2006 (11) TMI 674 - SC - Indian Laws

High Court has proper jurisdiction to hear arbitration award appeals under Section 37(2) of Arbitration Act 1996

M/s. Pandey & Co. Builders Pvt. Ltd Versus State of Bihar & Anr

SC dismissed appeal regarding arbitration award jurisdiction. Court held that HC has proper jurisdiction to hear appeals under Section 37(2) of ... Arbitration Award - invoked an arbitration Clause 23 - Application filled u/s 11 - contract for execution of canal repair work - served notice u/s 14 - Interpretation of 'constructive loss' -seeking termination of his mandate on the ground that the earlier Arbitrator has already given his award - Jurisdiction of High Court to hear the appeal as in terms of Sub-section (2) of Section 37 - HELD THAT:- The consequences of the statutory embargo would ensue but then the question will have to be considered as and when occasion arises therefor. Sub-section (2) of Section 37 of the 1996 Act prescribes for an appeal to a court. We do not see any reason as to why having regard to its plain language, the definition of 'court' shall not be put into service. It may be true that the interpretation clause provides for 'unless the context otherwise requires'. If application of the interpretation clause contained in Section 2 of the 1996 Act shall lead to anomalous and absurd results, one may not stick to the definition but we do not think that such a case has been made out. Section 42 of the 1996 Act refers to applications and not to appeals. Reliance placed by the learned counsel on M/s. Guru Nanak Foundation v. M/s. Rattan Singh and Sons [(1981) 4 SCC 634] is not apposite. Therein, the court was dealing with a provision of Sub-section (4) of Section 31 of the 1940 Act and as the appointment was made by the High Court, it was held that an application for setting aside of the award in terms of Sub-section (4) of Section 31 of the 1940 Act would lie before this Court. There exists a distinction between an appeal and an application. Whereas Section 31(4) of the 1940 Act or Section 42 of the 1996 Act provides for an application, Sub-section (2) of Section 37 of the 1996 Act provides for a statutory appeal. A forum of an appellate court must be determined with reference to the definition thereof contained in the 1996 Act. We, therefore, see no reason to differ with the High Court. The appeal is dismissed. Issues Involved:1. Jurisdiction of the Arbitrator.2. Jurisdiction of the High Court under Section 37(2) of the Arbitration and Conciliation Act, 1996.3. Applicability of Section 42 of the Arbitration and Conciliation Act, 1996.4. Interpretation of 'court' under Section 2(1)(e) of the Arbitration and Conciliation Act, 1996.Issue-wise Detailed Analysis:1. Jurisdiction of the Arbitrator:The Appellant invoked the arbitration clause due to disputes arising from a canal repair contract. The Superintending Engineer, the named Arbitrator, retired, and his successor delayed proceedings. The Appellant served notices under Sections 14 and 15 of the Arbitration and Conciliation Act, 1996 (the 1996 Act) for the termination of the Arbitrator's mandate. Despite objections and the appointment of Justice P.S. Sahay as an Arbitrator by the Chief Justice of the Patna High Court, the Superintending Engineer issued an award. Justice P.S. Sahay later held he had no jurisdiction, leading to an appeal under Section 37 of the 1996 Act.2. Jurisdiction of the High Court under Section 37(2) of the Arbitration and Conciliation Act, 1996:The High Court ruled it had no jurisdiction to hear the appeal under Section 37(2) of the 1996 Act, as appeals should be filed in the District Court. The High Court's decision was based on the Bengal, Agra, and Assam Civil Courts Act, 1857, which does not grant original civil jurisdiction to the Patna High Court. The Supreme Court upheld this view, emphasizing that the definition of 'court' under Section 2(1)(e) of the 1996 Act refers to the Principal Civil Court of original jurisdiction, which does not include the Patna High Court.3. Applicability of Section 42 of the Arbitration and Conciliation Act, 1996:The Appellant argued that Section 42 of the 1996 Act should apply, asserting that all subsequent applications arising from the arbitration agreement should be made in the same court. However, the Supreme Court clarified that Section 42 pertains to applications, not appeals. The Court referenced SBP & Co. v. Patel Engineering Ltd., which held that orders under Section 11(6) of the 1996 Act are judicial, but this does not affect the appellate jurisdiction under Section 37(2).4. Interpretation of 'court' under Section 2(1)(e) of the Arbitration and Conciliation Act, 1996:The Supreme Court analyzed the definition of 'court' in Section 2(1)(e) of the 1996 Act, which includes the Principal Civil Court of original jurisdiction and the High Court exercising original civil jurisdiction. Since the Patna High Court does not exercise original civil jurisdiction, it does not qualify as a 'court' under this definition. The Court emphasized the need to adhere to the statutory language and context, rejecting the argument that the High Court should have jurisdiction based on the broader interpretation of 'court.'Conclusion:The Supreme Court dismissed the appeal, affirming the High Court's decision that it lacked jurisdiction under Section 37(2) of the 1996 Act. The Court highlighted the distinct roles and definitions within the 1996 Act, emphasizing the statutory framework's intent to minimize judicial intervention and streamline arbitration proceedings. The judgment underscores the importance of adhering to statutory definitions and the specific jurisdictional mandates of different courts.