ORDER been extended in terms of sub-section
(3) of Section 29A rests with the Court. Neither the arbitrator nor parties even by joint consent can extend such period. The Court on the other hand has vast powers for extension of the period even after such period is over. While doing so the Court could also choose to substitute one or all of the arbitrators and this is where the definition of term 'Court' contained in Section 2(1)(e) does not fit. It is inconceivable that the legislature would vest the power in the Principal Civil Judge to substitute an arbitrator who may have been appointed by the High Court or Supreme Court. Even otherwise, it would be wholly impermissible since the powers for appointment of an arbitrator when the situation so arises, vest in the High Court or the Supreme Court as the case may be in terms of sub-section (4), (5) and (6) of Section 11 of the Act. If therefore there is a case for extension of the term of an arbitrator who has been appointed by the High Court or Supreme Court and if the contention of Shri Mehta that such an application would lie only before the Principal Civil Court is upheld, powers under sub-section (6) of Section 29A would be non-
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operatable. In such a situation sub-section
(6) of Section 29A C/IAAP/56/2016 IA
ORDER would be rendered otiose. The powers under sub-section (6) of Section 29A are of considerable significance. The powers for extending the mandate of an arbitrator are coupled with the power to substitute an arbitrator. These powers of substitution of an arbitrator are thus concomitant to the principal powers for granting an extension. If for valid reasons the Court finds that it is a fit case for extending the mandate of the arbitrator but that by itself may not be sufficient to bring about an early end to the arbitral proceedings, the Court may also consider substituting the existing arbitrator. It would be wholly incumbent to hold that under sub-section (6) of Section 29A the legislature has vested powers in the Civil Court to make appointment of arbitrators by substituting an arbitrator or the whole panel of arbitrators appointed by the High Court under Section 11 of the Act. If we therefore accept this contention of Shri Mehta, it would lead to irreconcilable conflict between the power of the superior Courts to appoint arbitrators under section 11 of the Act and those of the Civil Court to substitute such arbitrators under Section 29A(6). This conflict can be avoided only by understanding the term "court" for the C/IAAP/56/2016 IA
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ORDER purpose of Section 29A as the Court which appointed the arbitrator in case of Court constituted arbitral Tribunal".
89. On similar lines is the decision of the High Court of Bombay is a Cabra Instalaciones Y. Servicios Vs. Maharashtra State Electricity Distribution Company Limited, Commercial Arbitration Petition (L) No.814 of 2019, (2019 SCC OnLine Bom 1437). Paragraph 7 reads thus:
"7. On a plain reading of Section 29A alongwith its sub-sections, it can be seen that for seeking extension of the mandate of an arbitral tribunal, these are substantive powers which are conferred on the Court and more particularly in view of the clear provisions of sub-section (6) which provides that while extending the period referred to in sub-section (4), it would be open to the Court to substitute one or all the arbitrators, which is in fact a power to make appointment of a
new/substitute arbitrator or any member of the arbitral tribunal. Thus certainly when the arbitration in question is an international commercial arbitration as defined under Section 2(1)(f) of the Act, the High Court exercising power under Section 29A, cannot make an appointment of a substitute arbitral tribunal or any member of the arbitral tribunal as prescribed under sub-section (6) of Section 29-A, as it would be the exclusive
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power and jurisdiction of the Supreme Court considering the provisions of Section 11(5) read with Section 11(9) as also Sections 14 and 15 of the Act. It also cannot be overlooked that in a given case there is likelihood of an opposition to an extension application and the opposing party may pray for appointment of a substitute arbitral tribunal, requiring the Court to exercise powers under sub-section (6) of Section 29-A. In such a situation while appointing a substitute arbitral tribunal, when the arbitration is an international commercial arbitration, Section 11(9) would certainly come into play, which confers exclusive jurisdiction on the Supreme Court to appoint an arbitral tribunal".
90. The decision of Allahabad High Court in the case of
Indian Farmers Fertilizers Cooperative Ltd. V. Manish Engineering Enterprises, reported in AIR Online 2022 All 15 is also on the same issue. Relevant paragraphs 34 to 36 read thus :
"34. Thus, the power to substitute the arbitrator as mandated in sub-section (6) of Section 29A vest only with the Court. This provision cannot be read in isolation but with Section 11, which provides for appointment of arbitrator.
