Bombay HC Clarifies On Jurisdiction To Entertain Application Under Section 29A(4) A&C Act In Case Of Domestic Arbitrations

The Court observed, in the event, that an Arbitral Tribunal consisting of three Arbitrators is constituted with the agreement and consent of the parties and fails to complete the proceedings within the stipulated period/extended period, the application under Section 29-A(4) would lie to the principal Civil Court of original jurisdiction.

The Division Bench of Justice MS Karnik and Justice Valmiki Menezes observed, “(i) - In the event an Arbitral Tribunal constituted by the High Court under Section 11(6) fails to complete the proceedings within the stipulated period/extended period, then an application under Section 29-A(4) would lie to the High Court in case of a domestic arbitration…(ii) In answer to the second question, we opine that in the event an Arbitral Tribunal consisting of three Arbitrators is constituted as per Section 11(2) i.e. with agreement and consent of the parties, fails to complete the proceedings within the stipulated period/extended period, the application under Section 29-A(4) would lie to the principal Civil Court of original jurisdiction in a district and includes the High Court in exercise of its ordinary original jurisdiction.”

Advocate Pawan Jhabakh appeared for the Petitioner while Advocates Parag Rao, Pulkit Bandodkar and Shailesh Redkar appeared for the Respondents.

A reference was made to the larger bench on the following questions: (i) In the event an Arbitral Tribunal constituted by the High Court under Section 11(6) fails to complete the proceedings within the stipulated period/ extended period, where an application under Section 29-A(4) would lie i.e. the High Court or the Civil Court having original jurisdiction in case of domestic arbitration, and (ii) In the event an Arbitral Tribunal consisting of three Arbitrators is constituted as per Section 11(2) i.e. with agreement and consent of the parties, fails to complete the proceedings within the stipulated period/extended period, where an application under Section 29-A(4) would lie i.e. before the High Court or the Civil Court having original jurisdiction in the case of domestic arbitration.

This issue initially arose in the judgment of Mormugao Port Trust vs.Ganesh Benzoplast Ltd. (2020),which held that the power to extend the arbitral period would be with the District Judge who will have jurisdiction to entertain the application under Section 29-A(4) of the Arbitration Act and not the High Court.

Afterwards, in K.I.P.L. Vistacore Infra Projects J. V. Municipal Corporation of the city of Ichalkaranji, (2024), the Court held that only the High Court has the power to extend the time under Section 29A, even in cases where the arbitral tribunal is constituted by an agreement.

For the consideration of the first issue, the Court relied on facts which are as follows: Initially, the arbitral tribunal comprising three Arbitrators came to be constituted. After some time, the Presiding Arbitrator recused from the matter resulting in the two Arbitrators appointing the Presiding Arbitrator, who accepted such an appointment. Respondent No.1, therefore, applied for the extension of time for making of the award by the Arbitral Tribunal by a period of six months. During the pendency of such application, the Presiding Arbitrator resigned and as the two Arbitrators could not agree upon a Presiding Arbitrator, an application for Appointment of an Arbitrator came to be filed before this Court by Respondent no.1. This Court appointed a Presiding Officer and the Arbitral Tribunal was thus reconstituted and arbitral proceedings recommenced. By the impugned order, the Commercial Court extended the period for passing of the award by the Arbitral Tribunal.

Qua the first question, the Court held, “The extension of time is therefore not a mere ritual or an empty formality. Considering the nature of the application of mind and the extent of the discretionary powers conferred on the Court, we have no hesitation in forming an opinion that it can only be the Court empowered under Section 11(6) which will be the Court for the purpose of sub-section (4) of Section 29-A in the present case…No doubt that once the arbitrator is appointed under Section 11(6), the Court appointing the Arbitrator becomes functus officio for the purpose of arbitration proceedings before the arbitrator. However, that can never take away the empowerment of the Court which appointed the Arbitrator under Section 11(6) when the question of extension of period arises in the context of sub-section (4) of Section 29-A.”

As regards the second issue the Court, while relying on the judgment of the Supreme Court in Chief Engineer (NH) PWD (Roads) vs. M/s. BSC & C & C JV (2024), said that the Arbitral Tribunal constituted under Section 11(2), i.e. with the agreement and consent of parties fails to complete the proceedings within the stipulated period/extended period, the application under Section 29- A(4) would lie before the Principal Civil Court of original jurisdiction in a district which includes a High Court provided the High Court has ordinary original civil jurisdiction. It added that the power under sub-section (6) of Section 29-A is only a consequential power vesting in the Court which is empowered to extend the time under Section 29-A(4).

Accordingly, the writ petition was placed before the Single Judge for further consideration.

Cause Title: Sheela Chowgule v. Vijay V Chowgule and Ors. ( Neutral Citation: 2024:BHC-GOA:1275-DB)

Appearances:

Petitioner: Advocates Pawan Jhabakh, Gajendra Kanekar and Aniket S. Kunde

Respondents: Advocates Parag Rao, Pulkit Bandodkar, Shailesh Redkar, Sowmya Drago, Ajay Menon, Akhil Parrikar, Rahul Mantri and Angali Kumari

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