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2025 DIGILAW 2647 (KER)

Offshore Infrastructures Limited v. Bharat Petroleum Corp. Ltd.

2025-10-08

DEVAN RAMACHANDRAN, M.B.SNEHALATHA

body2025
ORDER : Devan Ramachandran, J. We are speaking on a reference placed before us by the Hon’ble the Chief Justice of this Court, initiated by a learned Single Judge through his order dated 09.06.2025. 2. The forensic and legal issues involved are ones that have engaged the attention of Courts several times before; and perhaps on which, authoritative pronouncements have already been made, not only by this Court or by other High Courts, but also by the Hon’ble Supreme Court. 3. The singular aspect placed for our evaluation under the reference, is as to the identity of the ‘Court’ as appearing in Section 29A of the Arbitration and Conciliation Act, 1966 (‘Act’ for short). 4. As is well recognized, under the ‘Act’, after an Arbitrator/Arbitral Tribunal is appointed, it prescribes a time limit for the mandate of Arbitration, which can then be extended in the manner specified in Section 29A thereof. 5. The apparent confusion is hinged on the question if such an extension can be granted by a Court which is not the High Court, in the case of an Arbitration where the Arbitrator/Arbitral Tribunal had been appointed by it under the provisions of Section 11 of the ‘Act’. 6. At first blush, there should not have been any real issue for concern because, Section 2(1)(e) of the ‘Act’ defines ‘Court’ in the following manner: “2. Definitions.—(1) In this Part, unless the context otherwise requires,— [(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;]” 7. However, almost as an exception, the ‘Act’ then mandates under Section 11 that, in certain specified scenarios, the appointment of an Arbitrator/Arbitral Tribunal shall be made by the High Court in the case of a Domestic Arbitration and by the Hon’ble Supreme Court in the case of an International Arbitration. 8. It is here that the question arises whether an extension of the mandate of the Arbitrator beyond the period - which is normally fixed under Section 29A(1) of the ‘Act’ - should be left to be done by the Court as defined under Section 2(1)(e) thereof, or by the High Court/ Supreme Court, as the case may be. 9. This confusion is not something that arose recently because, even prior to the year 2020, a reference appears to have been made by another learned Judge on the very same issue, which led to a judgment by a learned Division Bench, cited as M/s.Lots Shipping Company Ltd. V. Cochin Port Trust Board of Trustees [ 2020(2) KLT 907 ]. 10. In M/s.Lots Shipping Company Ltd. (supra), the learned Bench adopted the principles of contextual interpretation, to hold that where an appointment of an Arbitrator/Arbitral Tribunal is made by the High Court, then the principles of the ‘hierarchy of Courts’ would compel that extensions of mandates also be done by the same Court. However, when it declared so, its attention had not been brought to at least three judgments of the Hon’ble Supreme Court in force even at that time, namely National Aluminium Company Ltd. v. Pressteel and Fabrications Pvt. Ltd. and Another [ (2004) 1 SCC 540 ]; Garhwal Mandal Vikas Nigam Ltd. v. M/s. Krishna Travel Agency [ (2008) 6 SCC 741 ] and State of West Bengal and Others v. Associated Contractors [ (2015) 1 SCC 32 ]. 11. The afore three precedents dealt with the question as to which is the appropriate Court under Section 34 of the ‘Act’; as also whether the challenge of the Awards therein ought to be made under the old Act (‘1940 Act’), or the new Act (‘1966 Act’). 11. The afore three precedents dealt with the question as to which is the appropriate Court under Section 34 of the ‘Act’; as also whether the challenge of the Awards therein ought to be made under the old Act (‘1940 Act’), or the new Act (‘1966 Act’). Though the considerations therein were perhaps not strictly on the provisions for extension of mandate as available under Section 29A of the ‘Act’, they affirmatively declared that the word ‘Court’, as appearing in the ‘Act’, would not be the High Court, except where it is so specified, for example, under Sections 11 and 15 thereof. 12. While so, in the year 2024, the Hon’ble Supreme Court came to seize the issue again and declared its opinion lucidly in Chief Engineer (NH) Public Works Department (Roads) v. BSC and C and C JV [(2024) SCC OnLine SC 1801], emphatically reaffirming and holding that the word ‘Court’ as appearing in the ‘Act’, would not take into its fold the High Court or the Supreme Court - as the case may be, except where the Statute specifies so for certain enumerated functions. 13. It is in such factual ambit that the learned Single Judge made a reference for an emphatic declaration on whether M/s.Lots Shipping Company Ltd. (supra) can now be construed to be good law, particularly within the confines of the declarations in Chief Engineer (NH) (supra). 