High Court Lacks Jurisdiction To Entertain Applications Under Section 29A For Extension Of Arbitrator's Mandate: Andhra Pradesh High Court

Section 29A(4) of the Arbitration Act states that if the award is not made within the period specified of six months or the extended period of parties' mutual consent, any of the parties can apply to the court for an extension of time.

Brief Facts:

SEW Vizag Coal Terminal Pvt. Ltd (“Applicant”) and the Board of Trustees for the Port of Visakhapatnam (“Respondent”) entered into a Concession Agreement for the development of the East Quary-1A (EQ-1A) berth at Visakhapatnam Port. Disputes arose between the parties after the Respondent terminated the Agreement. The Applicant invoked the arbitration clause and this led to the formation of an arbitral tribunal, which was later reconstituted due to the recusal of the arbitrator nominated by the Applicant. The arbitral tribunal failed to pass the award within the prescribed twelve months.

Therefore, the parties filed an application before the Special Judge for Trial and Disposal of Commercial Disputes seeking an extension of the tribunal's mandate. The mandate was extended by six months through an order. Subsequently, another application was filed seeking a nine-month extension, but only six months were granted. The arbitration proceedings concluded on September 24, 2021, and the matter was reserved for an award. However, the nominee arbitrator for the Applicant passed away on December 17, 2021, which made it necessary for another reconstitution of the tribunal. The Applicant then filed an application before the Special Judge for an extension of the tribunal's mandate.

Despite filing this application, the Applicant filed another application in the High Court under Section 29A in light of the High Court's judgment on January 4, 2023, in M/s. K. V. Ramana Reddy vs. Rasthriya Ispat Nigam Limited. This judgment clarified that the Court handling an application for an extension of time under Section 29A(6) of the Arbitration Act has the authority to replace the existing arbitral tribunal by appointing a new arbitrator.

The Respondent argued that the Applicant had already approached the Special Judge for the same relief, which was still pending. Furthermore, it contended that the judgment in the M/s. K. V. Ramana Reddy case was misinterpreted by the applicants, as it pertained to instances where the initial appointment of an arbitrator was made under Section 11 and did not apply to cases where the arbitrator was appointed without High Court intervention.

Observations by the High Court:

The issue before the High Court was whether an application under Section 29A seeking an extension of the mandate of the arbitral tribunal is maintainable before the High Court. The High Court referred to its decision in Dr. V. V. Subba Rao vs. Dr. Appa Rao Mukammala where it held that Section 29A(4) does not explicitly refer to the High Court or the Supreme Court as the 'Court' authorized to extend the mandate of an arbitral tribunal. It held that instead, the definition in Section 2(1)(e) of the Arbitration Act must be relied upon, which designates the Principal Civil Court of original jurisdiction in a district, and includes a High Court exercising original civil jurisdiction, as having the authority to decide issues forming the subject matter of arbitration as if they were the subject matter of a suit.

The Division Bench of the High Court in Dr V. V. Subba Rao held that if the intention of the Parliament had been to vest the power of extending the mandate of an arbitrator exclusively in the High Court, it would have expressly provided for such in the legislation, similar to the specific provision made in Section 11 of the Arbitration Act regarding the appointment of arbitrators.

Therefore, the High Court held that it does not fall within the meaning of 'Court' as defined in Section 2(1)(e) of the Arbitration Act and therefore lacks the jurisdiction to entertain an application under Section 29A Consequently, the application was dismissed. The Applicant was advised to approach the suitable forum.

Case Title: SEW Vizag Coal Terminal Pvt. Ltd vs Board of Trustees for the Port of Visakhapatnam

Case Number: I.A.No.1 of 2023 in/and ARBITRATION APPLICATION No.17 of 2023

Advocate for the Applicant: Mr. Posani Akash

Advocate for the Respondent: Mr. P. Sri Ram

Date of Judgment: 10.05.2024

Click Here To Read/Download Order or Judgment