TMI Blog2014 (10) TMI 437X X X X Extracts X X X X X X X X Extracts X X X X ..... urt 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 Sections 9 and 34 are concerned, provided for under Section 37 of the Act, would not be available. Under Section 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 Section 42. Whether Section 42 applies after the arbitral proceedings come to an end - Held that:- 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 Section 42. If, for example, an application were to be filed in a court inferio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... setting aside the Award. In support of his submission, he relied upon judgment of this Court in the case of Jindal Vijaynagar Steel (JSW Steel Ltd.) Vs. Jindal Praxair Oxygen Co. Ltd. (2006) 11 SCC 521. 4. We have perused the decisions cited by learned counsel for the parties, which are all decisions of two Judges Bench. In our opinion, the law has to be clarified beyond doubt as to which Court will have the jurisdiction to entertain and decide an application for setting aside the Award under Section 34 of the Act read with Section 2(e) of the Act and other provisions, including Section 42 of the Act. We, therefore, refer the matter to a larger Bench to decide this question of law. 5. Let the papers of this case be placed before Hon'ble the Chief Justice for constituting an appropriate Bench. 6. Till the disposal of the appeal by a larger Bench, the interim order dated 17.05.2007 shall continue to operate. 2. The facts necessary to decide this matter are as follows: In 1995-96 an Item Rate Tender was duly executed and signed between the respondent Associated Contractors and the concerned Superintending Engineer for execution of the work of excavation and lining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned judgment dated 11th April, 2005, a Single Judge of the High Court of Calcutta allowed the petition under Article 227 holding: Accordingly, I hold that since the parties already had submitted to the jurisdiction of this Court in its Ordinary Original Civil jurisdiction in connection with different earlier proceedings arising out of the said contract, as indicated above, the jurisdiction of the court of the learned District Judge at Jalpaiguri to entertain the said application for setting aside of the award was excluded under Section 42 of the said Act. Thus, I find that this Court in its Ordinary Original Civil Jurisdiction is the only court which can entertain an application for setting aside the said award. The Revisional Application, thus, stands allowed. The impugned notice is, thus, quashed. 7. In an S.L.P. filed against this order, Mr. Anip Sachthey, learned advocate for the State of West Bengal, argued that since the application itself made under Section 9 was without jurisdiction, Section 42 of the Arbitration Act would not be attracted. He argued that the reason the Division Bench stayed the interim order passed under Section 9 was because it was convin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplications arising, out of that reference, and the arbitration proceedings shall be made in that Court and in no other Court. 11. It will be noticed that Section 42 is in almost the same terms as its predecessor Section except that the words in any reference are substituted with the wider expression with respect to an arbitration agreement . It will also be noticed that the expression has been made in a court competent to entertain it , is no longer there in Section 42. These two changes are of some significance as will be pointed out later. Section 42 starts with a non-obstante clause which does away with anything which may be inconsistent with the Section either in Part-I of the Arbitration Act, 1996 or in any other law for the time being in force. The expression with respect to an arbitration agreement widens the scope of Section 42 to include all matters which directly or indirectly pertain to an arbitration agreement. Applications made to Courts which are before, during or after arbitral proceedings made under Part-I of the Act are all covered by Section 42. But an essential ingredient of the Section is that an application under Part-I must be made in a court. 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 15 of the Code of Civil Procedure. Section 15 requires all suits to be filed in the lowest grade of court. This Hon ble Court has construed Section 2(1)(e) and said that where a High Court exercises ordinary original civil jurisdiction over a district, the High Court will have preference to the Principal Civil Court of original jurisdiction in that district. In that case, one of the parties moved an application under Section 34 before the District Judge, Thane. On the same day, the opposite party moved an application before the High Court of Bombay for setting aside some of the directions contained in the Award. In the circumstances, it was decided that the Court for the purpose of Section 42 would be the High Court and not the District Court. Several reasons were given for this. Firstly, the very inclusion of the High Court in the definition would be rendered nugatory if the above conclusion was not to be accepted, because the Principal Civil Court of original jurisdiction in a district is always a court lower in grade than the High Court, and such District Judge being lower in grade than the High Court would always exclude the High Court from adjudicating upon the matte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... framers of the statute must certainly be taken to have been conscious of the definition of 'court' in the Act. It is easily possible to contemplate that they did not want the power under Section 11 to be conferred on the District Court or the High Court exercising original jurisdiction. The intention apparently was to confer the power on the highest judicial authority in the State and in the country, on Chief Justices of High Courts and on the Chief Justice of India. Such a provision is necessarily intended to add the greatest credibility to the arbitral process. The argument that the power thus conferred on the Chief Justice could not even be delegated to any other Judge of the High Court or of the Supreme Court, stands negatived only because of the power given to designate another. The intention of the legislature appears to be clear that it wanted to ensure that the power under Section 11(6) of the Act was exercised by the highest judicial authority in the concerned State or in the country. This is to ensure the utmost authority to the process of constituting the arbitral tribunal. 18. It is true that the power under Section 11(6) of the Act is not conferred on the Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be followed but a separate set of rules made by the Chief Justice for the purposes of Section 11. Sub-section 12 of Section 11 reads as follows: (a) Where the matters referred to in sub-sections (4), (5), (6), (7), (8) and (10) arise in an international commercial arbitration, the reference to Chief Justice'' in those subsections shall be construed as a reference to the Chief Justice of India''. (b) Where the matters referred to in sub-sections (4), (5), (6), (7), (8) and (10) arise in any other arbitration, the reference to Chief Justice in those sub-sections shall be construed as a reference to the Chief Justice of the High Court within whose local limits the principal Civil Court referred to in clause (e) of sub-section (1) of section 2 is situate and, where the High Court itself is the Court referred to in that clause, to the Chief Justice of that High Court. It is obvious that Section 11(12)(b) was necessitated in order that it be clear that the Chief Justice of the High Court will only be such Chief Justice within whose local limits the Principal Civil Court referred to in Section 2(1)(e) is situate and the Chief Justice of that High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings after appointing an Arbitrator, the Supreme Court would not be court within the meaning of the Arbitration Act, 1940. 20. As noted above, the definition of court in Section 2(1)(e) is materially different from its predecessor contained in Section 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 Section 2(1)(e) even if it retains seisin over the arbitral proceedings. Firstly, as noted above, the definition is exhaustive and recognizes only one of two possible courts that could be court for the purpose of Section 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. Even though this proposition itself is open to doubt, as the Supreme Court exercising jurisdiction under Article 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 or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ference , but mean in the matter of a reference and that such phrase is wide enough and comprehensive enough to cover an application made after the arbitration is completed and the final Award is made. (See Paras 891- 893). As has been noticed above, the expression used in Section 42 is wider being with respect to an arbitration agreement and would certainly include such applications. 22. One more question that may arise under Section 42 is whether Section 42 would apply in cases where an application made in a court is found to be without jurisdiction. Under Section 31(4) of the old Act, it has been held in FCI represented by Managing Director Anr. v. A.M. Ahmed Co., through MD Anr., (2001) 10 SCC 532 at para 6 and Neycer India Ltd. v. GNB Ceramics Ltd., (2002) 9 SCC 489 at para 3 that Section 31(4) of the 1940 Act would not be applicable if it were found that an application was to be made before a court which had no jurisdiction. In Jatinder Nath v. Chopra Land Developers Pvt. Ltd., (2007) 11 SCC 453 at para 9 and Rajasthan State Electrical Board v. Universal Petrol Chemical Limited, (2009) 3 SCC 107 at paras 33 to 36 and Swastik Gases (P) Ltd. v. Indian Oil Corporati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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