Amit Kumar Gupta vs Dipak Prasad
2021 Latest Caselaw 104 Cal/2

                                    1


                        A.P. No. 417 of 2020
                 IN THE HIGH COURT AT CALCUTTA
                  Ordinary Original Civil Jurisdiction
                        Commercial Division
                         Amit Kumar Gupta
                                  v.
                            Dipak Prasad


For the petitioner         : Mr. Jishnu Choudhury, Advocate
                             Ms. Ujjaini Chatterjee, Advocate
                             Ms. Sreenita Ghosh, Advocate

For the Respondent         : Mr. Indra Kant Jha, Advocate

Hearing concluded on       : January 6, 2021
Judgment on                : February 3, 2021


DEBANGSU BASAK, J. :-

1. The petitioner has invoked the provisions of Section 29A of the

Arbitration and Conciliation Act, 1996 for extension of time to conclude

the reference by a period as may be deemed fit and appropriate by the

Court.

2. Learned Advocate appearing for the petitioner has submitted

that, the parties entered into an agreement dated April 7, 2015. Such

agreement had an arbitration clause. Disputes and differences had

arisen between the parties. The petitioner had invoked arbitration

clause contained in such agreement by a notice dated February 3, 2018

for the resolution of the disputes and differences between the parties.

The arbitration clause had allowed the petitioner to nominate its

arbitrator. Arbitration clause had also permitted the respondent to

nominate his arbitrator. Although the petitioner had invoked its

arbitrator, the respondent failed to do so. Consequently, the petitioner

approached this Hon'ble Court under Section 11 of the Act of 1996

being A.P. No. 239 of 2018 for constitution of the arbitral tribunal. By

an order dated June 29, 2020, the Court had disposed of such

application by constituting the arbitral tribunal. The arbitral tribunal

had entered into reference on August 17, 2018 which fact the arbitral

tribunal had recorded in the minutes of the meeting dated October 9,

2018.

3. Learned Advocate appearing for the petitioner has submitted

that, the time to conclude the arbitral reference had lapsed on

September 4, 2020. According to him, the petitioner is not at fault in

the arbitral tribunal not succeeding to complete the reference within the

initial time stipulated by the Act of 1996. He has submitted that, since

the nominee of the petitioner was elevated as a Judge of this Hon'ble

Court, the petitioner nominated its arbitrator. Constitution of the

arbitral tribunal is complete. However, the arbitral tribunal is not in a

position to conclude the reference in view of the expiry of the time

period.

4. Learned Advocate for the petitioner has relied upon 2019 SCC

Online Bom 1437 (Cabra Instalaciones Y. Servicios v. Maharashtra

State Electricity Distribution Company Limited), 2019 Volume 2

GLR 1537 (Nilesh Ramanbhai Patel & Ors. v. Bhanubhai

Ramanbhai Patel & Ors.) and 2020 Volume 2 ARBLR 505 (Delhi)

(DDA v. Tara Chand Sumit Construction Co.) in support of the

contention that this Hon'ble Court has the jurisdiction to try, entertain

and determine an application under Section 29A of the Act of 1996. He

has submitted that,

5. Learned Advocate appearing for the petitioner has relied upon

Section 29A of the Act of 1996 and submitted that, the exercise of

jurisdiction by a Court named under Section 11 of the Act of 1996 is

different. He has submitted that, Section 42 of the Act of 1996 is not

attracted when a Court is exercising jurisdiction under Section 11 of

the Act of 1996. By the same analogy, the definition of the Court as

appearing in Section 2 (1)(e) of the Act of 1996 is not attracted while

considering an application under Section 29A of the Act of 1996. He

has referred to Sections 14 and 15 and in particular Section 15(2) of the

Act of 1996. He has submitted that, the time to make and publish the

award by the arbitral tribunal be suitably extended.

6. Learned Advocate appearing for the respondent has submitted

that, the last sitting of the arbitral tribunal was held on February 2,

2020. There has been delay on the part of the petitioner in approaching

this Hon'ble Court. He has submitted that, the present application has

been filed sometime in December 2020 while the last sitting of the

arbitral tribunal was on February 2, 2020. According to him, there has

been unexplained delay on the part of the petitioner in approaching the

Court.

7. Learned Advocate appearing for the respondent has contended

that, there is an application in Section 9 of the Arbitration and

Conciliation Act, 1996 pending before the Alipore Court. By virtue of

Section 42 of the Act of 1996 therefore, such court has the jurisdiction

to try and entertain an application under Section 29 of the Act of 1996.

