Can A Section 29A Application Be Filed In The Commercial Court Or Only In The High Court? Single Bench Of Bombay High Court Refers The Issue To Larger Bench

The Bench of Justice Bharat P. Deshpande observed that the since Section 29A of the A&C Act not just involves extension of the mandate of the arbitrator, but also questions relating to the substitution, termination and reduction of the fees of the arbitrator, therefore, the power under Section 29A can only lie with the High Court in view of the appointing power given to it under Section 11 of the Act.

However, the Court remarked that since conflicting decisions are taken by the two co-ordinate benches, Judicial Propriety demands that the issue must be referred to a larger bench for an authoritative pronouncement.

Facts

The parties entered into a memorandum of family settlement dated 11.01.2021. Respondent No. 1 invoked an arbitration clause, leading to the appointment of an Arbitral Tribunal consisting of three arbitrators.

The arbitration process began with Respondents appointing Justice (Retired) A.P. Lavande as an arbitrator, and petitioners appointing Justice A.V. Sawant as their arbitrator on 15.062021. Justice H.L. Gokhale was appointed as the Presiding Arbitrator on 29.06.2021. However, Justice Gokhale resigned on 23.08.2022.

Justice Anil R. Dave was appointed as the new Presiding Arbitrator on 15.09.2022, but he recused himself. Despite efforts by the to appoint a new Presiding Arbitrator, no consensus was reached, leading to an application being filed before the Court in 2023.

The Court appointed Hon'ble Justice U.U. Lalit (Retired Chief Justice of India) as the Presiding Arbitrator on 31.10.2023. However, even with an extension of six months, the arbitration proceedings were not completed by the agreed-upon deadline, leading to a need for further extension.

Respondent No. 1 filed an application before the Commercial Court for an extension of time, which was allowed by an order dated 01.02.2024, extending the time period for completion of arbitration proceedings by six months. Aggrieved thereby, the petitioner challenged the order before the High Court.

Submissions by the Parties

The petitioner challenged the order on the following grounds:

• The power to extend the period of arbitration under Section 29A(4) of the A&C Act lies with the High Court and not with the Commercial Court or the Principal Court of Original Jurisdiction. This is because the power includes options such as changing arbitrators, terminating the mandate of arbitration proceedings, or reducing the fees of the arbitrators.
• Once the arbitrator is appointed by the High Court, only the High Court should regulate the proceedings, including under Section 29A of the Act, to avoid conflicts between authorities.
• The presiding arbitrator has been appointed by the High Court, therefore, any extension to the tribunal or any substitution should be before the High Court only.

The respondent made the following counter-submissions:

• The Commercial Court has the inherent jurisdiction to entertain and decide on applications under Section 29A(4) of the Act. This is in line with the principles of judicial economy and expeditious disposal of cases, as parties should not be forced to approach the High Court for every minor issue related to arbitration proceedings.
• The provision allows the court, which includes the Commercial Court, to extend the period for passing the arbitral award. There is no restriction in the Act that limits this power only to the High Court or the Supreme Court.
• The Amendment Act of 2019, which introduced Section 29A(4), aimed to reduce the interference of courts in arbitration proceedings and expedite the arbitration process.

Analysis by the Court

The Court observed that there are conflicting interpretations of Section 29-A of the Arbitration and Conciliation Act, particularly regarding the definition of "Court." In the Mormugao Port Trust^[1] case, the Single Judge interpreted "Court" to mean the High Court having original jurisdiction in the area. However, in the K.I.P.L Vistacore Infra Projects J.V. case, another Single Judge held that "Court" should be interpreted according to its textual and contextual meaning in the entire Act.

The Court disagreed with the interpretation in the Mormugao Port Trust case, stating that Section 29-A deals with various aspects beyond just the extension of time, such as termination of mandate and substitution of arbitrators. Therefore, the power to substitute or reconstitute the Arbitral Tribunal under Section 29-A(6) should be read with Section 11, which deals with the appointment of arbitrators. The Court noted that the power to substitute arbitrators is essentially a fresh appointment under Section 11, similar to the power given to the High Court in domestic arbitration.

Due to the conflicting views of the learned Single Judges, the Court determined that the matter should be referred to a Larger Bench for an authoritative pronouncement on the interpretation of "Court" in Section 29-A(4). The Court also noted that in this case, the reconstitution of the Arbitral Tribunal was done with the intervention of the Court, which underscores the need for clarity on where an application under Section 29-A(4) should lie – before the Court of Original Jurisdiction or before the High Court in domestic arbitration.

Therefore, the Court directed the registry to place the matter before the Hon'ble Chief Justice for the constitution of a Larger Bench to address the following questions of law:

1. Where should an application under Section 29-A(4) lie if an Arbitral Tribunal constituted by the High Court under Section 11(6) fails to complete the proceedings within the stipulated or extended period – before the High Court or the Civil Court having original jurisdiction in domestic arbitration?
2. Where should an application under Section 29-A(4) lie if an Arbitral Tribunal consisting of three arbitrators, constituted with the agreement and consent of the parties under Section 11(2), fails to complete the proceedings within the stipulated or extended period – before the High Court or the Civil Court having original jurisdiction in domestic arbitration?

Case Title: Sheela Chowgule v. Vijay V. Chowgule, WP. NO. 88 of 2024

Date: 15.04.2024

Counsel for the Petitioner: Mr. Pawan Jhabakh with Mr. Gajendra Kanekar, Mr. Aniket S. Kunde and Mr. Varun Salai, Advocates

Counsel for the Respondents: Mr. Parag Rao with Mr. Ajay Menon and Ms. S. Drago, Advocates

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