Arbitration In IndiaCourt Lack Authority to Extend Time Limits for Arbitral Awards Without Original Civil Jurisdiction

The Hon’ble Supreme court in  Chief Engineer (NH) Pwd (Roads) Versus M/S Bsc & C And C JV [SLA (C) No. 10544/2024] held that High Courts do not have  original civil jurisdiction to extend time to pass arbitral award as per section 29a(4) Arbitration and Conciliation Act, 1996 (hereinafter referred to as “A&C Act”)

FACTS

In the present case, the parties involved were the Chief Engineer (NH) PWD (Roads), Government of Meghalaya (referred to as the ‘Petitioner‘) and M/s BSC&C & C JC (referred to as the ‘Respondent‘). Following the Arbitral Tribunal’s failure to issue the award within the stipulated time and its subsequent extension, the Respondent applied for an extension of the Arbitral Tribunal’s mandate under Section 29A of the Arbitration & Conciliation Act, 1996 (referred to as the “A&C Act”) before the Commercial Court, East Khasi Hills (referred to as the “Commercial Court”).

Subsequently, the Petitioner filed an application under Section 11 of the Commercial Court, read with Order 7 Rule 11 of the Code of Civil Procedure, 1908, challenging the jurisdiction of the Commercial Court to entertain an application under Section 29A of the A&C Act.

The Commercial Court determined ‘that it possessed the jurisdiction to entertain the application for extending the mandate of the Arbitral Tribunal under Section 29A of the A&C Act’. Consequently, the Petitioner filed a revision application before the Hon’ble High Court of Meghalaya.

ISSUES BEFORE THE SUPREME COURT

1. Whether a High Court without original civil jurisdiction has the authority to extend the time limit for passing an arbitral award under Section 29A(4) of the A&C Act?
2. Whether the term “Court” under Section 29A(4) of the A&C Act in conjunction with Section 2(1)(e) of the A&C Act, which defines the principal civil court of original jurisdiction?

CONTENTIONS OF THE PARTIES

The petitioner argued that the learned Commercial Court erred in interpreting the term ‘Court’ as the Principal Civil Court in a District under Section 2(1)(e) of the A&C act. They contended that the power to extend the mandate of an arbitrator inherently includes the power to appoint an arbitrator, which lies exclusively with the High Court under Section 11(6) of the A&C act. Therefore, the term ‘Court’ in Section 29A should be interpreted as the High Court.

The Petitioner further emphasized the importance of the phrase ‘unless the context otherwise requires’ as mentioned  in Section 2 of the A&C act. The Petitioner argued that this phrase indicates that the term ‘Court’ should be interpreted based on the specific context, suggesting that in the context of Section 29A of the A&C Act and ‘Court’ should mean the High Court.

The Petitioner also argued that accepting the Respondent’s interpretation would lead to results where Civil Courts would have the authority to substitute and appoint arbitrators while extending the mandate under Section 29A of the A&C Act, which will go against the A&C act itself.

The Respondent argued that the term ‘Court’ as defined in Section 2(1)(e) of the A&C act should be read as it is or in its literal meaning, which includes the Principal Civil Court of original jurisdiction in a District and the High Court, that has original ordinary civil jurisdiction.

The respondent noted  that the Hon’ble High Court of Meghalaya lacks ordinary original civil jurisdiction. Therefore, in the context of Section 29A of the A&C Act, the term ‘Court’ should pertain to the Principal Civil Court, specifically the Commercial Court in Shillong.

The Respondent contended that the phrase “unless the context otherwise requires” does not provide sufficient grounds to deviate from the clear definition provided in Section 2(1)(e) of the A&C Act.

DECISION AND FINDINGS

The Hon’ble Supreme Court examined the statutory  provisions of Section 29A of the A&C Act, to determine the correct application of the law regarding the extension of time for making arbitral awards and the authority to replace arbitrators.

The Hon’ble Court reiterated that the authority to extend the time limit for arbitral awards resides with the principal civil court of original jurisdiction. This includes High Courts only when they exercise ordinary original civil jurisdiction. Since the Hon’ble High Court of Meghalaya does not possess ordinary original civil jurisdiction, it does not qualify as the “court” defined under Section 2(1)(e) of the A&C act for the purposes of Section 29A of the A&C Act.

The term “principal Civil Court of original jurisdiction” does not encompass all High Courts unless they have specific original civil jurisdiction. The Hon’ble High Court of Meghalaya’s rejected the application of the Petitioner to extend the time limit for passing of the arbitral award as the Hon’ble High Court didn’t have the jurisdiction to do so.

By dismissing the Special Leave Petition, the Hon’ble Supreme Court reinforced that only the principal Civil Court of original jurisdiction has the legal competence to grant extensions and make substitutions of arbitrators under Section 29A of the A&C Act.

AMLEGAL REMARKS

The case involves a detailed interpretation of two provisions of the A&C act 1996: Section 2(1)(e) and Section 29A(4) of the A&C Qct. The primary contention was determining which court holds the jurisdiction to extend the time limit for an arbitral tribunal to pronounce an award.

The disputes centered on whether a court without principal ordinary civil jurisdiction can be considered a “court” under Section 29A(4) and Section 2(1)(e) of the A&C Qct. The case resolves around, if a court without principle ordinary civil jurisdiction can be considered to fall under section 29A(4) and section 2(1)(e) of the A&C act,

This ruling clarifies the jurisdictional boundaries and ensures that only courts with appropriate original civil jurisdiction can adjudicate matters related to extending arbitration timelines and replacing arbitrators, thereby maintaining the integrity and efficiency of the arbitration process.

– Team AMLEGALS assisted by Mr. Mehul Agrawal (Intern)