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Conflicting Views: Competent ‘Court’ Empowered to Extend the Mandate of the Arbitration Proceedings




INTRODUCTION


Arbitration, as an alternative mechanism for resolving disputes without there being hassle of going to courts, has become the most popular and resorted alternate dispute resolution mechanism for the settlement of disputes more particularly concerning commercial disputes between the parties in India. Same is being resorted to more often as there are dedicated arbitral tribunals for adjudication of disputes in an expeditious manner.


Although from the very inception of the Arbitration and Conciliation Act, 1996 (the “1996, Act”), the law to resolve disputes through alternate dispute resolution mechanism i.e., Arbitration, has substantially evolved in the last two and a half decades, in the account of the law laid down by the Supreme Court and by notifying relevant amendments in 1996, Act from time to time. However, it is observed that still there exist certain grey areas one of these being as to which Court i.e., the High Court or a Commercial Court, a party must approach for seeking an extension of time for concluding the Arbitral proceedings.


UNDERSTANDING SECTION 29A OF THE ARBITRATION AND CONCILIATION ACT


Under the statutory scheme of the Arbitration and Conciliation Act, 1996 (as amended), there is a strict timeline provided under Section 29A of the 1996 Act for the Arbitral Tribunal for concluding the Arbitral proceedings. As per the timeline provided under Section 29A of the 1996The autho, Act, the period to complete the exchange of pleadings from the date of appointment of arbitrators in an arbitration proceeding is 6 (six) months, followed by a further period of 12 (twelve) months for the completion of the arbitral proceedings [1]. In the event, the arbitration proceedings are not completed within the aforesaid period, the period for concluding the arbitral proceeding may be further extended with the consent of both parties to a maximum of 6 (six) additional months. [2]


However, an issue arises when the parties are not at a consensus to extend the period for the conclusion of arbitration proceedings, or when further extension of time beyond the already mutually extended period of 6 months, is required. In the aforesaid circumstances, any of the parties before the Arbitral Tribunal is at the liberty to approach the Court with an application for the aforesaid purpose of extension of time for the conclusion of arbitral proceedings, which may be granted once the Court is satisfied that there is a sufficient cause is made out to allow a request for an extension of time for the conclusion of arbitral proceedings.


Now, the issue arises as to which Court i.e., the High Court or the Commercial Court, to approach for seeking an extension of time for the conclusion of arbitral proceedings. On a plain reading of the provisions of 1996, Act, it is borne out that the parties must approach the ‘Court.’ The term ‘Court’ under the 1996, Act has been defined to be the Principal Civil Court of original jurisdiction in a district or a High Court having original civil jurisdiction or pecuniary jurisdiction as stipulated in Section 2(1)(e) of 1996, Act. However, the term ‘Court’ as provided under Section 2(1)(e) of the 1996, Act, has been interpreted in more than one way by various High Courts across the country and divergent views have been expressed on the issue as to which court is to be approached for seeking extension of the mandate of arbitration proceedings. Whether it is the Principal Civil Court of original jurisdiction i.e., Commercial Court, or is it the High Court where such an application is to be filed, is the issue on which there appears to be no consensus in the views expressed by the High Court.


INTERPRETATION OF THE TERM ‘COURT’ BY INDIAN COURTS


There is a line of judgments in re: Amit Kumar Gupta vs. Dipak Prasad[3], DDA vs. M/s. Tara Chand Sumit Construction Co.[4], Nilesh Ramanbhai Patel vs. Bhanubhai Ramanbhai Patel[5], Indian Farmers Fertilizers Cooperative Ltd. vs. M/s. Manish Engineering Enterprises[6], Cabra Instalaciones Y. Servicios, S.A. vs. Maharashtra State Electricity Distribution Company Ltd.[7] and M/s. Lots Shipping Company Limited vs. Cochin Port Trust Board of Trustees passed by various High Courts including Calcutta High Court, Delhi High Court, Gujarat High Court, Allahabad High Court, Bombay High Court, and Kerala High Court whereby while inter alia taking note of Section 29A (6) of 1996, Act, the High Courts have concluded that at the time of extension of the mandate of the arbitral proceedings, the ‘Court’ has the power to substitute an Arbitrator constituting the Arbitral Tribunal. Such power could only be exercised by the High Court as under Section 11 of 1996, Act, the High Court is only empowered to appoint an Arbitrator under the scheme of the 1996, Act and not the Principal Civil Court of original jurisdiction i.e., Commercial Court. Thus, since the power of substitution of the arbitrator cannot be exercised by the Principal Civil Court of original jurisdiction i.e., Commercial Court, the Court as defined under Section 2(1)(e) of 1996, Act, the ‘Court’ in context of Section 29A of 1996, Act be interpreted as the High Court having jurisdiction to appoint an Arbitrator under Section 11 of 1996, Act.


