Full Judgment Text
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
th
% Reserved on: 4 December, 2019.
th
Pronounced on: 12 May, 2020.
+ O.M.P. (MISC.) (COMM) 236/2019
DDA ..... Petitioner
Through: Ms. Kanika Singh, Advocate.
versus
M/S TARA CHAND SUMIT CONSTRUCTION CO. ... Respondent
Through: Mr. S.K. Jain with Mr. Akshu Jain,
Advocates.
CORAM:
HON'BLE MS. JUSTICE JYOTI SINGH
JYOTI SINGH, J.
O.M.P. (MISC.) (COMM) 236/2019
1. With the consent of the parties, arguments have been heard on the
main petition also.
I.A. No.11418/2019
2. This is an application filed on behalf of the petitioner under Section
151 CPC seeking recall of order dated 31.07.2019.
3. Petitioner had filed the present petition under Section 29A of
Arbitration and Conciliation Act, 1996 (hereinafter referred to as the
„Act‟) for extension of mandate of the learned Arbitrator. The Court had
issued notice to the respondent. Respondent filed its reply and objected to
OMP (MISC.) (COMM) 236/2019 Page 1 of 22
the maintainability of the petition before this Court on the ground of lack
of pecuniary jurisdiction as the value of claims was less than ₹ 2 Crores.
4. When the matter was listed on 31.07.2019, learned counsel for the
petitioner submitted that the amount of claims and counter claims in the
arbitration proceedings was below the pecuniary jurisdiction of this Court
and, accordingly, sought leave to withdraw the petition, with liberty to
file the same before the Court of competent jurisdiction. The petition was,
accordingly, dismissed as withdrawn granting the liberty sought.
5. Present application seeks recall of the Order dated 31.07.2019.
6. The contention of learned counsel for the petitioner/applicant is
that power to extend the mandate of an Arbitrator under sub-Section (4)
of Section 29A of the Act, beyond the period of 12 months or further
extended period in terms of sub-Section (3), rests with the Court.
Tribunal can extend the mandate by 6 months beyond the initial 12
months, with the consent of the parties, but any further extension of
mandate can only be by the Court. Court has vast power of extension of
the period, even after such period is over and while doing so, Court can
substitute one or all of the Arbitrators, as provided under Sections 29(6)
and 29(7) of the Act. It is argued that reading the aforesaid provisions,
the inescapable conclusion is that the term „Court‟ in Section 29A would
be the High Court, in case of domestic arbitration, which has exclusive
power to appoint an Arbitrator and not the District Court, as per Section
2(1)(e) of the Act.
7. It is further argued that the said interpretation finds force from the
fact that it would be inconceivable that Legislature would vest the power
in the Principal Civil Judge to substitute an Arbitrator, who may have
OMP (MISC.) (COMM) 236/2019 Page 2 of 22
been appointed by the Supreme Court or the High Court. Even otherwise,
it would be wholly impermissible since powers of appointment of
Arbitrators, when invoked, vest only in the Supreme Court or the High
Court, as the case may be, in terms of sub-Sections (4), (5) and (6) of
Section 11 of the Act and hence, the Civil Court cannot be given the
power to extend the mandate of the Arbitrator, so appointed.
8. Learned counsel, in order to substantiate this argument, submits
that the power of extending the mandate of an Arbitrator also includes
power to substitute the Arbitrator. If in a given case and for valid
reasons, the Court while extending the mandate of the Arbitrator finds
that it is so necessary, it can substitute the Arbitrator in the same
proceedings. Surely, this power is only with the Supreme Court or High
Court given the nature of Arbitration, and in case it is to be held that the
Civil Court can extend the mandate of the Arbitrator, then it would be
required to be held that the Civil Court while extending the mandate, if so
required, can also substitute the Arbitrator. This would be clearly in the
teeth of the provisions of Section 11 of the Act. 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, to say the least. Learned counsel
submits that this conflict can be resolved by understanding the term
„Court‟ for the purpose of Section 29A, as the Supreme Court/High Court
exercising power under Section 11 of the Act and any other interpretation
would be contrary to the entire Scheme of the Act.
9. It is also pointed out that in fact several Courts below have been
rejecting applications under Section 29A of the Act on this very ground
OMP (MISC.) (COMM) 236/2019 Page 3 of 22
that only Supreme Court or the High Court would have the power to
extend the mandate of the Arbitrator, as the power to appoint the
Arbitrator lies only with the Supreme Court or the High Court, as the case
may be.
