High Court Exercising Original Civil Jurisdiction Can’t Be Classified As ‘Court’ U/S 42 A&C Act When It Merely Appointed Arbitrators: Himachal Pradesh HC
The Himachal Pradesh High Court held that the High Court exercising original civil jurisdiction cannot be classified as ‘Court’ under Section 42 of the Arbitration and Conciliation Act, 1996 (A&C Act) when it merely appointed Arbitrators.
The Court held thus in Arbitration cases in which a dispute arose between a Government Contractor and the Telecom Department relating to two works awarded.
A Single Bench of Justice Jyotsna Rewal Dua observed, “… the High Court of Himachal Pradesh, which exercises original civil jurisdiction cannot be classified as ‘Court’ for the purpose of Section 42 of the Arbitration and Conciliation Act when it merely appointed arbitrators under Section 11(6) of the Act. Section 42 of the Act will not be attracted where High Court of Himachal Pradesh has only appointed the arbitrator and has not undertaken any other exercise.”
The Bench said that, appointing an Arbitrator under Section 11(6) of the Act by the Court which exercises original civil jurisdiction may not even otherwise vest the Court with jurisdiction under Section 42 of the Act to entertain objections under Section 34 of the Act, if the Court does not have pecuniary jurisdiction to entertain the objections.
Advocate Navlesh Verma appeared on behalf of the Petitioners while Advocate H.S. Rangra appeared on behalf of the Respondents.
Factual Background -
A dispute arose between the Respondent (Government Contractor) and the Petitioners (Telecom Department) in relation to two works awarded to him in Division Mandi Himachal Pradesh. The Respondent moved two Arbitration Cases under Section 11(6) of A&C Act for appointment of an Arbitrator. Considering total value of claim in both cases at around Rs. 11 lakhs, an Advocate was appointed as Arbitrator for deciding both the claims. The Arbitrator entered into the references and passed separate Awards in two cases, directing the Telecom Department to pay Rs. 4,40,521/- and Rs. 2,26,554/- respectively along with an interest @ 6% p.a. from the date of filing of the Claim Petition.
The Respondent filed objections under Section 34 of A&C Act before the District Judge whereby it was held that an Arbitrator was appointed by the Himachal Pradesh High Court, which is vested with original civil jurisdiction, therefore, it will fall within the definition of ‘Court’ under Section 2(i)(e), hence by virtue of Section 42 of the Act, all subsequent Applications are required to be filed before the High Court and not before the District Court. Accordingly, the District Judge held that it did not have jurisdiction to entertain the objections filed and hence, the same were ordered to be returned to him for presentation before the appropriate Court i.e. the High Court. Resultantly, the case was before the High Court.
The High Court in view of the facts and circumstances of the case, noted, “In Inox Renewables Limited vs. Jayesh Electricals Limited21 the parties had agreed for holding arbitration at Jaipur. However, an application for appointment of arbitrator was made before the High Court of Gujarat. The arbitrator was appointed. Arbitral proceedings were held at Ahmedabad. The arbitral award was assailed before the Courts at Vadorara. The jurisdiction of Courts at Vadodara was unsuccessfully resisted. The matter reached Hon’ble Apex Court. It was held that by mutual agreement parties had shifted venue/place of arbitration from Jaipur to Ahmedabad. The moment seat is chosen as Ahmedabad, it is akin to an exclusive jurisdiction clause, thereby vesting the Courts at Ahmedabad with exclusive jurisdiction to deal with the arbitration.”
The Court further noted that even though part of cause of action arose in District Mandi, yet all arbitral proceedings were conducted at Shimla and it is not the case of either of the parties that any sitting was held within the jurisdiction of Court of the District Judge Mandi.
The Court added that the parties have not even placed on record copy of agreement to show that they had agreed for fixing seat of arbitration at Mandi and hence, the District Judge Mandi will not have jurisdiction over the objections under Section 34 of the Act against the Arbitral Awards.
“It is held that in the instant case, jurisdiction to decide the objections preferred under Section 34 of the Act against the arbitral awards will be before the Principal Court of original jurisdiction at Shimla”, it concluded.
Accordingly, the High Court disposed of the Arbitration Cases as not maintainable and set aside the impugned Judgment to the extent it was held that the High Court alone will have the jurisdiction to entertain & decide the objections preferred under Section 34 of A&C Act against the Arbitral Awards.
Cause Title- The Chief General Manager H.P. Telecom Circle & Ors. v. Kashmir Singh (Neutral Citation: 2025:HHC:305)
