Arbitration Act - Dispose Sec 11(5) & 11(6) Applications Pending For Over 1 Year Within 6 Months : Supreme Court To High Courts

A bench comprising Justice MR Shah and Justice BV Nagarathna has observed that if the arbitrators are not appointed at the earliest and the applications under Sections 11(5) and 11(6) of the Arbitration Act for appointment of arbitrators are kept pending for a number of years, it will defeat the object and purpose of the enactment of the Act and it may lose the significance of an effective Alternative Dispute Resolution Mechanism.

The bench has therefore requested all the Chief Justices of the High Courts to ensure that all pending applications under Sections 11(5) and 11(6) of the Arbitration Act and any other applications either for substitution of arbitrator and/or change of arbitrator, which are pending for more than one year from the date of filing, must be decided within six months.

"we request all the Chief Justices of the respective High Courts to ensure that all pending applications under Sections 11(5) and 11(6) of the Arbitration Act and/or any other applications either for substitution of arbitrator and/or change of arbitrator, which are pending for more than one year from the date of filing, must be decided within six months from today. The Registrar General(s) of the respective High Courts are directed to submit the compliance report on completion of six months from today. All endeavour shall be made by the respective High Courts to decide and dispose of the applications under Sections 11(5) and 11(6) of the Arbitration Act and/or any other like application at the earliest and preferably within a period of six months from the date of filing of the applications".

The bench has directed the Registrar Generals of the respective High Courts to submit the compliance report on completion of six months.

The bench has observed that all endeavour shall be made by the respective High Courts to decide and dispose of the applications under Sections 11(5) and 11(6) of the Arbitration Act and/or any other like application at the earliest and preferably within a period of six months from the date of filing of the applications.

According to the bench, if the Commercial disputes are not resolved at the earliest, not only it would affect the commercial relations between the parties but it would also affect economy of the country.

"It may affect the ease of doing business in the country. If the country has to compete with the global business, a confidence has to fostered that in our country the commercial disputes are resolved at the earliest and it does not take a number of years in resolving such Commercial disputes", the bench has said

The bench has further observed that the litigant may lose the faith in the justice delivery system, which may ultimately affect not only rule of law but commerce and business in the country. Therefore, such applications have to be decided and disposed of at the earliest.

The bench also noted that the amended Arbitration Act as well as the Commercial Courts Act mandate that the Commercial disputes are to be decided and disposed of within a period of one year.

The directions have been issued and observations have been rendered while considering a special leave petition assailing Telangana High Court's order dated June 30, 2020 by which the High Court had dismissed/disposed of the Arbitration Application to appoint the Arbitrator, which was filed under Section 11 (5) of the Arbitration and Conciliation Act, 1996.

The bench has made the observations considering the statements from High Courts regarding pending applications under Section 11(5) and 11(6) of the Arbitration and Conciliation Act,and noting these applications have been pending since more than one year. Further, in many High Courts, applications for appointment of the arbitrators are pending for more than four to five years.

The Court had earlier directed the High Courts to submit details of the pending applications.

The Apex Court had earlier on April 1 also expressed concerns at the time taken by the Telangana High Court to dispose of an arbitration application under Section 11 of the Arbitration and Conciliation Act, 1996 after a period of four years.

Referring to the amended Arbitration Act wherein arbitration proceedings are required to be disposed of within one year, the bench said, "If the Section 11 application itself is not decided within one year, even the purpose and object of the amended Arbitration Act shall also be frustrated."

It may be noted that the Top Court on April 1 had also expressed concerns at the pendency of execution proceedings for executing the award in Arbitration Matters before subordinate courts/executing courts in the State of Uttar Pradesh.

Case Title: M/s Shree Vishnu Constructions v. The Engineer in Chief Military Engineering Service Service And Ors. SLP (C) No. 5306 of 2022

Citation : 2022 LiveLaw (SC) 523

Arbitration and Conciliation Act 1996 -Section 11(5), 11(6)- Directions issued to High Courts to dispose pending applications within 6 months - we request all the Chief Justices of the respective High Courts to ensure that all pending applications under Sections 11(5) and 11(6) of the Arbitration Act and/or any other applications either for substitution of arbitrator and/or change of arbitrator, which are pending for more than one year from the date of filing, must be decided within six months from today. The Registrar General(s) of the respective High Courts are directed to submit the compliance report on completion of six months from today. All endeavour shall be made by the respective High Courts to decide and dispose of the applications under Sections 11(5) and 11(6) of the Arbitration Act and/or any other like application at the earliest and preferably within a period of six months from the date of filing of the applications

Arbitration and Conciliation Act 1996 - Delay in appointment of arbitrators- Section 11(5), 11(6)- if the arbitrators are not appointed at the earliest and the applications under Sections 11(5) and 11(6) of the Arbitration Act are kept pending for a number of years, it will defeat the object and purpose of the enactment of the Arbitration Act and it may lose the significance of an effective Alternative Dispute Resolution Mechanism. If the Commercial disputes are not resolved at the earliest, not only it would affect the commercial relations between the parties but it would also affect economy of the country. It may affect the ease of doing business in the country. If the country has to compete with the global business, a confidence has to fostered that in our country the commercial disputes are resolved at the earliest and it does not take a number of years in resolving such Commercial disputes.

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