10. On the merits of the case, learned counsel submits that the present
is a fit case for extension of mandate of the existing Arbitrator as the
arguments of both parties were nearly concluded. Most of the period of
12 months during the arbitration proceedings had elapsed due to the
dilatory tactics adopted by the respondent herein. It is not in the interest
of either party if the mandate of the Arbitrator is terminated at this stage
and a substitute Arbitrator is appointed, as is being suggested by the
respondent before the Court. The whole purpose of resorting to
arbitration for resolving the disputes between the parties is that the
proceedings are concluded as expeditiously as possible. It is, therefore,
prayed that the petition be allowed by this Court and mandate of the
Arbitrator be extended.
11. Learned counsel relies on a judgment of the Gujarat High Court in
the case of 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 , as also of
the Bombay High Court in Cabra Instalaciones Y Servicios, S.A. v.
Maharashtra State Electricity Distribution Company Limited, 2019
SCC Online Bom 1437 , to argue that in both the judgments, it has 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.
OMP (MISC.) (COMM) 236/2019 Page 4 of 22
12. Respondent has not filed a separate reply to the present application
but submitted that he would rely on the reply filed to the main petition
before the same was withdrawn by the petitioner.
13. Respondent has objected to the present application on two
grounds. Learned counsel argues that the claim amount, excluding
interest and cost, is ₹ 17,79,545/- and, thus, this Court does not have the
pecuniary jurisdiction to entertain the present petition. He submits that
learned counsel for the petitioner had clearly admitted to this fact and
had, therefore, withdrawn the petition, with liberty to approach the Court
of competent jurisdiction and it is not open to the petitioner to now seek a
recall of the order, once the petition has been withdrawn.
14. The next contention of the learned counsel for the respondent is
that he would have no objection to the extension of time for completion
of the proceedings and passing of the Award, provided the Court
exercises power under Section 29A(6) of the Act and substitutes the
present Arbitrator with a new Arbitrator. He submits that the present
Arbitrator has been deliberately delaying the proceedings, in connivance
with the petitioner herein, who is the respondent before the Arbitrator.
The Arbitrator made the mandatory Declaration under Section 12 of the
Act, after about 11 months of his appointment, on 10.01.2018. The
petitioner did not timely comply with the order dated 09.03.2018, of the
learned Arbitrator, by which the Arbitrator had directed the petitioner to
supply certified copies of the final bill paid to the Claimant, after which
only the respondent was to submit his Statement of Facts i.e. within four
weeks after receipt of the documents. Petitioner filed incomplete
documents on 23.08.2018, which, in any case, was after filing of the
OMP (MISC.) (COMM) 236/2019 Page 5 of 22
Statement of Facts by the respondent, on 05.05.2018 and Counter
Statement by the petitioner, on 16.07.2018. Respondent filed an
application on 28.11.2018 for calling of Junior Engineer as a witness,
who had received the final bill from the respondent. No objection was
raised by the petitioner to the said application and nor were any directions
passed to file a reply by the Arbitrator. On 11.12.2018, the Arbitrator
compelled the respondent to advance arguments without complete
documents being filed by the petitioner. Subsequently, on 13.12.2018,
the Arbitrator vide email directed the petitioner to file its reply within 15
days to the application, which was then filed on 29.12.2018. After
considering the reply, the Arbitrator vide email dated 01.01.2019 directed
the respondent to furnish the name of the Junior Engineer whom the
respondent wanted to call as a witness. The respondent furnished the
name on 02.01.2019, but vide email dated 09.01.2019, the Arbitrator
abruptly refused to call the witness. This attitude of the Arbitrator
compelled the respondent to move an application under Section 13 of the
Act. Respondent, therefore, submits that the application be dismissed and
no extension of time be granted, unless the Arbitrator is substituted by the
Court.
15. In support of his contention that the District Court would have the
jurisdiction to entertain the present petition and that this Court does not
have pecuniary jurisdiction, learned counsel for the respondent has relied
on the judgment of the Bombay High Court in the case of Chief Engineer
v. Devdatta P. Shirodkar, 2018 SCC Online Bom 368 , as well as the
judgment of the Allahabad High Court in Jai Bahadur Singh v. State of
U.P., 2019 SCC Online All. 3068 , wherein the respective High Courts
OMP (MISC.) (COMM) 236/2019 Page 6 of 22
refused to entertain the petitions as being not maintainable, leaving it to
the petitioners to approach the concerned District Courts.
