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SUPREME COURT OF INDIA
R.M. Lodha, CJI., Kurian Joseph, R.F. Nariman, JJ.
State of West Bengal & Ors. - Appellants
Versus
Associated Contractors - Respondent
CIVIL APPEAL NO. 4808 OF 2013 With CIVIL APPEAL NO. 6691 OF 2005
Decided On : September 10, 2014
(2000) 4 SCC 539 – Relied upon
(b) Arbitration and Conciliation Act, 1996 – Section 2(1)(e) – Court – Definition exhaustive – Principal Civil Court of original jurisdiction in a district or the High Court in exercise of its ordinary original civil jurisdiction – Chief Justice of Supreme Court or High Court or his delegate exercising power u/s 11(6) or 11(10) – Not a court within meaning of section 2(1)(e). (Para 14, 15, 16)
(1995) Suppl. 2 SCC 348; AIR 2014 SC 1093; (2006) 11 SCC 651; (2005) 8 SCC 618; (2007) 1 SCC 467 – Relied upon
(c) Arbitration and Conciliation Act, 1996 – Section 9 and 42 – Application u/s 9 for passing interim orders is before a court – Hence attracts section 42 – Making all subsequent applications before any other court precluded. (Para 18)
Arbitration and Conciliation Act, 1996 – Section 2(1)(e) and 42 – Supreme Court cannot be “court” for the purposes of Section 42. (Para 19, 20)
(2004) 1 SCC 540; (2008) 6 SCC 732; (2008) 6 SCC 741; (2006) 11 SCC 521 – Relied upon
(1972) 1 SCC 702; (1981) 4 SCC 634 – Distinguished
(d) Arbitration and Conciliation Act, 1996 – Section 42 – Expression “with respect to an arbitration agreement” – Includes all applications made before during or after the arbitral proceedings are over. (Para 21)
(1953) SCR 878 – Relied upon
(e) Arbitration and Conciliation Act, 1996 – Section 42 – Application made to a court not having jurisdiction – Section 42 will not apply – Filing of subsequent applications in a court other than such court – Not barred by section 42. (Para 22, 24)
(2001) 10 SCC 532; (2002) 9 SCC 489; (2007) 11 SCC 453; (2009) 3 SCC 107; (2013) 9 SCC 32; (2009) 17 SCC 338 – Relied upon
Facts of the case:
The question arising in this case is about jurisdiction of a court u/s 34 of the Arbitration and Conciliation Act, 1996. Interpretation of Section 2(1)(e) and Section 42 is called for.
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 of Teesta-Jaldhaka Main Canal from Chainage 3 Kms. to 3.625 Kms. in Police Station: Mal, District: Jalpaiguri, West Bengal. Para 25 of the said Item Rate Tender and Contract contained an arbitration clause.
The respondent herein filed an application under Section 9 of the Arbitration Act, 1996 for interim orders in the High Court of Calcutta. A learned Single Judge of the High Court of Calcutta, after granting leave under Clause 12 of the Letters Patent, passed an ad-interim ex-parte injunction order. This order was continued from time to time until it was confirmed by an order dated 10th December, 1998.
Meanwhile, an arbitrator was appointed u/s 11 of the Act. A Recalling Application filed by the State was dismissed.
On 20th July, 2000, the interim order was stayed by the Division Bench. The Arbitrator was, however, asked to complete the proceedings before him which would go on uninterrupted.
The arbitration proceedings culminated in an Award dated 30th June, 2004 by which the claimant was awarded a sum of Rs.2,76,97,205.00 with 10% interest from 1st July, 1998 till the date of the Award. If not paid within four months, the same would then attract interest at the rate of 18% per annum. Costs were also awarded in the sum of Rs.50,000/-. The counter claims of the respondent were rejected.
On 21st September, 2004, the State of West Bengal filed an application under Section 34 of the 1996 Act to set aside the arbitral Award before the District Judge at Jalpaiguri. District Judge
On 10th December, 2004, the respondent filed an application under Article 227 of the Constitution challenging the jurisdiction of the court of the learned District Judge at Jalpaiguri. By the impugned judgment a Single Judge of the High Court of Calcutta allowed the petition under Article 227.
Finding of the Court:
Only the Principal Civil Court of original jurisdiction in a district or a High Court having original civil jurisdiction in the State are “court” for the purpose of Part-I of the Arbitration Act, 1996; and no other court.
Section 42 will apply to all applications made u/s 9 and 34 of the Act to courts having jurisdiction whether before or during arbitral proceedings or after an Award is pronounced under Part-I of the 1996 Act.
