SC Sets Aside Decision Of Orissa High Court Appointing Arbitrator U/s. 11(6) Arbitration Act Without Jurisdiction

The Bench of Justice MR Shah and Justice BV Nagarathna has set aside the decision of the Orissa High Court for proceeding without jurisdiction by entertaining the application under Section 11(6) of the Arbitration and Conciliation Act, 1996 with respect to the contract agreement for which the respondent-claimant earlier initiated the arbitration proceedings in the Court at Vishakhapatnam.

A specific objection was raised by the appellant before the High Court on the entertainability and/or maintainability of the application under Section 11(6) of the Arbitration Act before the Orissa High Court.

The appellants submitted that as the respondent­ claimant had initiated proceedings under Section 9 of the Arbitration Act in the Court at Vishakhapatnam, only the High Court of Andhra Pradesh at Amaravati would have jurisdiction to entertain the application under Section 11(6) of the Act.

Despite the jurisdictional issue, the Orissa High Court appointed the Arbitrator solely by observing that since the appellant, East Coast Railways in principle, is not opposing the appointment of an Arbitrator there is little purpose served in relegating the respondent (original petitioner) to the appropriate High Court as that will delay the adjudication of the disputes.

Feeling aggrieved the appellant moved Supreme Court.

Additional Solicitor General K.M. Natraj appeared on behalf of the appellants and Advocate Amit Dubey, appeared for the respondent.

The Supreme Court observed that "The appellants might not have opposed the appointment of an arbitrator (though the fresh appointment of an Arbitrator was also opposed by the appellants herein) by that itself it will not confer the jurisdiction upon the High Court if otherwise, the High Court had no jurisdiction."

The Court noted that before filing an application under Section 11(6) of the Act before the High Court of Orissa at Cuttack, the respondent – claimant moved an application before the Court at Visakhapatnam under Section 9 of the Arbitration Act.

"In that view of the matter considering Section 42 of the Arbitration Act, the High Court of Andhra Pradesh at Hyderabad alone would have jurisdiction to decide the subsequent applications arising out of the Contract Agreement and the further arbitral proceedings shall have to be made in the High court of Andhra Pradesh at Amaravati alone and in no other court.", the Court noted.

Accordingly the Court quashed and set aside the judgment of the High Court of Orissa at Cuttack appointing sole arbitrator.

However, the Court held that the respondent claimant may submit/move an application under Section 11(6) of the Act before the competent High Court having jurisdiction namely the High Court of Andhra Pradesh at Amaravati. The Court further held that if the application is made before the High Court of Andhra Pradesh at Amaravati within a period of four weeks, the same be dealt with and on its own merits at the earliest.

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