16. Learned counsel for the petitioner, in rejoinder, has argued that the
proceedings before the Arbitrator were at the stage of reserving the case
for passing of the Award. Substitution of an Arbitrator cannot be sought
as a matter of right and the respondent even on merits has no ground to
seek such a substitution. In support of this, learned counsel relies on a
judgment of this Court in NCC Ltd. v. Union of India, 2018 SCC Online
Del 12699 . She further argues that perusal of the record of the Arbitrator
would clearly indicate that it was the respondent who was avoiding
adjudication of the disputes on merits. The Arbitrator was appointed on
10.01.2018 and fixed a schedule for completion of pleadings vide letter
dated 23.01.2018. Respondent filed its Statement of Claim after four
months i.e. on 05.05.2018. In total, seven hearings were held before the
Arbitrator. On the first hearing, respondent stated that he had sent the
rejoinder, but neither the Arbitrator nor the petitioner had received the
same and the hearing was adjourned. During the second hearing on
15.09.2018, counsel for the respondent was absent and the matter was
adjourned to 29.10.2018. After 10 months from the date of the Arbitrator
entering upon reference, respondent filed an application raising
objections and seeking a declaration under Section 12(1) of the Act from
the Arbitrator. Third hearing was held on 29.10.2018, when again the
main counsel for the respondent did not reach for the hearing and
continued to raise objections about his appointment. Fourth hearing was
held on 22.11.2018, when counsel for the respondent conceded that the
objections raised against the appointment of the Arbitrator stood settled
OMP (MISC.) (COMM) 236/2019 Page 7 of 22
and the proceedings may continue. Part arguments were addressed by
both the parties and the proceedings were adjourned to 11.12.2018 for
further arguments. On 28.11.2018, respondent filed an application for
calling of the concerned Junior Engineer as a witness regarding
verification of submission of the final bill. This was nothing but a
delaying tactic, after most of the arguments had been concluded.
Nevertheless, the Arbitrator heard arguments on the application and
dismissed the same vide Order dated 09.01.2019. During the sixth
hearing on 18.01.2019, respondent moved an application under Section
13 of the Act, requesting the Arbitrator to terminate its mandate through a
proxy counsel. Arbitrator fixed the date for hearing of the said
application, but none appeared on behalf of the respondent.
17. Learned counsel for the petitioner further submits that a letter dated
02.02.2019 was given by the respondent to the Arbitrator stating that 12
months period under Section 29A of the Act had elapsed on 23.01.2019
and, thus, after recording the entire history of the proceedings and taking
note of the objection by the respondent, the Arbitrator had no option but
to suspend the proceedings, in the absence of consent by the respondent,
for extension of time. The entire chronology, thus, shows that it was the
respondent who had delayed the proceedings and is wrongly blaming the
petitioner and the Arbitrator.
18. Insofar as the judgments relied upon by the respondent are
concerned, learned counsel for the petitioner has sought to distinguish
them. She submits that the judgment in the case of Chief Engineer
( supra ) is not applicable, as there was no dispute therein as to whether the
High Court or the District Court would have jurisdiction for extension of
OMP (MISC.) (COMM) 236/2019 Page 8 of 22
mandate of the Arbitrator under Section 29A of the Act, since neither of
the parties had taken any objection, as is taken by the respondent herein.
