"I realise that some of my criticisms may be mistaken; but to refuse to criticize judgements for fear of being mistaken is to abandon criticism altogether... If any of my criticisms are found to be correct, the cause is served; and if any are found to be incorrect the very process of finding out my mistakes must lead to the discovery of the right reasons, or better reasons than I have been able to give, and the cause is served just as well." -Mr. HM Seervai, Preface to the 1st ed., Constitutional Law of India.

Thursday, September 18, 2014

Three Judge Bench of SCI Decides Comprehensively on "Court" under the Arbitration & Conciliation Act 1996

A Three Judge Bench of the Supreme Court has comprehensively decided on "court" in the Arbitration and Conciliation Act, 1996 in the case of State of West Bengal v. Associated Contractors (10.09.2014). Previously, a two judge Bench of the Supreme Court of India was to consider the question as to which court will be a Court for the purposes of deciding an application under Section 34 of the Act for setting aside arbitral awards. The same was referred to the Chief Justice of India for constituting a larger bench in view of the conflicting views of judgements.

After hearing the matter, the three judge Bench, through Rohington Nariman, J. laid down the following as regards the issues pertaining to the appropriate Court for filing application in view of Section 2(1)(e)(which defines "Court"), Section 42 and other provisions of the 1996 Act:

" (a) Section 2(1)(e) contains an exhaustive definition marking out only the Principal Civil Court of original jurisdiction in a district or a High Court having original civil jurisdiction in the State, and no other court as "court" for the purpose of Part-I of the Arbitration Act, 1996.
(b) The expression "with respect to an arbitration agreement" makes it clear that Section 42 will apply to all applications made whether before or during arbitral proceedings or after an Award is pronounced under Part-I of the 1996 Act.
(c) However, Section 42 only applies to applications made under Part-I if they are made to a court as defined. Since applications made Under Section 8 are made to judicial authorities and since applications Under Section 11 are made to the Chief Justice or his designate, the judicial authority and the Chief Justice or his designate not being court as defined, such applications would be outside Section 42.
(d) Section 9 applications being applications made to a court and Section 34 applications to set aside arbitral awards are applications which are within Section 42.
(e) In no circumstances can the Supreme Court be "court" for the purposes of Section 2(1)(e), and whether the Supreme Court does or does not retain seisin after appointing an Arbitrator, applications will follow the first application made before either a High Court having original jurisdiction in the State or a Principal Civil court having original jurisdiction in the district as the case may be.
(f) Section 42 will apply to applications made after the arbitral proceedings have come to an end provided they are made under Part-I.
(g) If a first application is made to a court which is neither a Principal Court of original jurisdiction in a district or a High Court exercising original jurisdiction in a State, such application not being to a court as defined would be outside Section 42. Also, an application made to a court without subject matter jurisdiction would be outside Section 42."

The decision can be downloaded from this link (pdf)

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