35. Once the appointment of arbitrator or arbitral Tribunal has been made by the High
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Court or the Supreme Court exercising power under sub-sections (4), (5) and (6) of Section 11 then the power to substitute the arbitrator or the Arbitral Tribunal only vest with the said appointing authority i.e. High Court or Supreme Court, as the case may be.
36. The argument raised from the side opposite that the word "Court' occurring in Section 2(1)(e) means the principal Civil Court and not the High Court cannot be accepted, as once the appointment was made by the High Court exercising power under Section 11, the power to substitute an arbitrator cannot vest under sub-section (6) of Section 29A with the principal Civil Court".
91. Thus, the cumulative reading of Section 2 (e), Section 11 (4) (5) (6) and Section 29 A (4) and (6) of the Act makes it crystal clear that the court which could grant extension of time could only be the court which has the power to appoint the Arbitrators and not the Principal Civil Court which is the court for other purpose under the Act. Otherwise, the conflict between the power of the superior courts to appoint Arbitrators under Section 11 of the Act and powers of the Principal Civil Court to substitute such Arbitrators under Section 29 A (6) of the Act could not be reconciled. So, we find and hold that the learned
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District Judge erred while granting the extension of time to the learned Arbitral Tribunal.
92. A question may arise for consideration in the present case as the Arbitrators were not appointed by the High Court and were appointed by the parties themselves during pendency of Request Case No.06 of 2016 filed on behalf of BEDCPL for appointment of Arbitrator on behalf of SBPDCL, there ought not to be any issue for their extension or for that matter substitution under Section 29 (4) (6) of the Act. But in that case, the proceedings on this assumption that the Principal Civil Court got jurisdiction as the Arbitrators were appointed by the parties themselves would again give rise to conflicting situation. Let us take example of a situation where one of the Arbitrators has been appointed by the one of the parties and the second Arbitrator by the High Court and for substitution of either of them there could not be jurisdiction conferred upon both the principal civil court as well as on the High Court. So, to avoid such difference and conflicting cases in future it is more necessary to clear this aspect that the Principal Civil Court (the court of learned District Judge in the present case) has no jurisdiction to entertain the applications for extension of mandate of Arbitral Tribunal.
93. So we come to a conclusion on this point that the extension of term of the arbitral tribunal by the learned District
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Judge was without authority of law on jurisdiction and the same came to an end after its first extension on consent of the parties. If it is presumed that the same was with retrospective effect since the extension has been recorded after the expiry of the 12 months of the period.
94. Moreover, the view taken hereinabove is also fortified by the conduct of the parties. BEDCPL filed its petition for substitution of Arbitrators before this Court under Section 29 A
(6) of the Act, whereas SBPDCL filed its petition for appointment of fresh Arbitrators while making SPML party to such arbitration proceeding. So the parties have no doubt in their minds that if substitution is to be done, the jurisdiction lies with this Court and not the court of learned District Judge, otherwise, they would have moved before the learned District Judge for substitution. Obviously the inference is that only the court which has got power to substitute the Arbitrators should be moved for extension of time for arbitral proceedings.
95. Once we have held that there exists no arbitration proceedings as on date, there could be no arbitral tribunal in existence as on date since its term came to expiry in terms of Section 29 A (1) and even after subsequent extension under Section 29 A (3). So, this Court is required to consider the issue of appointment of Arbitrators afresh.
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96. Now let us take up the question of continuation and substitution of Arbitrators as prayed by the parties. The stand of SPML is very clear. It has contended from the very beginning that it is not a party to the arbitration agreement which did not find favour with this Court as discussed in earlier paragraphs. Once we have come to a conclusion that SPML is a necessary party to the arbitration agreement though this issue was left open by the learned arbitral tribunal as reflected from its order dated 05.08.2017. The natural consequence would be that it be asked to join the arbitration proceedings and appoint an Arbitrator on its behalf. It is again reiterated even at the cost of repetition that SPML and BEDCPL could not be treated as different from each other on conjoint reading of different documents, viz, RFP, LOI, DFA and specially the arbitration clause of DFA. So, we hold that Arbitrator needs to be appointed on behalf of SPML and
BEDCPL.