She submits that this would be clear from reading of Para 6 of the said
judgment, which reads as under:
“ 6. I have carefully considered the rival circumstances and
the submissions made and I do not find that any case for
interference is made out. It is apparent from the facts as set
out that the earlier Arbitrator retired without passing any
award and thereafter the petitioners failed to appoint any
Arbitrator in his place and therefore, the respondent were
required to approach this Court. This Court found that the
appropriate remedy for the respondent is to approach the
learned District Judge, as the mandate of the Arbitrator had
expired. Section 29-A of the Act makes it clear that an
Arbitrator is required to make the award within a period of
12 months from the date the arbitral tribunal enters upon
the reference and which period can be extended by consent
for a further period of six months. Under sub Section 4 of
Section 29-A, 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)
terminates unless the Court has, either prior to or after the
expiry of the period so specified, extended the period. Sub
Section 5 of Section 29-A provides that such extension of
period under sub-Section (4) can be ordered on the basis of
an application of any of the parties and the Court can grant
such extension for sufficient cause and on such terms as may
be imposed. Sub Section 6 of Section 29-A is material
which provides that 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. It was not disputed during the
course of arguments at bar that the District Court would
have jurisdiction to appoint/substitute an Arbitrator in the
place of the Arbitrator whose mandate had lapsed. If that be
so, the impugned order cannot be said to be without
jurisdiction. Mr. Amonkar, the learned counsel for the
OMP (MISC.) (COMM) 236/2019 Page 9 of 22
petitioners submitted that the application under Section 29-
A of the Act was not maintainable, as the said Section was
introduced by the amendment in the year 2015. I am afraid
that such an contention was never raised before the learned
District Judge. In any event, the petitioners have not raised
any ground about the suitability of Mr. Borkar as being the
Arbitrator to decide on the dispute between the parties. The
impugned order certainly does not result into any manifest
injustice to the petitioners. In that view of the matter, I
decline to entertain the petition, which is accordingly
dismissed with no order as to costs. ”
19. Insofar as the judgment in the case of Jai Bahadur Singh ( supra )
is concerned, it is argued that the said judgment does not decide the issue
of jurisdiction of Civil Courts to extend the mandate of the Arbitrator or
substitute them under Section 29A of the Act, which really is the
controversy in the present petition.
20. I have heard learned counsels for the parties.
21. The main controversy that arises for consideration in the present
application is whether the petition, as filed earlier and subsequently
withdrawn by the petitioner, is at all maintainable in this Court or 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. In order to decide the said issue, it is
important to take note of certain provisions of the Arbitration and
Conciliation Act, 1996 which are as under:
“2. Definitions:
—
(1) In this Part, unless the context otherwise requires,
xxxx xxxx xxxx
(e) “Court” means— (i) in the case of an arbitration other
than international commercial arbitration, the principal
OMP (MISC.) (COMM) 236/2019 Page 10 of 22
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;
xxxx xxxx xxxx
29A. Time limit for arbitral award.—
(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.
(5) The extension of period referred to in sub-Section (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.
OMP (MISC.) (COMM) 236/2019 Page 11 of 22
(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.
xxxx xxxx xxxx
11. Appointment of arbitrators.—
(5) Failing any agreement referred to in sub-Section (2), in
an arbitration with a sole Arbitrator, if the parties fail to
agree on the Arbitrator within thirty days from receipt of a
request by one party from the other party to so agree the
appointment shall be made, upon request of a party, by [the
Supreme Court or, as the case may be, the High Court or
any person or institution designated by such Court].
(6) Where, under an appointment procedure agreed upon by
the parties,—
(a) a party fails to act as required under that procedure; or
(b) the parties, or the two appointed arbitrators, fail to
reach an agreement expected of them under that procedure;
or
(c) a person, including an institution, fails to perform any
function entrusted to him or it under that procedure, a party
may request [the Supreme Court or, as the case may be, the
High Court or any person or institution designated by such
Court] to take the necessary measure, unless the agreement
OMP (MISC.) (COMM) 236/2019 Page 12 of 22
on the appointment procedure provides other means for
securing the appointment.
22. Section 11(5) and (6) of the Act relate to appointment of
Arbitrators by the High Court or the Supreme Court, as the case may be
and details the procedure to do so, therein. In case of International
Commercial Arbitration, the power of appointment is vested only with
the Supreme Court while in other arbitrations, High Court has the power
to make appointment in terms of sub-Sections (5) or (6) of the Act.
23. Section 29A came to be inserted in the Statute by the Amending
Act 3 of 2016 with effect from 23.10.2015. The Section has been
extracted above. Perusal of the Section indicates that it provides for
timelines within which the Award has to be made, including the timeline
up to which the Tribunal can extend the mandate with the consent of the
parties. The power of the Court to extend the mandate has no timelines,
as is clear from reading the relevant provision. One of the important
provisions of this Section is the power of the Court to substitute one or all
of the Arbitrators, while extending the mandate.