14. We propose to begin with the holdings of the Hon’ble Supreme Court in Chief Engineer (NH) (supra); and it is indubitable therefrom - particularly the paragraphs which we will presently extract under - that they are definite to the extent that all powers under Section 29A of the ‘Act’ vests in the Court, as defined in Section 2(1)(e) thereof. The relevant portion of the order, for ease of reading, is reproduced ut infra: “(3) The parties may, by consent, extend the period specified in sub-section (1) for making award for a further period not exceeding six months. The relevant portion of the order, for ease of reading, is reproduced ut infra: “(3) The parties may, by consent, extend the period specified in sub-section (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-section (1) or the extended period specified under sub-section (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-section, 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: Provided further that where an application under sub-section (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- section (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 sub- section (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 section shall be deemed to have received the said evidence and material. (7) In the event of arbitrator(s) being appointed under this section, 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 section. (9) An application filed under sub-section (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." (underlines supplied) 2. (9) An application filed under sub-section (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." (underlines supplied) 2. The power under sub-Section (4) of S.29A of the Arbitration Act vests in the Court as defined in S.2(1)(e) of the Arbitration Act. It is the principal Civil Court of original jurisdiction in a district which includes a High Court provided the High Court has ordinary original civil jurisdiction.” 15. Pertinently, the afore extracted opinion of the Hon’ble Supreme Court notices that, except for certain High Courts, the others do not have ordinary civil jurisdiction; and axiomatically declares that the power under Sub-section (6) of Section 29A of the ‘Act’ is only a consequential power which can be exercised by it, if it is to find that the cause of delay is one or all of the Arbitrators. 16. The obvious reason why the Hon’ble Supreme Court said as afore is that Section 29A (6), while authorizing the ‘Court’ to extend the mandate of the Arbitration, also reserves power to it to substitute one or all of the Arbitrators. 17. We will return to Chief Engineer (NH) (supra) in a while; and in the meanwhile, we record that we had the assistance of Sri.Sreelal Warriar, learned Amicus Curiae, who was requested to assist us, taking into account the rather tenuous nature of the situation presented before us, caused not by the complexity of the forensic issues, but on account of the factum of two reference orders having been made at different points of time on the same issue. 18. Sri.Sreelal Warriar made very exhaustive submissions before us, going into the nitty-gritty of the Scheme of the ‘Act’; and voicing an opinion that, at first blush, the word 'Court', wherever appearing, can only mean that which is defined under Section 2(1)(e). 18. Sri.Sreelal Warriar made very exhaustive submissions before us, going into the nitty-gritty of the Scheme of the ‘Act’; and voicing an opinion that, at first blush, the word 'Court', wherever appearing, can only mean that which is defined under Section 2(1)(e). He, however, pointed out – perhaps only to give a contrary perspective – that Section 2(1) of the ‘Act’ starts by saying “unless the context otherwise requires”, and then took us to Section 29A(6) thereof, to opine that, perhaps, a doubt can arise whether the substitution of an Arbitrator therein will have to be left to be done exclusively by the High Court or the Hon’ble Supreme Court, as the case may be, where the Arbitrator/Arbitral Tribunal is nominated by the said Courts. 19. May be, this is a view that can be triggered, but because of the afore extracted opinion in Chief Engineer (NH) (supra), we are not required to answer it at all, the holdings of the Hon’ble Supreme Court being binding on us. Moreover, we are in respectful agreement with it. 20. However, Sri.Rajeev George and Sri.John Vidayathil – learned counsel appearing for the petitioners in these cases; and Smt.Pooja Menon, appearing for the respondents, impelled an argument that the power of the Court under Section 29A (6) of the ‘Act’ will have to be seen in distinction to that power which is vested under Section 15 thereof, which they also concede, might perhaps admit to a situation where the High Court or the Hon’ble Supreme Court alone can order substitution of an Arbitrator. 