Only SC/ HC (and not district courts) is empowered to extend arbitrator’s mandate under Section 29A of the Arbitration and Conciliation Act, 1996

DDA VS. TARA CHAND SUMIT CONSTRUCTION CO. [O.M.P. (MISC.) (COMM.) 236/2019, dtd. 12.05.2020]

Facts

The Petitioner, DDA filed a petition under Section 29A of the Arbitration and Conciliation Act, 1996 (“1996 Act”) before the Delhi High Court (“Court”)seeking extension of the mandate of the Arbitrator (“Petition”).

However, the said Petition was dismissed as withdrawn by the Court on DDA’s submission that the value of claims and counter claims in the arbitration proceedings were below the pecuniary jurisdiction of the Court. Subsequently, DDA filed an application under Section 151 of the CPC seeking recall of the Court’s aforesaid order. DDA in the said application reagitated that the power to extend the mandate of an arbitrator under sub-Section (4) of Section 29A of the Act rests with this High Court irrespective of its pecuniary jurisdiction.

Parties’ contentions

Opposing the recall application, the Respondent contended that this Court did not have the pecuniary jurisdiction to entertain the Petition as the value of claims and counter claims fell short of its pecuniary jurisdiction i.e. INR 2 Crores. Thus, in terms of Section 2(1) (e) of the 1996 Act, it was contended that only the Principal Civil Court had the jurisdiction to entertain the Petition

DDA in the Petition contended that an Arbitral Tribunal, in exercise of its power under sub-section (3) of the 29A, can extend the mandate of an arbitrator by 6 months beyond the initial 12 months with consent of the parties. However, in terms of Section 29A (4) of the 1996 Act, the power to further extend the mandate beyond the total extended period of 18 months lies with the ‘Court’, and the term ‘Court’ in context of S. 29 A would be the Court which has the power to appoint an Arbitrator under the S. 11 of the 1996 Act.

Issue

Whether the term ‘Court’ in context of S. 29A of the 1996 Act would be Principal Civil Court as defined under S. 2(1)(e) of the 1996 Act or would be the High Court which has the power to appoint an arbitrator under S. 11 of the 1996 Act.

Key findings and conclusion arrived [Relevant paras nos. 24,25,26, 28, 29 and 30]

  1. S. 29A of the 1996 Act, is a complete code in itself when it comes to providing time limits for passing the award or the extension of arbitrator’s mandate.
  1. Sub-section (6) of the S. 29A is relevant for deciding the controversy, which confers a significant power on the ‘Court’ to substitute one or all the arbitrators while extending the mandate of an arbitrator to make an award under Sub-section (4) of the S. 29A of the 1996 Act if such need arises.
  1. Till Sub-section (4) of the S. 29A, the word ‘Court’ can be interpreted to mean Principal Civil Court as defined under Section 2 (1)(e) of the 1996 Act. Complexity, however, arises by virtue of the power conferred on the ‘Court’ under Sub-section (6) of S. 29A of the 1996 Act to substitute the arbitrator(s) while extending their mandate under Sub-section (4).
  1. This would lead to a situation where a conflict would arise between the power of the High Courts and the Supreme Court of India to appoint arbitrators under S.11 of the 1996 Act and with the power of the Civil Court to substitute those arbitrators under Sub-section (6) of Section 29A of the 1996 Act.
  1. The only way this conflict can be resolved is by interpreting the term ‘Court’ in the context of Section 29A of the 1996 Act, to be a Court that has the power to appoint arbitrators under S. 11 of the 1996 Act.
  1. Hence, the DDA’s Petition under S. 29A of the 1996 Act seeking extension of the arbitrator’s mandate would lie only before the Court which has the power to appoint an arbitrator under Section 11 of the 1996 Act i.e. the Delhi High Court in this case. Thus, the Petition was allowed.
  1. Petition under Section 29A can be filed irrespective of the pecuniary jurisdiction of the Court.

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