24. Sub-Section (1) of Section 29A provides a time limit of 12 months
within which the Award shall be made. Prior to the Amendment of 2019,
the starting point of the 12 months was the date when the Arbitral
Tribunal entered upon reference, but post 2019 Amendment, the
commencement date is when the pleadings before the Arbitral Tribunal
are completed. Sub-Section (3) enables the Arbitral Tribunal to extend
the period of 12 months by a further period of six months, with the
consent of the parties. Sub-Section (4) of Section 29A provides that if the
Award is not made within the statutory period of 12 months or the
OMP (MISC.) (COMM) 236/2019 Page 13 of 22
extended period under sub-Section (3), the mandate of the Arbitrator shall
terminate, unless the Court, either prior thereto or after the expiry of the
period, extends the mandate. The extension, of course, would be granted
on an application by any of the parties, but only for sufficient cause and
on such terms and conditions as may be imposed by the Court and this is
so stipulated in sub-Section (5) of Section 29A.
25. Section 29A of the Act, incorporates an important provision by
way of sub-Section (6) and which, in my opinion, is relevant for deciding
the controversy in the present case. This provision confers on the Court a
significant power of substituting one or all of the Arbitrators, while
extending the mandate under sub-Section (4), if the need arises and in
case, such substitution is made by the Court, the Arbitral proceedings
shall continue from the stage already reached and on the basis of evidence
or material, already collected. Therefore, when it comes to the time limits
for passing the Award or the extension of mandate, the Section is a
complete Code in itself.
26. When one looks at the definition of the term „Court‟ under Section
2(1)(e) of the Act, it is clear that in case of International Commercial
Arbitration, the Court would mean 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 the sui or the High Court having jurisdiction to
hear appeals of Courts subordinate to that High Court. However, in cases
of arbitration other than International Commercial Arbitration, Court
would be the Principal Civil Court of original jurisdiction in a District
and includes the High Court in exercise of its ordinary original civil
OMP (MISC.) (COMM) 236/2019 Page 14 of 22
jurisdiction, having jurisdiction to decide questions forming subject
matter of the arbitration if the same had been the subject matter of the
suit. This definition has been substituted by way of the Amendment Act 3
of 2016, which came into effect from 23.10.2015.
27. If the definition of the term „Court‟ is looked into, no doubt the
contention of the respondent seems plausible that the power to extend the
mandate of the Arbitrator would lie with the Principal Civil Court.
However, on a careful analysis, in my opinion, this interpretation would
lead to complications and would perhaps be in the teeth of the powers of
the Courts under Section 11 of the Act. Thus, the question that poses a
challenge is, whether the term „Court‟ can be interpreted differently in the
context of Section 29A. In my view, sub-Section (1) of Section 2 of the
Act itself gives that answer, as it begins with the expression “ in this part,
unless the context otherwise requires ”.
28. Power to extend the mandate of an Arbitrator under Section
29A(4), beyond the period of 12 months and further extended period of
six months only lies with the Court. This power can be exercised either
before the period has expired or even after the period is over. Neither the
Arbitrator can grant this extension and nor can the parties by their mutual
consent extend the period beyond 18 months. Till this point, interpreting
the term „Court‟ to mean the Principal Civil Court as defined in Section
2(1)(e) would, to my mind, pose no difficulty. The complexity, however,
arises by virtue of the power of the Court to substitute the Arbitrator
while extending the mandate and this complication is of a higher degree if
the earlier Arbitrator has been appointed by the High Court or the
Supreme Court. Coupled with this, one cannot lose sight of the fact that
OMP (MISC.) (COMM) 236/2019 Page 15 of 22
the Legislature in its wisdom has conferred the powers of appointment of
an Arbitrator only on the High Court or the Supreme Court, depending on
the nature of arbitration and as and when the power is invoked by either
of the parties. There may be many cases in which while extending the
mandate of the Arbitrators, the Court may be of the view that for some
valid reasons the Arbitrators are required to be substituted, in which case
the Court may exercise the power and appoint a substituted Arbitrator and
extend the mandate.
29. In case a petition under Section 29A of the Act is filed before the
Principal Civil Court for extension of mandate and the occasion for
substitution arises, then the Principal Civil Court will be called upon to
exercise the power of substituting the Arbitrator. In a given case, 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. Accepting the contention of the respondent would lead to an
inconceivable and impermissible situation where, particularly in case of
Court appointed Arbitrators, where the Civil Courts would substitute and
OMP (MISC.) (COMM) 236/2019 Page 16 of 22
appoint Arbitrators, while extending the mandate under Section 29A of
the Act.