While the aforesaid line of judgments primarily relies on the reasoning given by the aforesaid High Courts that since the High Court only has the power to appoint an Arbitrator under Section 11 of the 1996, Act and therefore, the appropriate ‘Court’ for extending the mandate of the arbitral proceedings under Section 29A of 1996, Act, is the High Court only.


There is another important aspect in the matter, which has been considered by the Kerala High Court and the Allahabad High Court in another line of judgments in re: M/s. URC Construction (Private) Ltd. V. M/s. BEML Ltd.[8] and M/s. Lucknow Agencies and Another vs. U.P. Awas Vikas Parishad and Others [9], whereby a contrary view, has been expressed that if arbitration is other than an international commercial arbitration i.e., domestic arbitration, for extension of the period for concluding the arbitral proceedings, the Competent ‘Court’ under Section 2(1)(e) of 1996, Act, shall be the High Court only if the High Court exercises original civil jurisdiction to try suits, applications involving the commercial dispute. However, if the concerned High Court does not exercise original civil jurisdiction, the competent ‘Court’ to extend the mandate of the arbitral proceedings in terms of Section 29A of the 1996, Act, shall be any principal civil court of original jurisdiction in a district (not being a High Court) i.e., Commercial Court. This is more to reason because the application under Section 11 of 1996The author Act is maintained before the High Court given the specific term ‘High Court’ used therein, whereas the term used in sub-section 4 and 5 of Section 29A is ‘Court’ and not the High Court.


Although the aforesaid two conflicting views have been expressed by various High Courts in the Country as to which Court i.e., the High Court or the Principal civil court is a competent ‘Court’ to approach for seeking extension of the mandate of the arbitral proceedings.


CONCLUSION


However, one of the aspects which are yet to be considered by the Courts insofar as the first line of judgments is concerned whereby it has been held that since the power of substitution of the arbitrator does not lie with the Principal Civil Court of original jurisdiction i.e., Commercial Court, the High Court having jurisdiction to appoint an Arbitrator under Section 11 of 1996, Act, is a competent ‘Court’ to approach under Section 29A of 1996, Act. It is yet to be considered as to which Court would be competent to approach under Section 29A of the 1996, Act, whereby the Arbitrators have been appointed by the consent of the parties or by an institution and not by the High Court exercising powers under Section 11 of 1996, Act. Once can Hope that the ambiguity thus, arisen in the aforesaid respect on account of contrary judgments of various High Courts would very soon be settled by the Supreme Court would guide the parties to approach competent ‘Court’ for extension of mandate under Section 29A of 1996, Act.



FOOTNOTES

[1] as stipulated under sub-section (1) of section 29A of the Act.

[2] as laid down in sub-section (3) of section 29A of the Act.

[3] Amit Kumar Gupta vs. Dipak Prasad, 2021 SCC Online Cal 2174.

[4] DDA vs. M/s. Tara Chand Sumit Construction Co., O.M.P. (Misc.) (Comm.) No. 236 of 2019 decided on 12.05.2020, by Delhi High Court.

[5] Nilesh Ramanbhai Patel vs. Bhanubhai Ramanbhai Patel, 2019 (2) GR 1537.

[6] Indian Farmers Fertilizers Cooperative Ltd. vs. M/s. Manish Engineering Enterprises, Arbitration and Conciliation Application under Section 11(4) No. 5 of 2022, decided on 11.03.2022, by Allahabad High Court. [7] S.A. vs. Maharashtra State Electricity Distribution Company Ltd, 2019 SCC Online Bom 1437.

[8] M/s. URC Construction (Private) Ltd. V. M/s. BEML Ltd, (2017) 4 KLT 1140.

[9] M/s. Lucknow Agencies and Another vs. U.P. Awas Vikas Parishad and Others, Arbitration Application No. 77 of 2018, decided on 15.03.2019.

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