8. Learned Advocate appearing for the respondent has submitted

that, the fees of the arbitral tribunal are prohibitively expensive for the

respondent to bear. Moreover the petitioner has violated orders passed

by the arbitral tribunal.

9. Attention of the parties had been drawn to the judgment and

order dated December 22, 2020 passed by the High Court in IA GA 2

of 2020 AP 243 of 2020 (Hanumandass Rajkumar Pvt. Ltd. v.

Trilok Kumar Jha). The parties had been invited to make their

respective submissions on such judgment and order, which the parties

did.

10. The issue of jurisdiction that the respondent canvassed has to

be considered. According to the respondent, since a petition under

Section 9 of the Arbitration and Conciliation Act, 1996 had been filed

and entertained by the Alipore District Court, this Hon'ble Court should

not exercise jurisdiction under Section 29A of the Act of 1996, in view of

Section 42 of the Act of 1996.

11. The Bombay High Court, in Cabra Instalaciones Y. Servicios

(supra) has considered Section 29A of the Act of 1996. It has held that,

Section 29A is a substantive and a comprehensive provision dealing

with the time limits for making of an arbitral award and extension of

such time limits. In the facts of that case, since, an international

arbitration had been involved, construing provisions of Section 29A (4)

and (6), and Section 11(5) and (9) of the Act of 1996, it has held that,

the High Court lacked jurisdiction to pass any orders under Section

29A of the Act of 1996.

12. In Nilesh Ramanbhai Patel & Ors. (supra) the Gujarat High

Court has considered Section 29A of the Act of 1996 in the context of a

domestic arbitration. It has held that, the powers under sub-section (6)

of Section 29A of the Act of 1996 are of considerable significance. It has

held that, since the provisions of Section 29A of the Act of 1996

empowers the Court in seisin of such proceedings to substitute an

arbitrator, "court" used in Section 29A of the Act of 1996 should be

understood to be the Court appointing the arbitrator.

13. The Delhi High Court in Tara Chand Sumit Construction Co.

(supra) Tara Chand Sumit Construction Co.) has noticed both Cabra

Instalaciones Y. Servicios (supra) and Nilesh Ramanbhai Patel &

Ors. (supra). It has held that an application under Section 29A of the

Act of 1996 would lie only before the Court, which has the power to

appoint arbitrator under Section 11 of the Act of 1996.

14. In the facts of the present case, the parties had entered into an

agreement dated April 7, 2015 containing an arbitration clause.

Disputes and differences had arisen between the parties when the

petitioner invoked the arbitration clause by a notice dated February 3,

2018. By such notice, the petitioner had nominated its arbitrator. On

the respondent failing to nominate its arbitrator, the petitioner had

invoked Section 11 of the Act of 1996 and applied before this Hon'ble

Court for constitution of the arbitral tribunal by way of AP No. 239 of

2018. By an order dated June 29, 2020, this Hon'ble Court had

disposed of such petition by constituting the arbitral tribunal. The

arbitral tribunal had entered into reference on August 17, 2018. The

time to conclude the arbitration reference had lapsed on September 4,

2020 which was within the lock down period.

15. Section 2(1)(e) of the Act of 1996 has defined "court" as used in

Part I of the Act of 1996. Section 2(1) of the Act of 1996 has stipulated

that, the meaning ascribed to the words under sub-sections (a) to (f)

therein shall apply unless the context otherwise requires. Therefore, the

meaning of the words as has been ascribed in Section 2(1) can have a

different meaning when used in a section in Part I of the Act of 1996, if

the context requires such word to have a different meaning than that

ascribed in Section 2(1). Section 9 of the Act of 1996 has used the word

"court". Section 11 has specified the Courts which have been

empowered to appoint an arbitrator or constitute the arbitral tribunal.

The word "court" has also been used in Section 29A and Section 42 of

the Act of 1996.

16. Section 29A of the Act of 1996 has dealt with the time limit for

arbitral award. Sub-section (1) of Section 29A has prescribed the time

limit for arbitration other than international commercial arbitration. It

has prescribed that endeavour should be made to dispose an

international commercial arbitration within the time limit prescribed.

Sub-section (2) of Section 29A has allowed the arbitral tribunal to

receive additional fees if the award is made within the time limit

prescribed. Sub-section (3) of Section 29A of the Act of 1996 has

allowed the parties to agree to extension for making the award.