21. The afore argument is simple to fathom, namely that, if an Arbitrator/Arbitral Tribunal has been appointed by the High Court or Hon’ble Supreme Court - as the case may be, then Section 15 thereof - which provides for the substitution of an Arbitrator in the situations where an Arbitrator withdraws from Office, or is sought to be withdrawn pursuant to the argument of the parties - the same Rules that are applicable to his appointment in the first place would apply. This would ineluctably apply only to a situation where substitution is to be made under the ambit of Section 15 of the ‘Act’, to thus follow the same procedure applicable to the initial appointment; but in the case of one done without the aegis of either the High Court or the Hon’ble Supreme Court, but by the parties themselves under an agreement or arrangement they have entered into as statutorily permitted, subsequent substitution of Arbitrator/s can only be by the District Court, or the Principal Civil Court of original jurisdiction. 21. We have little doubt that this is precisely why the Hon’ble Supreme Court also, in Chief Engineer (NH) (supra), declared authoritatively that the power under Sub-section (6) of Section 29A of the ‘Act’ is only a consequential power. 22. As indicated above, the field is occupied by three other judgments cited supra. In all the said judgments, starting from National Aluminium Company Ltd. of the year 2004; running through Garhwal Mandal Vikas Nigam Ltd. of the year 2008; and standing at Associated Contractors of the year 2014, the unambiguous holdings of the Hon’ble Supreme Court is that, neither the High Court nor the Hon’ble Supreme Court will retain any power or control of the Arbitration proceedings after the nomination happens, except under specified circumstances, including under Sections 14 or 15 of the ‘Act’. This can brook no further doubt when one reads paragraphs 20, 24 and 25 of Associated Contractors, which requires a full reading and hence is reproduced below: “20. As noted above, the definition of "Court" in S.2(1) (e) is materially different from its predecessor contained in S.2(c) of the 1940 Act. There are a variety of reasons as to why the Supreme Court cannot possibly be considered to be "Court" within the meaning of S.2(1)(e) even if it retains seisin over the arbitral proceedings. Firstly, as noted above, the definition is exhaustive and recognises only one of two possible Courts that could be "Court" for the purpose of S.2(1) (e). Secondly, under the 1940 Act, the expression "Civil Court" has been held to be wide enough to include an appellate Court and, therefore would include the Supreme Court as was held in the two judgments aforementioned under the 1940 Act. Secondly, under the 1940 Act, the expression "Civil Court" has been held to be wide enough to include an appellate Court and, therefore would include the Supreme Court as was held in the two judgments aforementioned under the 1940 Act. Even though this proposition itself is open to doubt, as the Supreme Court exercising jurisdiction under Art.136 is not an ordinary Appellate Court, suffice it to say that even this reason does not obtain under the present definition, which speaks of either the Principal Civil Court or the High Court exercising original jurisdiction. Thirdly, if an application would have to be preferred to the Supreme Court directly, the appeal that is available so far as applications under S.9 and S.34 are concerned, provided for under S.37 of the Act, would not be available. Any further appeal to the Supreme Court under Art.136 would also not be available. The only other argument that could possibly be made is that all definition Sections are subject to context to the contrary. The context of S.42 does not in any manner lead to a conclusion that the word "Court" in S.42 should be construed otherwise than as defined. The context of S.42 is merely to see that one Court alone shall have jurisdiction over all applications with respect to arbitration agreements which context does not in any manner enable the Supreme Court to become a "Court" within the meaning of S.42. It has aptly been stated that the rule of forum conveniens is expressly excluded by S.42. See: JSW Steel Ltd. v. Jindal Praxair Oxygen Co. Ltd., 2006 (11) SCC 521 at para 59. S.42 is also markedly different from S.31(4) of the 1940 Act in that the expression "has been made in a Court competent to entertain it" does not find place in S.42. This is for the reason that, under S.2(1)(e), the competent Court is fixed as the Principal Civil Court exercising original jurisdiction or a High Court exercising original civil jurisdiction, and no other Court. For all these reasons, we hold that the decisions under the 1940 Act would not obtain under the 1996 Act, and the Supreme Court cannot be "Court" for the purposes of S.42. 24. For all these reasons, we hold that the decisions under the 1940 Act would not obtain under the 1996 Act, and the Supreme Court cannot be "Court" for the purposes of S.42. 