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2024 Supreme(Online)(Del) 32983
IN THE HIGH COURT OF DELHI AT NEW DELHI
Subramonium Prasad, J
OVINGTON FINANCE PVT. LTD. – Appellant
Versus
BINDIYA NAGAR – Respondent
O.M.P.(MISC.)(COMM.) 695/2024
For the Appellants/Petitioners: Mr. Aniket Rajput
For the Respondents: Mr. Rahul Yadav
The court affirmed that only the appointing High Court has jurisdiction to extend the mandate of an Arbitral Tribunal, despite the claim value being below Rs. 2 crores.
Headnote:(A) Arbitration & Conciliation Act, 1996 - Section 29A(5) - Extension of time for arbitral award - Petition filed seeking extension of arbitral time limit; Respondent contested jurisdiction citing value of claim is below Rs.2 Crores - Court ruled that jurisdiction lies before the appointing court under Section 11 of the Act and unable to agree with Andhra Pradesh High Court's interpretation which allows Principal Civil Court to substitute Arbitrators - Extension granted for one year. (Paras 9, 10, 12, 20-26)
(B) Court Jurisdiction - The power to extend the mandate of an arbitrator rests exclusively with the High Court or Supreme Court and should avoid conflicts with lower courts concerning arbitrator substitution. (Paras 15-19)
Facts of the case:
The Petitioner entered a loan agreement with the Respondent for Rs. 20 lakhs, resulting in default and subsequent arbitration initiated through court due to the Respondent's refusal to pay before the agreed time limit.
Findings of Court:
The court concluded that the Respondent's objection lacked merit and ordered the extension of the mandate of the Arbitral Tribunal as substantial progress was made without valid grounds for termination.
Issues: Jurisdiction of the High Court to consider extension of mandate under Section 29A(5) in context of the expiring arbitration timeline and the amount in question.
Ratio Decidendi: The court maintained that jurisdiction for extension lies with the court that appointed the arbitrator, thus confirming the authority of the High Court, distinguishing from the Andhra Pradesh High Court's stance.
Result: Extension of Arbitral Tribunal’s mandate granted for one year.
| Table of Content |
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| 1. petitioner initiated arbitration due to loan repayment defaults. (Para 2 , 3 , 4) |
(ORAL)
1. This is a petition under Section 29A (5) of the Arbitration & Conciliation Act, 1996 on behalf of the Petitioner seeking extension of time for making an arbitral award by the learned Arbitrator.
2. The facts of the case reveal that the Petitioner had entered into a Loan Agreement with the Respondent on 20.11.2018 for the sum of Rs.20 lakhs. Under the loan agreement, a sum of Rs.20 lakhs was disbursed to the Respondent by the Petitioner and repayment was to be made in terms of the loan agreement.
3. Since the Respondent did not adhere to the terms of repayment of the loan amount, the loan agreement was terminated by notice dated 02.03.2022. It is stated that a sum of Rs. 17,58,186/- was due and payable by the Respondent till the termination of the agreement.
4. A legal notice was issued to the Respondent but the Respondent did not make the payment which resulted in the Petitioner approaching this Court by filing a petition under Section 11 of the Arbitration & Conciliation Act seeking appointment of an Arbitrator. This Court vide Order dated 03.03.2023 in ARB.P. 810/2022 appointed Mr. Hardik Rupal, Advocate, as the Sole Arbitrator to adjudicate the disputes between the parties.
5. The matter is proceeding before the learned Arbitrator. Material on record indicates that on 25.07.2024, the Tribunal was to convene to cross- examine CW-1. However, the matter was adjourned. On 11.07.2024, a request was made by the Claimant to examine additional witness, namely, Prahlad Singh Chauhan, Director & General Manager of the company.
6. Learned Counsel for the Respondent on 02.08.2024 filed an application before the Arbitral Tribunal challenging the mandate of the Tribunal for passing an award beyond the statutory time limit stating that one year period under Section 29A (1) of the Arbitration & Conciliation Act was over and therefore, the mandate of the Arbitrator has to be terminated.
7. On 06.08.2024, the learned Arbitration terminated the proceedings for want of consent by the Respondent to continue with the arbitration proceedings and allowed the application of the Respondent.
8. Learned Counsel for the Petitioner/Claimant stated that the Petitioner would be moving an application for extension of mandate of the Arbitral Tribunal and the learned Arbitrator requested the parties to inform the decision of this Court when the same is passed. The Petitioner has approached this Court by filing the instant petition under Section 29A (5) of the Arbitration & Conciliation Act, 1996 for extending the mandate of the Arbitral Tribunal for a period of one year.
9. On 09.09.2024, this Court issued notice in the matter. On 23.09.2024, learned Counsel for the Respondent sought some more time to file the reply. 10. Learned Counsel for the Respondent raised a preliminary objection stating that since the amount that is claimed is less than Rs.2 crore, this Court will not have the jurisdiction to entertain this application under Section 29A (5) of the Arbitration & Conciliation Act.
11. Learned Counsel for the Respondent states that under Section 2(1)(e) of the Arbitration & Conciliation Act, in case of arbitration other than international commercial arbitration, the disputes can only be adjudicated by the principal civil court of original jurisdiction in a district having the jurisdiction to decide the question forming the subject matter of the arbitration and this Court does not have the pecuniary jurisdiction to entertain the application.
12. Learned Counsel for the Respondent places reliance on the Judgment passed by the Andhra Pradesh High Court in in Dr. V V Subbarao v. Dr. Appa Rao Mukkamala & Ors., 2024 SCC OnLine AP 1668, which has taken a view that after the appointment of an Arbitral Tribunal, the High Court becomes functus officio and the mandate can be only extended by the Court as defined under Section 2(1)(e) of the Arbitration & Concil
