Telangana High Court Clarifies Application For Termination Of Arbitrator Lies Before District Court And Not High Court

Chief Justice Alok Aradhe clarified that applications for termination of an arbitrator's mandate under Section 14 of the A&C Act should be filed before the District Court, not the High Court. This decision emphasizes that despite the High Court's power to appoint arbitrators under Section 11(6) of the Act, it does not have jurisdiction to hear applications for terminating an arbitrator's mandate under Section 14.

“In view of the law laid down by the Supreme Court in Swadesh Kumar Agarwal, it is held that the application under Section 14 of the A&C Act is not maintainable before this Court (High Court). However, liberty is reserved to the applicant to approach the competent Court as defined under Section 2(1)(e) of the A&C Act and thereafter to file an application under Section 11(6) of the A&C Act depending on the outcome of the proceedings under Section 14 of the A&C Act.”

The case stemmed from a construction agreement dated May 26, 2021, which included an arbitration clause. When disputes arose, the appointed arbitrator, allegedly failed to conduct proceedings efficiently. Consequently, the applicant approached the High Court under Section 14(2) of the A&C Act, seeking to terminate the arbitrator's mandate and appoint a new one.

The primary legal question before the court was whether such an application was maintainable before the High Court or if it should be filed before the District Court.

The applicant argued that since the High Court has the power to appoint an arbitrator under Section 11(6) of the A&C Act, it should logically have the authority to terminate an arbitrator's mandate. However, the respondent challenged this view, citing recent judgments from the Supreme Court and the Calcutta High Court to support their contention that such applications fall under the jurisdiction of the District Court.

In the deliberation, Justice Aradhe carefully examined Sections 2(1)(e) and 14 of the A&C Act.

He noted that the "Court" referred to in these sections is defined as the principal Civil Court of original jurisdiction in a district for domestic arbitrations. The judgment heavily relied on the Supreme Court's decision in Swadesh Kumar Agarwal vs. Dinesh Kumar Agarwal and others (2022), which clearly stated that disputes regarding the termination of an arbitrator's mandate under Section 14(1)(a) must be raised before the "Court" as defined in Section 2(1)(e) of the A&C Act.

The court determined that the present case indeed involved a dispute under Section 14(1)(a), as the applicant alleged the arbitrator's inability to perform his functions or failure to act without undue delay.

Justice Aradhe distinguished between the High Court's power to appoint arbitrators under Section 11(6) and the termination of an arbitrator's mandate under Section 14, emphasizing that these are separate jurisdictional matters.

Based on this reasoning, the High Court concluded that the application under Section 14 of the A&C Act was not maintainable before it. The court directed the applicant to approach the competent court as defined under Section 2(1)(e) of the A&C Act. However, it granted the applicant liberty to file an application under Section 11(6) of the A&C Act, depending on the outcome of the proceedings under Section 14.

“It is made clear that this Court has not expressed any opinion on the eligibility of the arbitrator to continue with the arbitration proceedings, as the aforesaid question has to be dealt with by the appropriate forum in a proceeding, which may be instituted by the applicant under Section 14 of the A&C Act.”

Thus, the application was disposed of.

ARBITRATION APPLICATION No. 43 of 2024

M/s. Naolin Infrastructure Private Limited vs. M/s Infinity Projects

Counsel for the applicant: . P. Pratap

Counsel for respondent: T. Bala Mohan Reddy