Cooperative Ltd v. Manish Engineering Enterprises, 2022 SCCOnline All 150

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