Madras High Court To Hear Plea Challenging Validity Of Madras High Court Arbitration Rules, 2020

A Division Bench comprising of Chief Justice Sanjib Banerjee and Justice Senthilkumar Ramamoorthy has fixed the matter for hearing on July 2, 2021.

The petition has been filed by one Sivesh Varshan on the following grounds:

Commercial Courts Act

Section 10 of the Commercial Courts Act indicate the intention of the Parliament to constitute Commercial Courts as an exclusive court for commercial arbitration.

Towards this end, Section 15 provides for transfer of all proceedings pertaining to Arbitration and Conciliation Act to the said courts and it specifically provides that all pending cases are to be decided in accordance with procedure contemplated under Commercial Courts Act.

However, all the Principal District Courts in Tamil Nadu have been designated as Commercial Courts. But they treat petitions under Arbitration and Conciliation Act as any other petition procedure.

Arbitration and Conciliation Act

Section 29(5) of the Arbitration and Conciliation Act can be invoked to secure obedience of order of the Tribunal, by the way of contempt of Tribunal under the Contempt of Courts Act. However, the impugned Rules do not contain any procedure to be followed in such cases.

Rule 12(IV) of said Rules is not consistent with section 2(e) of the Arbitration and Conciliation Act as the same contemplates for the transfer arbitral proceedings to Additional District Judge, who is not Principal Court of Original Jurisdiction as per definition of District Judge as occurring in section 3(17) of the General Clauses Act.

Information Technology Act

Rule 6 of Order XI of the Commercial Courts Act relates to electronic records of arbitral proceedings. The provision owes its existence to the provisions of the Information Technology Act, 2000 which designates the Union of India as the appropriate government for making appropriate rules for the purpose of that Act.

There is no power for further delegation of powers of any appropriate government under the said Act. Hence, the High Court cannot tweak those Rules by the way of subordinate legislative authority under Section 82 of the Arbitration and Conciliation Act 1996, as there is no parliamentary approval for impugned Rules.

[Section 82 of the Arbitration and Conciliation Act provide that the High court may make rules consistent with the Act as to the proceedings before the courts]

Case Title: Sivesh Varshan v. Madras High Court & Ors.

Case No.: WP 10979/2021