Supreme Court judgement in Chief Engineer V. BSC&C On Section 29-A , Arbitration Act

Divergent views emanating from different High Courts

At the outset it must be stated that there is no disputing that a High Court exercising OOCJ shall have the power to extend the mandate of the arbitral tribunal from matters arising within the territories in which they exercise OOCJ. The confusion emerges in cases filed before High Courts not possessing OOCJ or where the High Court possesses both OOCJ and appellate jurisdiction but exercises extra-territorial/appellate jurisdiction from matters originating beyond the territories from they exercise OOCJ. for example if the Bombay High Court that possesses both OOCJ and appellate jurisdiction has to decide a case from Pune, which is beyond the original jurisdiction of the Court and falls within its extra-territorial jurisdiction. In this regard, divergent views emanate from several High Courts. Three broad views emerge from the High Courts are as follows:

1. View-1-The first view is that in jurisdictions where High Courts do not have OOCJ or in the alternative exercise extra-territorial jurisdiction, it will only be the District Court that has the power to extend the mandate of the arbitral tribunal under Section 29-A of the Arbitration Act in any given circumstance.

2. View-2- The second view is that it will only be the High Court that will exercise powers under Section 29-A of the Arbitration Act to extend the mandate of the arbitral tribunal regardless of whether the High Court has constituted the arbitral tribunal.

3. View-3- The third view, which is more nuanced and harmonious, is that when the High Court constitutes the arbitral tribunal, only then will the High Court have the power to extend the mandate of the arbitral tribunal under Section 29-A. But if the arbitral tribunal has not been constituted by the High Court, then the the District Court will have the power to extend the mandate of the arbitral tribunal and not the High Court.

View-2 has been subscribed to by the Division Bench of the Patna High Court in South Bihar Power Distribution Company Ltd. v. Bhagalpur Electricity Distribution Company Private Limited .

However, Larger Bench References are pending in certain High Courts due to different Benches of the same Court either subscribing to View-1 or View-3.

1. In JaypeeInfratech Limited v. EHBH Services Pvt. Ltd., the Allahabad High Court noticed the conflicting views of various Benches of the Court and framed two questions to be determined by a Larger Bench viz. (i) if the Supreme Court or the High Court has constituted an arbitral tribunal, then will only these Courts extend the mandate of the Tribunal under Section 29-A and (ii) if arbitrators are not appointed by the Supreme Court or High Court then can the Court defined under Section 2(1)(e) exercise powers under Section 29-A?

2. A Single Bench of the Bombay High Court in SheelaChowgule v. Vijay Chowgule has discussed the contrary views certain Single Benches of the Court and has framed two questions for consideration of the larger bench viz. (i) In cases where an arbitral tribunal for domestic arbitrations is constituted by the High Court under Section 11(6) where would an application under Section 29-A(4) lie, before the High Court or the District Court and (ii) In cases where a three member arbitral tribunal constituted with the consent of parties, whether an application under Section 29-A(4) would lie before the High Court or District Court?

3. A Single Bench of the Orissa High Court in M/s.Dredging & Desiltation Co. Pvt. Ltd., Kolkata v. The Board of Trust ofParadip Port Trust, Jagatsinghpur also framed two questions for consideration of the Larger Bench of the High Court on the interpretation of the expression “Court” under Section 29-A (4) and (5).

The effect of the speaking order of the Supreme Court

What was challenged before the Supreme Court was a judgment of the Meghalaya High Court which had followed View-3 by holding that since the High Court had not appointed the arbitrators, the Commercial Court being the principal civil court in the district had jurisdiction to extend the mandate of the arbitral tribunal under Section 29-A. This order was challenged in the Supreme Court by an SLP. This SLP was dismissed by a short “speaking order” on 13^th May 2024 and not in limine or by a “non-speaking order”.

So would this mean that the judgment of the Meghalaya High Court has merged with the speaking order of the Supreme Court? The answer is obviously, no. In Kunhayammed v. State of Kerala (“Kunhayammed”), the Supreme Court has held that an order dismissing an SLP, be it a speaking or non-speaking order, does not attract the doctrine of merger. Therefore, the judgment of the Meghalaya High Court remains unaffected. Further, the speaking order dismissing the SLP is certainly not a judgment as it does not contain any facets of a judgment i.e., (i) a statement of material facts, (ii) legal issues or questions, (iii) deliberations to reach a decision and (iv) the ratio decidendi (“ratio”) as set out ShakuntalaShukla v. State of U.P. Up to this point there isn't any difficulty. The difficultly arises because of what the Supreme Court had also held in Kunhayammed i.e., if a speaking order dismissing an SLP contains “a statement of law”, then it would be binding on all courts, tribunals and authorities under Article 141 of the Constitution of India, 1950. (“the Constitution”).

It is submitted that the speaking order of the Supreme Court does not contain “a statement of law” that is binding in terms of Article 141 of the Constitution. In SecundrabadClub v. C.I.T.-V (“Secundrabad Club”), the Supreme Court has held that what is binding in terms of Article 141 is the ratio of the judgment i.e. the reason assigned in support of the conclusion which has to be deduced from the facts of the case. But what Secundrabad Club more importantly holds is as follows:

“Further, the precedential value of an order of the Supreme Court which is not preceded by a detailed judgment would be lacking inasmuch as an issue would not have been categorically dealt with. What is of essence in a decision is its ratio and not every observation found therein, nor what logically follows from the various observations made therein” (emphasis supplied)

Notwithstanding what is mentioned above, assuming that the speaking order of the Supreme Court contains a “statement of law” under Article 141, then it would be imperative to ascertain what this statement actually is. The speaking order examines the definition of Court under Section 2(1)(e) of the Arbitration Act, it then notes that in the case before it the High Court i.e. the Meghalaya High Court does not have OOCJ and eventually the order states that the said power to extend the mandate under Section 29-A “has to be exercised by the Court which is empowered to extend the time as provided in sub-Section (4) of Section 29A of the Arbitration Act.” The Supreme Court did not examine, consider or express any opinion (contrary or otherwise) on any of the views adopted by the High Courts on the issue i.e. View-1, View-2 or View-3 set out earlier including that of the Meghalaya High Court.

Therefore, it is submitted that the speaking order of the Supreme Court dated 13^th May 2024 would not in any way curtail or restrict the concerned High Courts from taking one view or the other while decided the Larger Bench References on the interpretation of Section 29-A pending before them.

The author is an arbitrator and a practicing advocate at the Bombay High Court. The views expressed are personal.