Which court can extend arbitral timeline under Section 29A of Arbitration Act? Supreme Court answers
The Supreme Court on Thursday ruled that applications seeking extension of time to conclude arbitration proceedings under Section 29A of the Arbitration and Conciliation Act, 1996 must be filed before the civil court having original jurisdiction even in cases wherein the arbitrator was appointed by the High Court under Section 11 [Jagdeep Chowgule Vs Sheela Chowgule]
A Bench of Justices PSNarasimha and R Mahadevan held that the High Court or the Supreme Court does not retain supervisory or continuing jurisdiction over arbitral proceedings merely because it appointed the arbitrator.
The apex court emphasised that once an arbitral tribunal is constituted, the referral court becomes functus officio (no longer having official authority).
"It is a misconception to assume that the Supreme Court or the High Court keeps a watch on the Conduct of Arbitral Proceedings or on Making of the Arbitral Award like the Orwell’s “Big Brother is watching you”. The referral Court becomes functus officio once appointment has been made, it has no role or function as a sub-judice Sentinel," the judgment said.
The case arose out of a Memorandum of Family Settlement dated January 11, 2021 executed among members of the Chowgule family. Arbitration was invoked in May 2021. After delays in proceedings and the resignation of the presiding arbitrator, the High Court appointed a new arbitrator under Section 11.
Meanwhile, an application under Section 29A seeking extension of time to conclude the arbitration was allowed by the commercial court. This order was later set aside by the Bombay High Court at Goa on the ground that only the High Court could extend time since it had appointed the arbitrator.
Conflicting High Court rulings on this jurisdictional issue ultimately led to the Supreme Court’s intervention.
In its judgment, the Supreme Court made it clear that once a High Court appoints an arbitrator under Section 11, its role in that capacity comes to an end.
“Exercise of jurisdiction under Section 11 stands exhausted upon the constitution of the arbitral tribunal....There is no residual supervisory or controlling power left with the High Court or the Supreme Court over the arbitral proceedings after appointment is made,” the top court held.
In other words, a High Court does not retain control over arbitration merely because it appointed the arbitrator, the Supreme Court made it clear.
It explained that Section 29A, which deals with extension of time, reduction of arbitrators’ fees and substitution of arbitrators in case of delay, falls within curial supervision of arbitration proceedings — a function parliament has expressly vested in the “court” defined under Section 2(1)(e).
Crucially, the Supreme Court rejected the view taken by some High Courts that the appointing High Court must also hear Section 29A applications to avoid a “conflict of power”.
"We are of the opinion that the conclusion on the ground that there will be hierarchical difficulties, conflict of power or jurisdictional anomaly if a Civil Court entertains application under Section 29A for extension of time of an arbitral tribunal if the High Court under Section 11(6) of the Act has appointed the arbitrator(s) is untenable. This approach is hereby rejected," the judgment said.
Answering the core question, the Supreme Court held that the word “court” in Section 29A carries the same meaning as in Section 2(1)(e) of the Act.
“The ‘Court’ under Section 29A shall be the Civil Court of ordinary original jurisdiction in a district and includes the High Court in exercise of its original civil jurisdiction under Section 2(1)(e), and shall not be the High Court or the Supreme Court under Section 11(6) of the Act.”
This means the principal civil or commercial court has jurisdiction under Section 29A and a High Court can exercise Section 29A jurisdiction only if it has ordinary original civil jurisdiction and not because it appointed the arbitrator.
The Court underlined that the fact of appointment under Section 11 is legally irrelevant when it comes to deciding jurisdiction under Section 29A.
“Absence of any contextual indicia to the contrary, the expression ‘Court’ in Section 29A must, therefore, be accorded the meaning assigned to it under Section 2(1)(e),” the Court ruled.
The Bench also clarified that Section 42 of the Act, which vests exclusive jurisdiction in the court where the first application is filed, does not get triggered merely because an application under Section 11 was filed before a High Court.
Applying this interpretation, the Supreme Court set aside the Bombay High Court's ruling which had held that only the High Court could extend time under Section 29A since it had appointed the arbitrator. The Court restored the commercial court’s order extending the arbitral timeline and permitted the parties to seek further extensions before the commercial court.
The petitioners were represented by advocates Abhay Anil Anturkar, Dhruv Tank, Aniruddha Awalgaonkar, Sarthak Mehrotra, Bhagwant Deshpande and Surbhi Kapoor.
The respondents were represented by advocates Amit Pai, Omkar Jayant Deshpande, Ashok Poulo Paul, Mukul Reedla, Shaneen Parikh, Sanskriti Sidana, Rahul Mantri, Parag Rao, Shambhavi Rao, Akhil Parikar, Salvador Santosh Rebello, Raghav Sharma, Kritika, Jaskirat Pal Singh, Moulishree Pathak, Shiven Desai, Vivek Jain, Suchitra Kumbhat, Sadiq Noor, Rohit H Nair and Benila BM.