Principal Civil Court Has Power To Entertain Application U/S 29A Of A&C Act If Arbitrator Is Not Appointed By High Court: Meghalaya HC

The Meghalaya High Court held that the principal civil court has power to entertain an application under Section 29A of the Arbitration and Conciliation Act, 1996 (A&C Act) if an arbitrator is not appointed by the High Court.

The Court held thus in a revision petition against the judgment of the District Judge, Commercial Court, Shillong.

A Single Bench of Justice H.S. Thangkhiew observed, “In the backdrop of the discussions herein above, coming to the case in hand, the decision rendered in Magnum Opus IT consulting Private Limited vs. Artcad Systems, Through its Proprietor Vinay Digambar Shende (2022) SCC OnLine Bom 2861: (2023) 1 Arb LR 441, which has been relied upon by the respondents, however comes to their aid, as the arbitrators in the present case were not appointed under Section 11 by the High Court. As such, by applying this judgment, a distinction can be drawn to hold that, if the appointment of the arbitrator is not by the High Court under Section 11, the Principal Civil Court of original jurisdiction in this case, the Commercial Court at Shillong, East Khasi Hills will have the power to entertain an application under Section 29A for extension of the term, as no anomalous situation would arise therefrom. As such, by making use of the expression of Section 2 of the Act “unless the context otherwise requires” the textual interpretation will be in tune with the contextual one.”

Advocate General A. Kumar appeared on behalf of the petitioner while Senior Advocate R. Banerji appeared on behalf of the respondent.

Facts of the Case -

On the inability of an Arbitral Tribunal which was constituted in 2019, to render an award within the stipulated time and subsequent extension thereof, the respondent entity had preferred an application for extension of the mandate under Section 29A of A&C Act before the Commercial Court, East Khasi Hills. The petitioner, Chief Engineer (NH) PWD (Roads), then filed an application under Section 11 of the Commercial Courts Act, read with Order 7 Rule 11 of the Civil Procedure Code (CPC), challenging the jurisdiction of the Commercial Court to entertain an application under Section 29A of the A&C Act.

The District Judge, Commercial Court then by the Judgment and Order in 2024, held that the said Court had the jurisdiction to entertain an application for extension of the mandate of the Arbitral Tribunal under Section 29A of the A&C Act. Being aggrieved thereby, the petitioner was before the High Court. The main issue in this case was with regard to the interpretation of the expression ‘Court’ as given in Sub-sections (4), (5) & (6) of Section 29A of the A&C Act. Essentially, the interpretation revolves around whether the expression ‘Court’ used in Section 29A would mean the High Court, or the Principal Civil Court in a District.

The High Court after hearing the contentions of the counsel noted, “Thus, it is seen that the term ‘Court’ used in Section 29A(4), as the definitive clause has provided in Section 2(1), is to be interpreted by making use of the expression “unless the context otherwise requires”. The phrase “unless the context otherwise requires” in the view of this Court, is a provision in Section 2, intended by the legislature to allow for flexibility in interpretation and indicates that the definitions given therein, should be understood in accordance with the surrounding context, or specific circumstances, rather than strictly adhering to a literal interpretation.”

The Court added that the said provision enables courts to consider the broader context, including the intent of the legislature, in determining the applicable meaning of the provisions and in essence, it grants discretion to interpret the provision in a manner that best aligns with the overall purpose and objectives of the statute.

“Though it is correct that the power under Section 11(6) of the Act, specifically vests the powers of appointment of arbitrator in the case of domestic arbitration upon the High Court, this jurisdiction also is limited, as once an arbitrator is nominated, the High Court does not retain jurisdiction”, it said.

The Court further said that however, if the power under Section 29A is to be exercised by the Principal Civil Court, though it may be competent to extend the mandate, an anomalous situation would arise, if there is a question of substitution, as it may result in an arbitrator appointed by the High Court being substituted by the Principal Civil Court, which would then militate against the stipulation of Section 11(6) of the Act.

“A contextual interpretation of the term ‘Court’ as given in the Act, will therefore involve analyzing the facts of the case, the legislative intent to understand its purpose and its application, whereas textual interpretation on the other hand, focuses solely on the language of the provision itself. Balancing both approaches therefore, will ensure the comprehensive application of the provisions’ meaning and intent, taking into account both its context and textual structure to apply it effectively, to fit into the scheme of the Act. As such, in the considered view of this Court, Section 2(1)(e) allows the interpretation of the term ‘Court’ to be read, keeping the object of the statute intact, and the same should not result in defeating the purpose, for which the provision i.e. Section 29A was inserted”, it also observed.

The Court concluded that the High Court does not possess original Civil Jurisdiction, coupled with the fact that, Section 11 nor Section 29A(6) do not come into play in the case, as the arbitrators were not appointed by the High Court, and that the Commercial Court, East Khasi Hills, Shillong being the Principal Court of original jurisdiction will have the jurisdiction to extend the mandate as prescribed under Section 29A of the Act.

Accordingly, the High Court dismissed the revision petition.

Cause Title- Chief Engineer (NH) PWD (Roads), Govt. of Meghalaya v. M/s BSC&C and CJV (Neutral Citation: 2024:MLHC:309)

Appearance:

Petitioner: Advocate General A. Kumar and Government Advocate E.R. Chyne.

Respondent: Senior Advocate R. Banerji, Advocates R. Prakash, A. Pande, A. Raghuwanshi, S. Gangar, and G.C. Marboh.

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