However, the period of extension has been prescribed not to exceed six

months. Sub-section (4) of Section 29A has empowered the Court to

extend the period to complete the arbitration reference. The first proviso

to such sub-section has allowed the Court to reduce the fees of the

arbitral tribunal, if the Court finds that the delay is attributable to the

arbitral tribunal. Second proviso has provided that, the arbitral

reference of the arbitrator shall continue till the disposal of an

application under sub-section (5). The third proviso has required the

Court to afford an opportunity of hearing to the arbitrator before the

fees is reduced. Sub-section (5) of Section 29A has allowed the parties

to make an application for extension of time to complete the reference.

It has noted that, an extension to complete the reference can be granted

when sufficient cause has been shown and on such terms and

conditions as may be imposed by the Court. Sub-section (6) of Section

29A has allowed the Court to substitute one or all of the arbitrators.

Sub-section (7) of Section 29A has stipulated that, in the event, the

arbitrator or arbitrators are appointed under Section 29A then, the

reconstituted arbitral tribunal shall be deemed to be in continuation of

the previously appointed arbitral tribunal. Sub-section (8) of Section

29A has recognised the power of the Court to impose only actual or

exemplary costs upon any of the parties. Sub-section (9) of Section 29A

of the Act of 1996 has stipulated that an application under sub-section

(5) of Section 29A should be disposed of by the Court as expeditiously

as possible and endeavour should be made to dispose of the same

within the period of 60 days from the date of service of notice on the

opposite party.

17. The meaning of the word "court" as ascribed in Section 2(1)(e) of

the Act of 1996 is subject to the requirement of the context. In the

context of Section 29A of the Act of 1996 which has prescribed a

substantive provision for completion of the arbitral award and the time

limit to do so, the meaning of the word "court" as used therein has to be

understood. Under sub-section (6) of Section 29A of the Act of 1996, the

Court has been empowered to substitute the arbitrator or the

arbitrators in reconstituting the arbitral tribunal if so required. The

power of appointment of an arbitral tribunal has been prescribed in

Section 11 of the Act of 1996. Section 11 of the Act of 1996 has

prescribed two appointing authorities given the nature of the

arbitration. In the case of an international commercial arbitration, the

authority to appoint an arbitrator, has been prescribed under Section

11 of the Act of 1996 to be the Supreme Court. In the case of a

domestic arbitration, Section 11 of the Act of 1996 has prescribed that

the appointing authority shall be the High Court.

18. In my view, the word "court" used in Section 29A of the Act of

1996 partakes the character of the appointing authority as has been

prescribed in Section 11 of the Act of 1996 as, the Court exercising

jurisdiction under Section 29A of the Act of 1996 may be required to

substitute the arbitrator in a given case. Such right of substituting can

be exercised by a Court which has the power to appoint. The power to

appoint has been prescribed in Section 11. Therefore, the power to

substitute should be read in the context of the power of appointment

under Section 11.

19. The non obstante clause of Section 42 will get attracted only

when the Courts are dealing with matters other than appointment and

removal of arbitrators under Section 11 and Section 29A of the Act of

1996 respectively.

20. In the facts of the present case, a petition under Section 9 of the

Act of 1996 had been filed and entertained by the Alipore District

Court. By virtue of Section 42 of the Act of 1996 such Court would have

jurisdiction to try and determine all subsequent petitions under the Act

of 1996. However, such Court is not the appointing Court of an

arbitrator under Section 11 of the Act of 1996. Consequently, when the

party is required to apply under Section 29A of the Act of 1996, it has

to approach the High Court or the Supreme Court who has been

empowered to appoint an arbitrator, as the case may be. In the facts of

the present case, since the arbitral tribunal has been constituted by the

High Court, the application under Section 29A of the Act of 1996 is

maintainable before this Hon'ble Court.

21. In Hanumandass Rajkumar Pvt. Ltd. (supra), the Court has

considered the ongoing pandemic, the order dated March 23, 2020 and

July 10, 2020 passed by the Supreme Court in Suo Motu Writ Petition

(Civil) No. 3 of 2020 and having returned a finding therein that, the

Supreme Court in exercise of powers under Section 142 of the

Constitution of India, directed the time for publication of any arbitral

tribunal stands extended until further direction, found an application

under Section 29A of the Act of 1996 to be premature. It had recalled

an earlier order of extending the time to complete the arbitration.

22. The parties have not brought any material on record to

establish that there has been a change of view subsequent to the order

dated July 10, 2020 passed by the Supreme Court in Suo Motu Writ

Petition (Civil) No. 3 of 2020. Consequently, in accordance with the ratio

laid down in Hanumandass Rajkumar Pvt. Ltd. (supra), although

this Court has jurisdiction to try and determine this petition, it is

premature.

23. AP No. 417 of 2020 is disposed of accordingly.

[DEBANGSU BASAK, J.]