1. Court held that 'court' under Section 2(1)(e) means principal civil court, excluding High Courts without original jurisdiction, and Section 42 does not govern appeals. (Para 3 )
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2006 Supreme(SC) 1100
SUPREME COURT OF INDIA
S.B. Sinha & Dalveer Bhandari
M/s. Pandey & Co. Builders Pvt. Ltd - PETITIONER
VERSUS
State of Bihar & Anr-RESPONDENT
Appeal (civil) 4780 of 2006
(Arising out of SLP (C) No. 8861 of 2006)
Decided on : 10/11/2006
Appeal under Section 37(2) of the Arbitration and Conciliation Act, 1996, must be filed in the principal Civil Court of original jurisdiction if the High Court does not exercise ordinary original civil jurisdiction, as per the definition of 'Court' in Section 2(1)(e).
Headnote:(A) Arbitration and Conciliation Act, 1996 - Sections 2(1)(e), 11, 14, 16, 37 and 42 - Bengal, Agra and Assam Civil Courts Act, 1857 - Interpretation of "Court" - Appeal against order of arbitral tribunal - Where High Court does not exercise ordinary original civil jurisdiction, it cannot entertain an appeal under Section 37(2) - Definition of "Court" under Section 2(1)(e) limits the High Court's role to the exercise of its ordinary original civil jurisdiction - Principal Civil Court of original jurisdiction in a district is the correct forum for such appeals. (Paras 20-25)
(B) Section 42 of the Arbitration and Conciliation Act, 1996 - Exclusive jurisdiction - Provision applies to applications and not to statutory appeals - Appointment of an arbitrator by the High Court under Section 11 does not transfer the appellate jurisdiction of a Section 37(2) order to the High Court. (Paras 32-34)
Facts of the case:
An appellant construction company and a state agency entered into a contract containing an arbitration clause. Following delays and disputes over the arbitrator's mandate, the High Court appointed an arbitrator under Section 11. However, the originally named arbitrator had already passed an award. The High Court-appointed arbitrator then ruled he had no jurisdiction to proceed. This order was challenged by the appellant via an appeal under Section 37(2) before the High Court. The High Court dismissed the appeal on the grounds that it lacked original civil jurisdiction, directing the appellant to the competent District Court.
Findings of Court:
The High Court correctly determined that it does not possess ordinary original civil jurisdiction. Consequently, it does not fall within the definition of "Court" under Section 2(1)(e) for the purposes of hearing a statutory appeal under Section 37(2).
Issues: Whether a High Court lacking ordinary original civil jurisdiction is competent to hear an appeal under Section 37(2) of the Arbitration and Conciliation Act, 1996.
Ratio Decidendi: The definition of "Court" in Section 2(1)(e) of the 1996 Act specifies that a High Court is included only when exercising its ordinary original civil jurisdiction. If the High Court does not have such jurisdiction, the appeal under Section 37(2) must lie with the principal Civil Court of original jurisdiction in the district. Furthermore, the exclusive jurisdiction mentioned in Section 42 pertains to applications, not statutory appeals.
Result: The appeal is dismissed.
Legal Category Hierarchy
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practice and procedure
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arbitration
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appeal
- appealable orders under section 37
- second appeal prohibition
-
court jurisdiction
- definition of court under section 2(1)(e) (Para 3)
- section 42 scope
- determination of jurisdiction by arbitrator
-
appeal
-
arbitration
Table of Contents
2. Appeal under Section 37(2) lies to the court defined in Section 2(1)(e) — principal civil court of original jurisdiction, not High Court lacking original civil jurisdiction. (Para 3 )
3. Under Section 37(2) of the Arbitration Act, where does an appeal from an arbitral tribunal's order on jurisdiction lie?
To the 'court' as defined in Section 2(1)(e), which is the principal civil court of original jurisdiction, not the High Court lacking original civil jurisdiction. (Para 3 )
JUDGMENT:
S.B. SINHA, J.
Leave granted.
The parties hereto entered into a contract in terms whereof Appellant herein undertook a contract for execution of canal repair work for Rs. 11,33,421/-. An additional agreement was entered into by and between the parties. The said contract contained an arbitration clause being Clause 23 of the contract.
Disputes and differences having arisen between the parties, Appellant invoked the said arbitration clause. The Superintending Engineer of the Circle who was the named Arbitrator entered into reference. There being alleged undue delay in conclusion of the proceedings of the arbitral tribunal, a notice was served by Appellant purported to be in terms of Sections 14 and 15 of the Arbitration and Conciliation Act, 1996 (for short "the 1996 Act"). The named Arbitrator retired and his successor did not proceed with the reference for a long time. Another notice was issued by Appellant asking the then incumbent of the office of Superintending Engineer to proceed with the arbitration. He, however, instead of proceeding with the arbitration sought for directions in this behalf from his superior officers. On 23.8.2002, he expressed his inability to continue with the proceedings. A notice under Section 14 of the 1996 Act was again served. A proposal was made thereunder to nominate another independent person as an Arbitrator. The Irrigation Department of the State of Bihar asked the Superintending Engineer to conclude the arbitration proceedings within three months by an office order dated 20th November, 2002.
An objection, however, was filed by Appellant questioning the jurisdiction of the said Arbitrator on the premise that his nomination has already been terminated. On the said plea that the named Arbitrator in terms of Clause 23 could not have functioned as such, an application under Section 11 of the 1996 Act was filed before the Chief Justice of the Patna High Court. Justice P.S. Sahay, a former Judge of the Patna High Court was
appointed but the Superintending Engineer fixed a date for hearing on 12.2.2003 by an order dated 8.2.2003, to which an objection was raised by Appellant. Appointment of Justice P.S. Sahay was intimated to the said Superintending Engineer.
An award was passed by the Superintending Engineer on 20th February, 2003. In the meantime, Appellant had filed his claim before Justice P.S. Sahay. Respondents also appeared on 21.2.2004 and filed an application under Section 14 of the 1996 Act seeking termination of his mandate on the ground that the earlier Arbitrator has already given his award. The learned Arbitrator held that he had no jurisdiction to proceed with the matter.
A purported appeal was filed thereagainst by Appellant under Section 37 of the 1996 Act before the High Court. By reason of the impugned judgment, the High Court opined that it had no jurisdiction to hear the appeal as in terms of Sub-section (2) of Section 37 of the 1996 Act, the appeal lay before the District Court. A review application filed thereagainst was also dismissed.
It is not in dispute that in terms of Section 16 of the 1996 Act, the Arbitrator could have determined his own jurisdiction. The learned Arbitrator, nominee of the Chief Justice of the High Court, opined that there could not be two awards in one proceeding. It was held:
"19. Thus, on a careful consideration of the submission made on behalf of the parties and after going through the papers filed by them, I hold that I have no jurisdiction to continue with this proceedings for the reasons, mentioned above."
The High Court in passing the impugned judgment opined that the Patna High Court having no original jurisdiction, in view of the provisions contained in the Bengal, Agra and Assam Civil Courts Act, 1857 (for short "the 1857 Act"), the appeal filed under Section 37(2) of the 1996 Act was not maintainable before it stating:
"Accordingly, I am of the opinion that this Court being not a court of ordinary original civil jurisdiction to