In no circumstances can the Supreme Court be “court” for the purposes of Section 2(1)(e) and 42.
The legal document clarifies the scope and interpretation of jurisdictional provisions under the Arbitration and Conciliation Act, 1996. The primary focus is on defining what constitutes a "court" for the purposes of Part-I of the Act, specifically under Section 2(1)(e) and Section 42. It establishes that only the Principal Civil Court of original jurisdiction in a district or a High Court exercising original civil jurisdiction within the State qualifies as a "court" under these provisions (!) (!) .
The document emphasizes that applications made to authorities outside these specified courts, such as the Chief Justice or their delegates under Sections 11 and 11(6), are not considered applications to "courts" within the meaning of Section 42 (!) (!) . Consequently, Section 42's applicability is limited to applications filed in the designated courts—namely, the Principal Civil Court or the High Court exercising original jurisdiction—whether before, during, or after arbitral proceedings (!) (!) .
It also clarifies that the scope of Section 42 extends to all applications related to arbitration agreements, including those made after the conclusion of arbitral proceedings, provided they are under Part-I of the Act (!) (!) . However, applications under Sections 8 and 11, which are made to authorities like the Chief Justice or designated officials, are outside the scope of Section 42 because these authorities are not "courts" as defined (!) (!) .
Furthermore, the document states that the Supreme Court, even if it retains seisin over arbitration proceedings, does not qualify as a "court" for the purposes of Section 2(1)(e) or Section 42 (!) (!) . This is due to the exhaustive nature of the definition and the specific legislative intent to restrict the application of Section 42 to designated courts only (!) (!) .
In summary, the legal principles outlined establish that the jurisdiction under the Arbitration Act is strictly confined to designated courts, and authorities like the Chief Justice or their delegates do not fall within this jurisdictional scope. Applications made outside these courts are outside the purview of Section 42 and do not preclude subsequent applications in the proper courts.
JUDGMENT
R.F. Nariman, J.
1. This matter has come before a three Judge Bench by an order of reference of a Division Bench of this Hon’ble Court dated 7th April, 2010. The referral order reads thus:
“In this appeal, the question that arises for decision is which Court will have the jurisdiction to entertain and decide an application under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter for short 'the Act').
2. Mr. Bikas Ranjan Bhattacharya, learned senior counsel appearing for the appellants cited the judgments in the case of National Aluminium Co. Ltd. Vs. Pressteel & Fabrications (P) Ltd. And Anr. (2004) 1 SCC 540, Bharat Coking Coal Ltd. Vs. Annapurna Construction (2008) 6 SCC 732, Bharat Coking Coal Ltd. Vs. H.P. Biswas and Company (2008) 6 SCC 740 and Garhwal Mandal Vikas Nigam Ltd. Vs. Krishna Travel Agency (2008) 6 SCC 741 in support of his submission that it is only the Principal Civil Court, as defined in Section 2(e) of the Act, which can entertain and decide an application under Section 34 of the Act for setting aside the Award.
3. Mr. Pradip Ghosh, learned senior counsel appearing for the respondent on the other hand submitted that in the present case the Calcutta High Court exercising jurisdiction under Clause 12 of the Letters Patent had passed an interim order under Section 9 of the Act before commencement of the arbitration proceedings and by virtue of Section 42 of the Act, it is only the Calcutta High Court which will have jurisdiction to entertain and decide an application under Section 34 of the Act for 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 of Teesta-Jaldhaka Main Canal from Chainage 3 Kms. to 3.625 Kms. in Police Station: Mal, District: Jalpaiguri, West Bengal. Para 25 of the said Item Rate Tender and Contract contained an arbitration clause.
3. The respondent herein filed an application under Section 9 of the Arbitration Act, 1996 for interim orders in the High Court of Calcutta. A learned Single Judge of the High Court of Calcutta, after granting leave under Clause 12 of the Letters Patent, passed an ad-interim ex-parte injunction order. This order was continued from time to time until it was confirmed by an order dated 10th December, 1998. Meanwhile, in an application under Section 11 of the Arbitration Act, Justice B.P. Banerjee (retired), was appointed as an Arbitrator to adjudicate upon the disputes between the parties. A Recalling Application filed by the State was dismissed on 20th January, 2000.
4. An appeal was filed against the order dated 10th December, 1998, confirming the ad-interim ex-parte injunction. On 5th July, 2000, delay in filing the appeal was condoned and on 20th July, 2000, the interim order was stayed by the Division Bench. The Arbitrator was, however, asked to complete the proceedings before him which would go on uninterrupted.
5. Meanw
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