Supreme Court Concludes The Question Of Jurisdiction Under Section 29A Of The Arbitration And Conciliation Act, 1996

This position of law has had a checkered history. While it is undeniable that the definition of a 'Court' under Section 2(1)(e) of the Act makes the Principal Civil Court the primary forum of jurisdiction by default, there were a few conflicting precedents of certain High Courts which held that it would be the High Court which would possess the jurisdiction to decide Section 29A applications.^[3] These precedents were based upon the courts' reasoning that Section 29A stands on a similar footing with Section 11 of the Act and the word 'Court' used in Section 29A partakes the character of the appointing authority as has been prescribed in Section 11. This is because the court exercising jurisdiction under Section 29A may also be required to substitute the arbitrator in a given case under Section 29A (6) of the Act.

All these judgements were predicated on the thinking that since appointment of an arbitrator is solely the domain of High Court or the Supreme Court under Section 11, thus, any substitution under Section 29A would also fall before these senior courts. Accordingly, in these High Court precedents the view was taken that the application under Section 29A would only lie before these courts.^[4] Per contra, other High Courts, when faced with the same question, maintained the line that an application under Section 29A would be maintainable only before the Principal Civil Court as defined under Section 2(1)(e) of the Act.

In the CE, PWD judgment, the Supreme Court opined that the power of substitution under sub-section (6) of Section 29A is only a consequential power vested in the Court which is empowered to extend the time. The Court further opined that in case the Principal Civil Court finds that the cause of delay is attributable to the arbitrator(s), it could proceed with substituting them. The judgment makes it clear that the Court was not inclined to apply an expansive interpretation of the term 'Court' in Section 29A and read the same as the High Court unless it was a High Court in its exercise of ordinary original civil jurisdiction.

It is now expected that the CE, PWD judgment should lay substantial quietus to this controversy for the time being. In any case, there was no reason to denude the Principal Civil Courts of their powers to decide on effectively procedural applications like Section 29A applications. Particularly when these courts already possess the jurisdiction to decide much more complex issues like substitution of an arbitrator under Section 14^[5], or indeed, entire challenges to an award under Section 34.^[6]

One may argue an ambiguity, as to what would happen if the arbitrator(s) was appointed under Section 11 by a High Court or the Supreme Court and whether, their substitution under Section 29A (6) (if required) can be done by a subordinate court like the Principal Civil Court. However, it can be argued that the CE, PWD judgment is strident in its view that only the Principal Civil Court can consider a Section 29A application and the power to substitute is only a consequential power. The subtext of the judgment appears to be that such residual actions do not require the senior courts to re-enter into the arena of appointing arbitrator(s). Moreover, while the term 'Court' has been used in various other Sections, Section 11 specifically uses the term 'High Court' and 'Supreme Court', which may be termed as another cause to read the said Section in isolation from Section 29A. This judgment is thus a welcome step towards authoritatively resolving this issue.

Authors: Abhinav Raghuvanshi and Sanya Gangar, Advocates. Views are personal.