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2023 DIGILAW 47 (AP)

K. v. Ramana Reddy VS Rashtriya Ispat Nigam Limited

2023-01-04

R.RAGHUNANDAN RAO

body2023
JUDGMENT 1. By an order dtd. 20/9/2018, directions for appointment of arbitrators were passed in ARB. APPL. No.50 of 2018. An Arbitral Tribunal was constituted on the basis of the said directions and the Arbitral Tribunal entered reference on 27/10/2018. Thereafter, the Tribunal commenced hearings in the matter. As the proceedings could not be completed within a period of one year, parties to the arbitration extended the period of arbitration by six months. As further time was required for completion of the arbitral proceedings, CAOP.No.6 of 2020 was filed before the Special Judge for Trial and Disposal of Commercial Disputes, Visakhapatnam, under Sec. 29A of the Arbitration and Conciliation Act, 1996, (hereinafter referred to as the Act) for extension of time. The application was allowed, on 27/11/2020, extending the mandate of the Arbitral Tribunal for a period of six months. Thereafter CAOP. No. 5 of 2021 was filed for further extension of time. It must be noted that respondent No.1 herein had raised an objection, before the Commercial Court that an application under Sec. 29(A) of the Act, for extension of time can only be filed before the High Court and such an application would not be maintainable before the Commercial Court. After hearing both sides on this issue, the Commercial Court had taken the view that the application would be maintainable before the Commercial Court and extended the mandate of the Arbitral Tribunal. 2. The petitioner, in Arbitration Application No.50 of 2018, has now moved this Court for extension of the mandate of the Arbitral Tribunal from 1/3/2022 to 28/2/2023 under Sec. 29(A)(5) of the Act. 3. On a perusal of the grounds set out in the application, for extension of time of the mandate of the Arbitral Tribunal, this Court is of the opinion that extension of the mandate of the Arbitral Tribunal is required. The impact of the intervening Covid pandemic; the hospitalization of one of the Hon'ble Arbitrators on account of a brain stroke and consequential surgery and the large amount of material and pleadings placed before the Arbitral tribunal are sufficient reasons for extension of the mandate of the Arbitral Tribunal. 4. However, the question of whether the application under Sec. 29(A) of the Arbitration and Conciliation Act is to be filed before the High Court or before the Commercial Court would still remain. 5. 4. However, the question of whether the application under Sec. 29(A) of the Arbitration and Conciliation Act is to be filed before the High Court or before the Commercial Court would still remain. 5. The Hon'ble High Court of Allahabad in Indian Farmers Fertilizers Cooperative Ltd., vs. Manish Engineering Enterprises, 2022 SCC Online ALL 150. the Hon'ble High Court of Bombay in Cabra Instalaciones Y. Servicios vs. Maharashtra State Electricity Distribution Company Limited, 2019 SCC Online Bom 1437. Hon'ble High Court of Delhi in DDA vs. M/s Tara Chand Sumit Construction Co., 2020 (269) DLT 373 . the Hon'ble High Court of Orissa at Cuttak in Liladitya Deb vs. Tara Ranjan Pattanaiak and Another, 2021 SCC Online Ori 928. the Hon'ble High Court of Kerala in URC Construction (Private) Ltd vs. BEML Ltd, 2018(1) Ker LJ 55. and the Hon'ble High Court of Gujarat in Nilesh Ramanabhai Patel vs. Bhanubhai Ramanbhai Patel, 2019(2) GLR 1537 . have held that an application under Sec. 29(A) of Arbitration and Conciliation Act can only be moved before the Court which would have authority, under Sec. 11 of the Arbitration and Conciliation Act, to appoint an arbitrator in the case and consequently it would only be either the High Court or the Hon'ble Supreme Court, as the case may be, before whom such applications can be moved. 6. The Commercial Court while dealing with this issue in CAOP.No.5 of 2021 had taken into account, the Judgments of the Hon'ble Supreme Court in Lalit Kumar V.Sanghavi (D) Th.LRs Neeta lalit Kumar Sanghavi and Another vs. Dharmdas V.Sanghavi and Others, 2014(0) Supreme (SC) page 180. State of West Bengal vs. Associated Contractors, 2015(1)SCC page 32.and State of Jharkhand vs. Hindustan Construction Company Ltd., 2018(2)SCC page 602. wherein the Hon'ble Supreme Court had taken the view that the expression "Court" as defined in Sec. 2(1)(a) of the Arbitration and Conciliation Act can only mean the Principal Civil Court of original jurisdiction in a District or a High Court having civil jurisdiction in the State. 