Principal Civil Courts Can Extend Or Substitute Mandate Of Arbitrator If Not Originally Appointed By High Court Or Supreme Court: Meghalaya High Court

The Meghalaya High Court single judge bench of Justice H. S. Thangkhiew held that Principal Civil Courts of original jurisdiction have the jurisdiction to extend or substitute the mandate of arbitrators under Section 29A of the A&C Act, 1996, only when the arbitrator was not appointed by the High Court or the Supreme Court. 

Brief Facts:

An Arbitral Tribunal was established on March 13, 2019, to address a dispute between the Petitioner and the Respondent. However, it faced challenges in rendering an award within the initially stipulated timeframe, prompting a request for an extension. Despite this extension, the Tribunal still encountered difficulties in reaching a resolution. Consequently, the Respondent sought further extension of the Tribunal's mandate under Section 29A of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”). This application for extension was submitted to the Commercial Court, East Khasi Hills, Shillong.

Subsequently, the Petitioner filed an application under Section 11 of the Commercial Courts Act, combined with Order 7 Rule 11 of the Code of Civil Procedure (CPC). This application aimed to contest the jurisdiction of the Commercial Court to entertain the Respondent's application under Section 29A of the Arbitration Act. Upon deliberation, the Commercial Court affirmed its jurisdiction to consider and adjudicate upon applications for the extension of the Arbitral Tribunal's mandate under Section 29A of the Arbitration Act. 

Dissatisfied by the order of the Commercial Court, the Petitioner filed a revision application before the High Court of Meghalaya (“High Court”). The key issue in this revision application was whether the expression “court” used in Section 29A of the Arbitration Act would mean the High Court or the Principal Civil Court in a district.  

Contentions of the Petitioner:

The Petitioner contested the interpretation made by the Commercial Court, which construed 'Court' to mean the Principal Civil Court in accordance with Section 2(1)(e) of the Arbitration Act. Section 29A (6) of the Arbitration Act allows the Court to extend the mandate and substitute arbitrators which aligns with the power of appointment vested solely with the High Court under Section 11(6). 

Section 2 of the Arbitration Act is also preceded by the expression 'unless the context otherwise requires'. Since, the High Court had the power to appoint an arbitrator in domestic arbitration, the power under Section 29A (6) would also rest with the High Court. Additionally, allowing District Courts to appoint new arbitrators would contravene Section 11 of the Arbitration Act. 

Observations of the High Court:

The Respondent contended that the term 'Court' in Section 2(1)(e) of the Arbitration Act, read with Section 29A (4), refers to the Principal Civil Court of original jurisdiction in a District, including the High Court if it exercises ordinary civil jurisdiction. In the case of the Meghalaya High Court, which lacks ordinary original civil jurisdiction, the 'Court' in Section 29A refers to the Principal Civil Court, i.e., the Commercial Court in Shillong. Further, the Petitioner's argument overlooked arbitrator appointments made under Section 11(2) by mutual consent, not just under Section 11(6). Therefore, the definition of 'Court' in Section 2(1)(e) is clear and inclusive of the High Court only when exercising original jurisdiction.

Moreover, Section 29A, even with the caveat "unless the context otherwise requires," should adhere to the definition provided in Section 2(1)(e). If the legislature intended 'otherwise' for Section 29A, it would have explicitly stated so, akin to the exceptions carved out in Section 11. 

Observations by the High Court:

The High Court perused the definition of 'court' provided under Section 2(1)(e) of the Arbitration Act. The section defines 'Court' as the Principal Civil Court of original jurisdiction in a District, including the High Court when exercising ordinary civil jurisdiction, with a clear distinction for domestic arbitration cases. The High Court noted that Section 29A, particularly subsections (4) and (6), raised questions about the powers of the High Court not exercising original civil jurisdiction and its inclusion as the 'Court' under Section 2(1)(e). 

The High Court highlighted the provision in Section 2(1)(e), "unless the context otherwise requires," allowing for flexibility in interpretation based on the surrounding circumstances. While acknowledging the limited jurisdiction of high courts under Section 11(6), the Meghalaya High Court cautioned against potential anomalies if the Principal Civil Court substitutes arbitrators appointed by the higher courts (the High Court or the Supreme Court). 

In the instant case, the arbitrators were not appointed by any High Court under Section 11 of the Arbitration Act. Therefore, it was held that the Commercial Court, being the Principal Court of original jurisdiction, had the jurisdiction to extend the mandate under Section 29A. Conclusively, the High Court dismissed the revision petition and affirmed the jurisdiction of the Commercial Court to adjudicate on the application made under Section 29A of the Arbitration Act.

In conclusion, the Court dismissed the Revision Petition, affirming the Commercial Court's jurisdiction to handle the matter under Section 29A.

Case Title: Chief Engineer (NH) PED (Roads), Govt. of Meghalaya vs M/s BSC&C of C JV

Case No.: CRP No. 2 of 2024

Advocate for the Petitioner: Mr A. Kumar and Mr E.R. Chyne

Advocate for the Respondent: Mr R. Banerji with Mr R. Prakash, Mr A. Pande, Mr A. Raghuwanshi, Ms S. Gangar, Ms G.C. Marboh 

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