30. Similarly, in case of International Commercial Arbitration, if one
was to follow the definition of the term Court under Section 2(1)(e) and
apply the same in a strict sense, then it would be the High Court
exercising Original or Appellate jurisdiction which would have the power
to extend the mandate and substitute the Arbitrator. In such a situation,
the High Court would be substituting an Arbitrator appointed by the
Supreme Court which would perhaps lead to the High Court over
stepping its jurisdiction as the power to appoint the Arbitrator is
exclusively in the domain of the Supreme Court. Thus, in the opinion of
this Court, an application under Section 29A of the Act seeking extension
of the mandate of the Arbitrator would lie only before the Court which
has the power to appoint Arbitrator under Section 11 of the Act and not
with the Civil Courts. The interpretation given by learned counsel for the
respondent that for purposes of Section 29A, Court would mean the
Principal Civil Court in case of domestic arbitration, would nullify the
powers of the Superior Courts under Section 11 of the Act.
31. 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. There is, thus, no merit in the
contention of the learned counsel for the respondent that this Court has no
pecuniary jurisdiction to entertain the petition, the value of the claims
being below Rs. 2 Crores.
OMP (MISC.) (COMM) 236/2019 Page 17 of 22
32. I am fortified, in my view, by the judgment of the Gujarat High
Court in the case of Nilesh Ramanbhai Patel ( supra ), relevant paras of
which read as under:
“ 15. This provision thus make a few things clear. Firstly, the
power to extend the mandate of an arbitrator under sub-sec.
(4) of Sec. 29A beyond the period of twelve months or such
further period it may have been extended in terms of sub-
sec. (3) of Sec. 29A rests with the Court. Neither the
arbitrator nor parties even by joint consent can extend such
period. The Court on the other hand has vast powers for
extension of the period even after such period is over. While
doing so, the Court could also choose to substitute one or all
of the arbitrators and this is where the definition of term
'Court' contained in Sec. 2(l)(e) does not fit. It is
inconceivable 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 Supreme
Court. Even otherwise, it would be wholly impermissible
since the powers for appointment of an arbitrator when the
situation so arises, vest in the High Court or the Supreme
Court as the case may be in terms of sub-secs. (4), (5) and
(6) of Sec.11 of the Act. If therefore, there is a case for
extension of the term of an arbitrator who has been
appointed by the High Court or Supreme Court and if the
contention of Shri Mehta that such an application would lie
only before the Principal Civil Court is upheld, powers
under sub-sec. (6) of Sec. 29A would be non-operatable. In
such a situation, sub-sec. (6) of Sec. 29A would be rendered
otiose. The powers under sub sec. (6) of Sec. 29A are of
considerable significance. The powers for extending the
mandate of an arbitrator are coupled with the power to
substitute an arbitrator. These powers of substitution of an
arbitrator are thus concomitant to the principal powers for
granting an extension. If for valid reasons the Court finds
that it is a fit case for extending the mandate of the
arbitrator but that by itself may not be sufficient to bring
about an early end to the arbitral proceedings, the Court
OMP (MISC.) (COMM) 236/2019 Page 18 of 22
may also consider substituting the existing arbitrator. It
would be wholly incumbent to hold that under sub-sec. (6) of
Sec. 29A the Legislature has vested powers in the Civil
Court to make appointment of arbitrators by substituting an
arbitrator or the whole panel of arbitrators appointed by the
High Court under Sec. 11 of the Act. If we, therefore, accept
this contention of Shri Mehta, it would lead to irreconcilable
conflict between the power of the superior Courts to appoint
arbitrators under Sec. 11 of the Act and those of the Civil
Court to substitute such arbitrators under Sec. 29A(6). This
conflict can be avoided only by understanding the term
"Court" for the purpose of Sec. 29A as the Court which
appointed the arbitrator in case of Court constituted
Arbitral Tribunal.
16. Very similar situation would arise in case of an
international commercial arbitration, where the power to
make an appointment of an arbitrator in terms of Sec. 11
vests exclusively with the Supreme Court. In terms of Sec.
2(i)(e), the Court in such a case would be the High Court
either exercising original jurisdiction or appellate
jurisdiction. Even in such a case, if the High Court were to
exercise power of substitution of an arbitrator, it would be
transgressing its jurisdiction since the power to appoint an
arbitrator in an international commercial arbitrator rests
exclusively with the Supreme Court.”
