We had done about three posts on the Arbitration and Conciliation (Amendment) Bill, 2018 before it was formally introduced in the Lok Sabha. These posts are given below. Before you jump in into the posts, the official version of the Bill has been uploaded on the Lok Sabha website and can be downloaded from this link:
This blogger is not sure if there are substantial changes between the Bill partially reviewed in the above posts and the Bill uploaded now. On a glance, it appears that they are the same and therefore, the aforesaid comments still hold good.
Therefore, the controversial issue as to the retrospective applicability of the 2015 Amendments is sought to be closed with the introduction of Section 13 of this Amendment Act, which is critiqued in the second post listed above. The long and short of it seems to be that the Government has not heeded to the Supreme Court's advice in relation to the the said provision. We will attempt to do a detailed critique of the amendments in the next few posts. We hope proper discussions take place in the Parliament this time regarding the important amendments. In this post, we look at the controversial issue of definition of Courts and argue that the Bill should put to rest the controversy.
Principal Civil Court of Original Jurisdiction: Does it Include Additional District Courts?
There is a raging controversy in many states in India as to whether "Principal Civil Court of Original Jurisdiction" as provided in Section 2(1)(e) of the Arbitration and Conciliation Act, 1996 would include Additional District Courts. It appears that the question is settled in some states while in some states such as Tamil Nadu, the practice seems to be that Principal District Courts hive off certain matters to the relevant Additional District Courts for disposal of arbitration matters. (For further examples, see Ashiana Infrahomes Pvt . Ltd . and Ors . vs . Adani Power Ltd . ( 18 . 05 . 2018 - DELHC ) MANU/DE/1893/2018;
Section 2(1)(e) as was enacted reads:
"(e) "Court" means the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not include any civil court of a grade inferior to such principal Civil Court, or any Court of Small Causes;"
The definition was amended in 2015 in order to take away from the District Court the power to hear arbitration related petitions concerning international commercial arbitrations while letting the District Court retain the power to decide arbitration petitions in non-international commercial arbitrations. the amended Section 2(1)(e) reads:
"(e) “Court” means—
(i) in the case of an arbitration other than international commercial arbitration, the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not include any Civil Court of a grade inferior to such principal Civil Court, or any Court of Small Causes;
(ii) in the case of international commercial arbitration, the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, and in other cases, a High Court having jurisdiction to hear appeals from decrees of courts subordinate to that High Court;"
As one would notice, the expression "the principal Civil Court of original jurisdiction in a district" has been retained. Therefore, the question is whether the aforesaid expression would include an Additional District Court? The subsidiary question is whether, if it does not, it should include an Additional District Court?
One of the earliest decisions is the case of I.T.I.Ltd., Naini, Allahabad vs District Judge, Allahabad, 1998 (3) AWC 2244: AIR 1998 All. 313 where the Allahabad High Court unequivocally held that while it may be true that an Additional District Court might exercise the same powers as the District Judge in relation to the powers assigned by the latter to the former, the term "principal" employed in Section 2(1)(e) of the 1996 Act refers only to the Principal District Court and not to and Additional District Court. Interesting the High Court recognised that such a construction could add additional burden to the Principal District Court but a different construction could not be adopted in view of the plain words of the statute.
On the other side of the spectrum is the recent decision of the Full Bench of the Bombay High Court in Gemini Bay Transcription Private Ltd . and Ors . vs . Integrated Sales Service Ltd . and Ors MANU/MH/0265/2018 , where the court added another dimension to the debate. It held that for the purposes of execution of decrees, the provisions of the Code of Civil Procedure, 1908 govern and the Bombay Civil Courts Act, 1869 which govern. The Court held: "The emphasis is on the expression "District Court" and the reason is obvious as "the Principal District Judge" has not been contemplated as persona designata, at least in the matter of execution of an Award as a decree." Interestingly, the court recognised that if the Principal District Court alone is to be the court, it would burden the said court. The Court stated that the CPC does not restrict execution by any specific civil court. On these grounds the court held that "principal Civil Court or original jurisdiction" also included an Additional District Court for the purposes of enforcement/ execution of awards. The High Court also relied on the recent decision of the Supreme Court in Sundaram Finance Ltd. v Abdul Samad where the Supreme Court held that an arbitral award could be executed anywhere in India where the assets of the award-debtor were located and not merely in the court, which passed the decree.
We will look at the divergence in views of various High Courts on the issue in another post. Our aim in this post was to highlight the difference in views as to what constituted "Court" for the purposes of the 1996 Act. The new Bill, sadly, does not address this divergence. It is important for the Government to introduce amendments to the definition of "Court" in Section 2(1)(e) to clarify and put to rest this controversy.