97. SBPDCL has submitted before this Court that it has nominated Hon'ble Mr. Justice V.N.Sinha (since retired) to be its nominee Arbitrator. The contention of BEDCPL is that arbitration proceedings are still subsisting and its nominee Arbitrator, Hon'ble Mr. Justice Pravir Kumar Samanta (since retired) is continuing. Once we have held that arbitration proceeding has come to an end and Arbitrators are to be
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appointed afresh. In circumstances other than the present one, this Court might have asked the parties to nominate their Arbitrators. But considering the fact that the dispute in the matter has been lingering on for almost 7 to 8 years, this Court would suggest the panel of Arbitrators on behalf of the parties to choose, who in turn will nominate the Presiding Arbitrator. It is made clear that one Arbitrator is to be chosen by SBPDCL and another by SPML and BEDCPL jointly. This exercise would be completed by the parties within two weeks from the date of receipt of a copy of this judgment.
98. The arbitral proceedings are being ordered to be started afresh and it is not an extension within the meaning of Section 29A (6) of the Act. The arbitral tribunal shall follow the timeline as prescribed in Section 29 A. Ordering for fresh arbitration in the matter has become more necessary as the SPML has not been a party to the earlier arbitration proceeding and it has been ordered to be treated as a party in the present case. So it is incumbent upon this Court to see that SPML is not prejudiced in any manner. Moreover, considering the history of dispute, it would be proper and in the interest of justice that the parties start the arbitral proceeding on a clean slate. This Court suggests the panel of following Arbitrators to be chosen from by the parties.
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1. Hon'ble Mr. Justice Jayanandan Singh, Former Judge, Patna High Court, Patna
2. Hon'ble Mr. Justice Vijayeshwar Narayan Sinha, Former Judge, Patna High Court, Patna
3. Hon'ble Mr. Justice Mihir Kumar Jha, Former Judge, Patna High Court, Patna
4. Hon'ble Mr. Justice Ramesh Kumar Datta, Former Judge, Patna High Court, Patna
5. Hon'ble Mr. Justice Samarendra Pratap Singh, Former Judge, Patna High Court, Patna
6. Hon'ble Mr. Justice Jitendra Mohan Sharma, Former Judge, Patna High Court, Patna
7. Hon'ble Justice Smt. Nilu Agrawal, Former Judge, Patna High Court, Patna
8. Hon'ble Mr. Justice Jyoti Saran, Former Judge, Patna High Court, Patna
9. Hon'ble Mr. Justice Dinesh Kumar Singh, Former Judge, Patna High Court, Patna
10. Hon'ble Mr. Justice Prabhat Kumar Jha, Former Judge, Patna High Court, Patna
11. Hon'ble Mr. Justice Ashwani Kumar Singh, Former Judge, Patna High Court, Patna.
99. In view of discussions made so far, we have no hesitation in holding that the arbitral tribunal which started working with effect from 14.05.2016 has ceased to exist and for this reason, it cannot be continued even after substituting Arbitrator on behalf of any of the parties what to say on behalf of SBPDCL.
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100. In the light of the discussions made in paragraphs hereinbefore, the order dated 25.09.2021 passed by the learned District Judge in Misc. Arbitration Case No.01 of 2017 wherein the learned District Judge allowed the extension of time for completion of arbitration proceeding and the mandate of the Arbitrators is set aside. Similarly, the order dated 25.09.2021 passed by the learned District Judge in Misc. Arbitration Case No. 164 of 2017 is also set aside. The order dated 25.09.2021 passed by learned District Judge in Misc. Arbitration Case No.165 of 2017 wherein it upheld the extension of the arbitral tribunal by consent of the parties is also set aside.
101. Accordingly, CWJC No.20350 of 2021, M.A. No.635 of 2021, M.A. No.638 of 2021 are allowed to the extent indicated above and rest of the cases are disposed of. Parties to bear their own cost.
(P. B. Bajanthri, J) (Arun Kumar Jha, J)
V.K.Pandey/-
| AFR/NAFR |
AFR |
| CAV DATE |
19.01.2023 |
| Uploading Date |
26.04.2023 |
| Transmission Date |
N/A |