33. A somewhat similar controversy arose before the Bombay High
Court in the case of Cabra Instalaciones Y Servicios, S.A. ( supra ), where
the dispute was with respect to the maintainability of the petition under
Section 29A of the Act. Since the said case related to International
Commercial Arbitration, the Arbitral Tribunal had been appointed by the
Supreme Court exercising power under Section 11(5) of the Act. The
Bombay High Court was of the view that when the Arbitrators are
OMP (MISC.) (COMM) 236/2019 Page 19 of 22
appointed by the Supreme Court, the High Court exercising power under
Section 29A of the Act cannot make an appointment of a substitute
Arbitral Tribunal or substitute any member of the Tribunal, as prescribed
under sub-Section (6) of Section 29A, as it would be the exclusive power
and jurisdiction of the Supreme Court, in view of the provisions of
Section 11(5) of the Act. Relevant para of the judgment reads as under:
“ 7. On a plain reading of Section 29A alongwith its sub-
sections, it can be seen that for seeking extension of the
mandate of an arbitral tribunal, these are substantive
powers which are conferred on the Court and more
particularly in view of the clear provisions of sub-section (6)
which provides that while extending the period referred to in
sub-section (4), it would be open to the Court 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 certainly when the arbitration in
question is an international commercial arbitration as
defined under Section 2(1)(f) of the Act, the High Court
exercising power under Section 29A cannot make an
appointment of a substitute arbitral tribunal or any member
of the arbitral tribunal as prescribed under sub-section (6)
of Section 29A as it would be the exclusive power and
jurisdiction of the Supreme Court considering the provisions
of Section 11(5) read with Section 11(9) as also Sections 14
and 15 of the Act. It also cannot be overlooked that in a
given case there is likelihood of an opposition to an
extension application and the opposing party may pray for
appointment of a substitute arbitral tribunal, requiring the
Court to exercise powers under sub-section (6) of Section
29A. In such a situation while appointing a substitute
arbitral tribunal, when the arbitration is an international
commercial arbitration Section 11(9) would certainly come
into play, which confers exclusive jurisdiction on the
Supreme Court to appoint an arbitral tribunal. ”
OMP (MISC.) (COMM) 236/2019 Page 20 of 22
34. Insofar as the judgments relied upon by the respondent are
concerned, learned counsel for the petitioner has rightly distinguished
both. In the case of Chief Engineer ( supra ), the parties had not disputed
during the course of the arguments that the District Court would have
jurisdiction to appoint/substitute the Arbitrator in place of the Arbitrator
whose mandate had lapsed. In view of the above, the issue involved in
the present case in fact did not even arise for consideration. In any case,
as aforesaid, this Court is in agreement with the two judgments cited by
the petitioner, as a proposition of law. Insofar as the judgment in the case
of Jai Bahadur Singh ( supra ) is concerned, this was a case where a writ
petition had been filed before the Allahabad High Court and all that the
Court observed was that since the period of six months had also expired,
issuance of a writ of mandamus was not possible and any further
extension was possible only if the parties sought such extension in
accordance with provisions of Section 29A of the Act, before the Civil
Court of competent jurisdiction. The issue of competence of a Civil Court
to entertain a petition under Section 29A was neither raised nor decided
by the Court. Both the judgments, therefore, have no application to the
present case.
35. For the reasons stated above, the application is allowed. Order
dated 31.07.2019 is recalled. Petition is restored to its original number.
36. Insofar as the objection of the respondent to the continuation of the
present Arbitrator is concerned, in my view, the same also has no merit.
There is no dispute between the parties that the proceedings had reached
the stage where most of the final arguments were concluded and the
proceedings had been adjourned for remaining arguments. At this stage,
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for the Court to substitute the Arbitrator would cause an unnecessary
financial burden on the parties. Respondent has not been able to make out
a case for substitution of the present Arbitrator. The best course of action,
in the interest of the parties, would be to extend the mandate of the
present Arbitrator by a period of four months for completion of the
Arbitral proceedings and passing of the Award.
37. There are allegations and counter allegations made by the
respective counsels as regards the delay in the proceedings. It is made
clear that no further adjournments will be sought by either of the parties
on the date fixed by the Arbitrator for concluding the arguments. The
Arbitrator would fix the hearing as per the mutual convenience of parties.
38. Petition is accordingly allowed. The mandate of the Arbitrator is
extended by a period of four months from today. Period between
24.01.2019 and today is hereby regularised.
39. No orders as to costs.
JYOTI SINGH, J
May 12 , 2020
srb
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