S.29A Arbitration Extension Lies with High Court If It Appointed Arbitrator Under S.11; Earlier Precedent Binds Pending Larger Bench Reference: Allahabad HC - 2024-05-17

Covering Law & Justice.

Allahabad High Court Clarifies Jurisdiction for Arbitration Mandate Extension Amidst Conflicting Precedents

Allahabad, May 17, 2024: In a significant ruling addressing conflicting judicial opinions, the Allahabad High Court, presided over by Hon’ble Mr. Justice Shekhar B.Saraf , has held that applications seeking an extension of an arbitral tribunal's mandate under Section 29A of the Arbitration & Conciliation Act, 1996 (the Act) are maintainable before the High Court itself, provided the High Court appointed the arbitrator under Section 11 of the Act.

The Court further clarified that pending a decision by a Larger Bench on the contentious issue, the earlier binding precedent addressing the specific question must be followed.

Case Background: The Jurisdictional Dilemma

The judgment arose from two separate applications (Civil Misc. Arbitration Application Nos. 4 and 5 of 2024) filed by M/S Geo Miller & Co. Pvt. Ltd. and GPT Infraprojects Limited, respectively. Both sought an extension of the time limit for their arbitral tribunals to deliver awards, as the statutory period under Section 29A had expired or was about to expire.

In both cases, the sole arbitrators had been appointed by the Allahabad High Court under Section 11 of the Act. The core issue before Justice Saraf was whether the High Court had the jurisdiction to entertain these Section 29A applications, given conflicting rulings from different Coordinate Benches of the same court. This conflict had previously led to the matter being referred to a Larger Bench on February 26, 2024.

Conflicting Judgments and the Larger Bench Reference

The applicants highlighted the uncertainty caused by differing interpretations:

1. Lucknow Agencies (2019): Held that where the arbitrator was not appointed by the High Court under Section 11, a Section 29A application would lie before the 'Court' as defined in Section 2(1)(e) of the Act (i.e., the Principal Civil Court of original jurisdiction), as the Allahabad High Court lacks original civil jurisdiction in such matters.
2. Indian Farmers Fertilizers (2022): Dealing specifically with a case where the High Court had appointed the arbitrator under Section 11, this judgment held that the Section 29A application would be maintainable only before the High Court.
3. A’Xykno Capital Services (2024): Took a divergent view, deeming Indian Farmers Fertilizers per incuriam and concluding that irrespective of who appointed the arbitrator, only the Section 2(1)(e) 'Court' could hear Section 29A applications.

Given these conflicting views, the question arose: which precedent should be followed while the Larger Bench deliberates?

The Doctrine of Precedent: Following the Earlier Ruling

Justice Saraf embarked on a detailed analysis of the doctrine of stare decisis (binding precedent) and judicial discipline, citing several Supreme Court landmark judgments, including National Insurance Co. Ltd. v. Pranay Sethi (2017) and Union Territory of Ladakh v. Jammu and Kashmir National Conference (2023).

The Court emphasized the principle that judicial consistency and certainty are paramount. Quoting Pranay Sethi , the judgment reiterated:

> "…an earlier decision may seem to be incorrect to a Bench of a coordinate jurisdiction considering the question later... but it would not be a reason to say that the decision was rendered per incuriam and liable to be ignored. The earlier judgment may seem to be not correct yet it will have the binding effect on the later Bench of coordinate jurisdiction."

The Supreme Court in UT of Ladakh explicitly directed High Courts:

> "...when faced with conflicting judgments by Benches of equal strength of this Court, it is the earlier one which is to be followed by the High Courts... It is not open... to await an outcome of a reference or a review petition..."

Applying these principles, Justice Saraf concluded:

> "When a bench of coequal strength is faced with conflicting judgments of other coequal benches, the judgment delivered earlier will continue to govern the field of law, till such time, the same is overturned or in case the question(s) of law, if referred to the larger bench is answered."

Resolving the Section 29A Conflict (Interim Position)

Addressing the specific conflict regarding Section 29A, the Court reasoned:

• Lucknow Agencies and Indian Farmers Fertilizers dealt with distinct factual scenarios – arbitrator appointment not under Section 11 versus under Section 11. Therefore, they weren't truly conflicting but addressed different situations.
• Indian Farmers Fertilizers was the first judgment by the Allahabad High Court to directly address the scenario where the High Court itself appointed the arbitrator under Section 11.
• Therefore, Indian Farmers Fertilizers , being the earlier precedent on this specific point, must be followed for cases involving Section 11 appointments, pending the Larger Bench decision.
• The Court respectfully disagreed with the reasoning in A’Xykno Capital Services , stating its finding of per incuriam regarding Indian Farmers Fertilizers was flawed and that A'Xykno , being later, would not hold precedential value on this point for now.

The Court held:

> "The judgments in Lucknow Agencies (supra) and Indian Farmers Fertilizers (supra) having been delivered under different factual scenarios will continue to govern the field of law as far as Section 29A of the Act is concerned before this Court... The judgment in A’Xykno Capital Services (supra) having been delivered after the aforesaid judgments, will not hold any precedential value. Needless to say, this position will be subject to the decision of the Larger Bench.”

Final Decision and Implications

Following the law laid down in Indian Farmers Fertilizers , the Court held that since the arbitrators in both applications were appointed by the High Court under Section 11, the applications under Section 29A were maintainable before it.

The Court allowed both applications, extending the mandate of the respective arbitral tribunals by eight months from the date of the judgment (May 17, 2024).

This judgment provides crucial interim clarity for litigants and arbitrators in Uttar Pradesh facing similar jurisdictional questions regarding the extension of arbitral mandates, reinforcing the principles of judicial discipline and the binding nature of earlier precedents pending authoritative resolution by a Larger Bench.