Commercial Court Cannot Be Regarded As A "Person Or Institution" Under Section 11(6) Of The A&C Act: Bombay High Court

The Court added that the term "all applications or appeals arising out of such arbitration", as provided under Section 10 (3) of the Commercial Courts Act, does not take within its ambit the application which is required to be filed under Section 11 (6) of the A&C Act before the High Court for seeking appointment of arbitrator(s).

The Single Bench of Justice G.S. Kulkarni held that a Commercial Court can never be regarded as a "person or institution" under Section 11 (6) of the A&C Act, and that the term "any person or institution" would not include a Court exercising any judicial power.

The petitioner- Uttam Energy Ltd., entered into an agreement with the respondent- M/s. Shivratna Udyog Ltd. After certain disputes arose between the parties, the petitioner invoked the arbitration clause contained in the agreement and filed a petition under Section 11 (6) of the A&C Act before the Bombay High Court, seeking appointment of an arbitral tribunal to adjudicate the disputes between the parties.

Disputing the maintainability of the petition, the respondent M/s. Shivratna Udyog submitted before the High Court that in view of Section 10 (3) of the Commercial Courts Act, 2015, all applications or appeals arising out of an arbitration under the provisions of the A&C Act, other than an international commercial arbitration, would ordinarily lie before any principal civil court of original jurisdiction, not being a High Court, which shall be heard by the Commercial Court exercising territorial jurisdiction. Hence, the respondent averred that the High Court did not have the jurisdiction to entertain the petition and that the petition must be directed to be presented before the designated Commercial Court or the Principal Civil Court of original jurisdiction.

To this, the petitioner Uttam Energy submitted that the jurisdiction to appoint an arbitral tribunal under Section 11 of the A&C Act would vest exclusively with the High Court.

Section 11 (6) of the A&C Act provides that where a party fails to act as required under an appointment procedure agreed upon by the parties, a party may request the Supreme Court or the High Court, or any person or institution designated by such Court, for securing the appointment of arbitrators. Further, Section 11 (6B) provides that the designation of any person or institution by the Supreme Court or the High Court, for securing the appointment of arbitrators, shall not be regarded as a delegation of judicial power by the Supreme Court or the High Court.

The Court ruled that the term "Commercial Court", as used in Section 10 (3) of the Commercial Courts Act, is to be understood in the context of the definition of "Commercial Court", as provided in the Commercial Courts Act.

Holding that the jurisdiction of the High Court under Section 11 of the A&C Act with respect to appointment of an arbitral tribunal has not been disturbed or divested, the Court held that the term "all applications or appeals arising out of such arbitration", as used in Section 10 (3) of the Commercial Courts Act, would not contemplate an application which is required to be filed under Section 11 of the A&C Act before the High Court.

"Thus, to read into sub-section (3) of Section 10 of the Commercial Courts Act to take within its ambit the jurisdiction and power in relation to the appointment of an arbitral tribunal, to be exercised by the Commercial Court exercising territorial jurisdiction over such arbitration, when the exclusive jurisdiction to make appointment of an arbitral tribunal within the meaning of section 11 of the ACA, is conferred on the High Court or the Supreme Court as the case may be under section 11 of the ACA, it would amount to a complete misreading of sub-section (3) of Section 10 of the Commercial Courts Act, and in fact would lead to an absurdity. Such an interpretation can never be accepted in terms of what Section 11 categorically provides qua the powers of the High Court to appoint an arbitral tribunal.", the Court said.

Further, the High Court rejected the contention of the respondent that the Commercial Court should be regarded as a person or an institution designated by the High Court to exercise powers under Section 11 of the A&C Act.

Referring to Section 11 (6B) of the A&C Act, the Court observed that the designation of any person or institution by the Supreme or the High Court under Section 11 (6) of the A&C Act, shall not be regarded as a delegation of any judicial power.

Ruling that a Commercial Court can never be regarded as a "person or institution" under Section 11 (6) of the A&C Act, the High Court held that the term "any person or institution" would not include a Court exercising any judicial power.

"It would be absurdity to accept such argument inasmuch as the Commercial court would be a "Court" exercising judicial powers as clear from the provisions of Commercial Courts Act, 2015. Thus, sub-section (6) of Section 11 of the ACA when uses the word "any person or institution" necessarily it would be a person or any institution which is not a Court and which would not have any judicial power and by virtue of such designation under sub-section (6-B) of Section 11, it shall not be regarded as a delegation of judicial power by the Supreme Court or the High Court."

The Court thus allowed the petition and appointed a sole arbitrator.

Case Title: Uttam Energy Ltd. versus M/s. Shivratna Udyog Ltd.

Dated: 27.07.2022 (Bombay High Court)

Counsel for the Petitioner: Mr. Aman Kacheria a/w. Rahul Agarwal, Jasmin Puranik

Counsel for the Respondent: Mr. Abhijit Kulkarni i/b. Milind Prabhune

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