7. Sec. 29 A, reads as follows: 29A.Time limit for arbitral award: (1) The award in matters other than international commercial arbitration shall be made by the arbitral tribunal within a period of twelve months from the date of completion of pleadings under sub-sec. 7. Sec. 29 A, reads as follows: 29A.Time limit for arbitral award: (1) The award in matters other than international commercial arbitration shall be made by the arbitral tribunal within a period of twelve months from the date of completion of pleadings under sub-sec. (4) of Sec. 23: Provided that the award in the matter of international commercial arbitration may be made as expeditiously as possible and endeavor may be made to dispose of the matter within a period of twelve months from the date of completion of pleadings under sub-sec. (4) of Sec. 23. (2) If the award is made within a period of six months from the date the arbitral tribunal enters upon the reference, the arbitral tribunal shall be entitled to receive such amount of additional fees as the parties may agree. (3) The parties may, by consent, extend the period specified in sub-sec. (1) for making award for a further period not exceeding six months. (4) If the award is not made within the period specified in sub-sec. (1) or the extended period specified under sub-sec. (3), the mandate of the arbitrator(s) shall terminate unless the Court has, either prior to or after the expiry of the period so specified, extended the period: Provided that while extending the period under this sub-sec., if the Court finds that the proceedings have been delayed for the reasons attributable to the arbitral tribunal, then, it may order reduction of fees of arbitrator(s) by not exceeding five per cent for each month of such delay. 3 [Provided further that where an application under sub-sec. (5) is pending, the mandate of the arbitrator shall continue till the disposal of the said application: Provided also that the arbitrator shall be given an opportunity of being heard before the fees is reduced. (5) The extension of period referred to in sub-sec. (4) may be on the application of any of the parties and may be granted only for sufficient cause and on such terms and conditions as may be imposed by the Court. [ (6) While extending the period referred to in subsec. (5) The extension of period referred to in sub-sec. (4) may be on the application of any of the parties and may be granted only for sufficient cause and on such terms and conditions as may be imposed by the Court. [ (6) While extending the period referred to in subsec. (4), it shall be open to the Court to substitute one or all of the arbitrators and if one or all of the arbitrators are substituted, the arbitral proceedings shall continue from the stage already reached and on the basis of the evidence and material already on record, and the arbitrator(s) appointed under this Sec. shall be deemed to have received the said evidence and material. (7) In the event of arbitrator(s) being appointed under this Sec., the arbitral tribunal thus reconstituted shall be deemed to be in continuation of the previously appointed arbitral tribunal. (8) It shall be open to the Court to impose actual or exemplary costs upon any of the parties under this Sec. . (9) An application filed under sub-sec. (5) shall be disposed of by the Court as expeditiously as possible and endeavour shall be made to dispose of the matter within a period of sixty days from the date of service of notice on the opposite party. 8. Sec. 29 A (6) provides for substitution of the one or all the Arbitrators. This would effectively mean appointment of Arbitrator(s). Such power, under Sec. 11 of the Act, is vested in the High Courts or the Supreme Court alone. This would require that an application for extension of time for the Arbitral tribunal can only be filed before the High Court or the Supreme Court, as the case may be. 9. All the High Courts, in the Judgments mentioned above, had taken the same view that the Court, before whom an application for extension of time is filed, would also have, in view of Sec. 29 A (6) of the Act, the power to replace the existing arbitral by appointing a new arbitrator. 9. All the High Courts, in the Judgments mentioned above, had taken the same view that the Court, before whom an application for extension of time is filed, would also have, in view of Sec. 29 A (6) of the Act, the power to replace the existing arbitral by appointing a new arbitrator. In view of this provision, the principle laid down in all the Judgments was that an application under Sec. 29(A) can be moved only by the Court having authority under Sec. 11 of the Arbitration and Conciliation Act, to appoint arbitrators and consequently it can only be the High Court or the Hon'ble Supreme Court, as the case may be, before whom an application for extension of time can be moved under Sec. 29 A of the Act. 10. The Judgments relied upon by the Commercial Court Judge, are cases in which the Hon'ble Supreme Court was considering the definition of "Court" as set out in Sec. 2(1)(a). The effect of Sec. 29(A) of the Arbitration and Conciliation Act was not before the Hon'ble Supreme Court in these cases. In the light of the above discussion, it must be held that it is only this Court which would have jurisdiction and authority to extend the period of the mandate of the Arbitral Tribunal and the same cannot be undertaken by the Commercial Court. 11. Accordingly, this application is allowed, extending the mandate of the Arbitral Tribunal, from 1/3/2022 to 28/2/2023. There shall be no order as to costs. Miscellaneous petitions, pending if any, shall stand closed.