24. If an application were to be preferred to a Court which is not a Principal Civil Court of original jurisdiction in a district, or a High Court exercising original jurisdiction to decide questions forming the subject - matter of an arbitration if the same had been the subject - matter of a suit, then obviously such application would be outside the four corners of S.42. If, for example, an application were to be filed in a Court inferior to a Principal Civil Court, or to a High Court which has no original jurisdiction, or if an application were to be made to a Court which has no subject - matter jurisdiction, such application would be outside S.42 and would not debar subsequent applications from being filed in a Court other than such Court. 25. Our conclusions therefore on S.2(1)(e) and S.42 of the Arbitration Act, 1996 are as follows: (a) S.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 - 1 of the Arbitration Act, 1996. (b) The expression "with respect to an arbitration agreement" makes it clear that S.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, S.42 only applies to applications made under Part - I if they are made to a Court as defined. Since applications made under S.8 are made to judicial authorities and since applications under S.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 S.42. (d) S.9 applications being applications made to a Court and S.34 applications to set aside arbitral awards are applications which are within S.42. (d) S.9 applications being applications made to a Court and S.34 applications to set aside arbitral awards are applications which are within S.42. (e) In no circumstances can the Supreme Court be "Court" for the purposes of S.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) S.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 S.42. Also, an application made to a Court Without subject -matter jurisdiction would be outside S.42. The reference is answered accordingly.” 23. It is ineluctable from the afore extract, that the Hon'ble Supreme Court has expressly recognised that the definition of “Court” in Section 2(1)(e) of the 'Act' is exhaustive; and that every procedure, unless otherwise specified in the Statute itself, will have to be initiated, regulated and completed by such, within the statutory ambit. 24. The corollary question arises, how could a view contrary to the one reflected in the three judgments have been taken in M/s.Lots shipping company Ltd. (supra). 25. Apodictically, even at the time when the judgment – also answering a reference - was delivered, the afore three binding precedents controlled the field. However, we notice from it that the said three judgments had not been cited before the learned Bench; and consequently, were not adverted to, or taken into account. We are sure that, had it been done, the decision in M/s.Lots shipping company Ltd. (supra) would have been vastly different. 26. Be that as it may, the forensic situation on this issue is now completely cemented by the judgment of the Supreme Court in Chief Engineer (NH) (supra). We are sure that, had it been done, the decision in M/s.Lots shipping company Ltd. (supra) would have been vastly different. 26. Be that as it may, the forensic situation on this issue is now completely cemented by the judgment of the Supreme Court in Chief Engineer (NH) (supra). The Hon'ble Court has held, as we have repeatedly noticed above, that a High Court which is not one within the umbra of Section 2(1)(e) of the 'Act', namely that which does not have ordinary civil jurisdiction, obtains no powers under Section 29A of the 'Act'; and it has further gone on to dispel any confusion on the power of substitution of Arbitrator/Arbitral Tribunal vested with such Court, to say that it is only a consequential one. 27. Obviously, the observations and findings in M/s.Lots shipping company Ltd. (supra) cannot be held to be good law in any case after Chief Engineer (NH) (supra); and we are aware that the submissions of the learned counsel at the Bar were even to the extent of requesting that this Court declare it to be per incuriam, for the singular fact that it did not advert to the three binding precedents of the Hon'ble Supreme Court referred above. 28. Though we find no favour with such plea, we are left with no doubt that no reliance can be placed on M/s.Lots shipping company Ltd. (supra) any further, being bound by the subsequent affirmative declarations of the Hon'ble Supreme Court in Chief Engineer (NH) (supra). 29. This reference is so answered, but clarifying that our observations and findings herein would not disturb any pending application before this Court under Section 29A of the 'Act', filed as per M/s.Lots shipping company Ltd. (supra). We place on record our deepest commendation for Sri.Sreelal Warriar – learned Amicus Curiae, but for whose incise and clear assistance, it would have been much more difficult for us to find our path, as we have done now.