Commercial Division Of High Court Can Hear Applications And Appeals Under The Arbitration And Conciliation Act, 1996 Filed On Original Side: Calcutta High Court

The bench held that:

“The language used in Section 10(2) is “shall”, which is mandatory and implies that even if an application is filed in the original Side of the High Court (without any distinction between Ordinary Original Civil Jurisdiction or Commercial Division), it would suffice if the same is heard and disposed of by the Commercial Division.”

Brief Facts:

The matter pertained to an application which sought to recall an order issued by a co-ordinate Bench of the High Court which appointed an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996. Siemens Healthcare Private Limited (Petitioner) argued that the application under Section 11(5) was filed in the Ordinary Original Civil Jurisdiction of the High Court rather than in the Commercial Division. Consequently, the Court, according to the Petitioner, lacked the subject-matter jurisdiction to entertain and decide the application in the Ordinary Original Civil Side. Therefore, the Petitioner contended that the order should be recalled.

The Petitioner relied on Section 15 of the Commercial Courts Act, 2015, which mandates that all suits and applications, including those under the Arbitration Act, relating to commercial disputes of specified value pending in a High Court with a constituted Commercial Division should be transferred to that Commercial Division. It referred to Laxmi Polyfab Pvt. Ltd. Vs. Eden Realty Ventures Pvt. Ltd. and another (AIR 2021 Cal 190) where it was observed that Section 15 of the 2015 Act should be read in conjunction with Sections 6 and 7 of the Act. It was held that suits filed after the notification of the specified value cannot be deemed "pending" within the meaning of Section 15(1) and thus cannot be transferred to the Commercial Division. Instead, such suits fall under the purview of Order VII Rule 10 of the Code of Civil Procedure, 1908. On the date the application was filed under Section 11(5) of the Arbitration Act, the relevant notification was already in effect implying that the Ordinary Original Civil Jurisdiction Court lacked the authority to decide the matter.

The Petitioner further supported this argument by referring to the Commercial Courts Practice Directions, 2021. Clause 4 of the Directions states that any suit, appeal, or proceeding pending before any Civil Court or High Court before the issuance of the Notification should be transferred to the Commercial Division. However, Clause 9(1) specifies that, post-Notification, the High Court or District Court cannot receive, try, or determine any suit involving a commercial dispute of the specified value if filed in its Ordinary Original Civil Jurisdiction. Sub-clause (2) allows for a plaint or application to be returned if filed after the Notification, but the court must reject any such plaint or application if neither party requests its return. Thus, the Petitioner argued that the Court's only course of action on the relevant date was to reject the application due to lack of jurisdiction.

Observations by the High Court:

The High Court held that Clauses 4 and 9 of the Commercial Courts Practice Directions of the High Court do not cover applications under the Arbitration Act. These Clauses are specifically relevant to commercial suits and related proceedings in civil matters rather than to arbitration applications.

Clause 4 of the Practice Directions pertains to suits, appeals, or other proceedings "pending before any Civil Court as per the Bengal, Agra, and Assam Civil Courts Act, 1887 or in the High Court." Similarly, Clause 9(1) refers to proceedings in "the High Court or the District Court." The Arbitration Act, however, makes a clear distinction between the term "court" as defined in Section 2(1)(e) and the "High Court" as referred in Section 11. Section 11 of the Arbitration Act deals with the appointment of arbitrators, which is a function specifically assigned to the High Court, rather than the Civil Courts or District Courts.

The High Court held that Clauses 4 and 9 of the Practice Directions mention Civil Courts and District Courts in conjunction with the High Court which implies that they address civil suits and related matters. They do not cover applications under the Arbitration Act. Therefore, the High Court held that Civil Courts and District Courts lack jurisdiction over applications under Section 11 of the Arbitration Act which are to be addressed by the High Court acting in its capacity under the Arbitration Act.

Additionally, it noted that the Practice Directions do not mention the Arbitration Act or its related applications contrasting with the provisions under the Arbitration and Conciliation (Amendment) Act, 2015 (2015 Act).

Further, the High Court held that relevant provision for handling applications under the Arbitration Act is Section 10(2) of the 2015 Act. This Section mandates that applications or appeals arising from arbitration under the Arbitration Act and filed in the Original Side of the High Court must be heard and disposed of by the Commercial Division of the High Court, provided such a division is constituted. The bench noted that the mandatory language of Section 10(2) ensures that even if an application related to commercial arbitration is filed on the Original Side it must be processed by the Commercial Division.

Given the context, the bench held that the application under Section 11(5) of the Arbitration Act, which was the subject of the order under recall, was correctly heard and decided by the Commercial Division of the High Court.

Therefore, the application was dismissed.

Case Title: M/S. Siemens Healthcare Private Limited Vs Sun Hospital And Ors.

Case Number: IA NO. GA/1/2024 and connected matter

Mr. Krishnaraj Thaker, Adv. Mr. Tanish Ghaneriwala, Adv. Mr. Ramendu Agarwal, Adv. Ms. Rishika Goyal, Adv. …for the petitioner

Mr. Prabal Mukherjee, Sr. Adv. Ms. Madhushri Dutta, Adv. …for the respondent

Date of Judgment: 20th August, 2024

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