By Garv Sood.
Garv Sood is a final-year B.A.LL.B. (Hons.) student at University Institute of Legal Studies, Panjab University, Chandigarh.
The procedure for extension of mandate of an arbitral tribunal had for long been mired by uncertainty, owing to an apparent divergence in opinions expressed by various High Courts on the question of jurisdiction. The article examines these divergent opinions and discusses the different interpretative approaches adopted by these courts. It further correlates this analysis of High Court decisions with the final verdict pronounced by the Supreme Court providing doctrinal clarity.
While the jurisdictional controversy largely stands settled, the article finally highlights a significant omission in the judgement i.e., the absence of any indication as to the effective date of operation of the ruling. In light of such omission, the article examines the potential impact of retrospective application of the ratio decidendi of this judgement on the domestic arbitration regime, particularly so on the finality of past arbitral awards.
Keywords: Section 29A, Extension of Mandate, Referral Courts, Substitution of Arbitrator, Prospective Overruling
The Supreme Court has finally put to rest, the interpretative conundrum arising from the procedure for extension of mandate of an arbitral tribunal after expiration thereof, as enshrined under Section 29A of the Arbitration and Conciliation Act, 1996 (“the Act”).
The Apex Court in Jagdeep Chowgule v. Sheela Chowgule & Ors. (“Jagdeep Chowgule”), was seized of an appeal against a decision rendered by a Division bench of the Bombay High Court in Sheela Chowgule v. Vijay V. Chowgule (“Sheela Chowgule”)[i]. In the impugned judgement, the Bombay High Court had held that where an arbitral tribunal is constituted by a High Court, in exercise of its powers under Section 11(6), an application seeking extension of mandate of such tribunal would lie only before that High Court. The High Court further clarified that in matters of consensual appointment of arbitrator by the parties, such applications would lie before the “court” as defined under Section 2(1)(e) of the Act and to no other.
The Supreme Court rejected this distinction and held that all applications under Section 29A must lie exclusively before the “court” falling within the ambit of Section 2(1)(e) of the Act and, that in no circumstances could such applications be entertained by referral courts.
This article entails an extensive inquiry into the root of the jurisdictional question arising from Section 29A and its subsequent resolution by the Supreme Court in Jagdeep Chowgule (supra). The article briefly touches upon the scheme of the provision and thereafter, proceeds to analyse the rationale adopted by various High Courts in rendering divergent opinions on the jurisdictional issue under Section 29A. It further evaluates the reasoning which formed the basis of the decision pronounced by the Supreme Court and lastly, attempts to examine the impact of the judgement on the domestic arbitration regime, particularly so, on the finality of arbitral awards.
[i] 2024 SCC OnLine Bom 5717
Section 29A was introduced to the Act through the 2015 amendment and prescribed statutory timelines for arbitration proceedings governed by the Act. These statutory timelines and the process of computation of the same, were further altered by the enactment of the 2019 Amendment.
The section provides that arbitral proceedings are to be concluded within 12 months from the date of completion of pleadings, while also providing for a 6-month extension of the same, subject to consent of the parties. Any further extension of the mandate, beyond this 18-month period, requires express sanction from a court of competent jurisdiction.
The pivotal question that arises therefore is, which court would be competent to consider such application for extension. Would it be the referral court exercising jurisdiction under Section 11(6) or the court as defined under Section 2(1)(e)?
The definition of the term “court” as provided under Section 2(1)(e) is fairly unambiguous, in that, it defines the same as the principal civil court exercising original jurisdiction in a district, including a High Court which exercises ordinary original civil jurisdiction. However, the question of interpretation primarily arises due to the usage of the phrase “unless context otherwise provides” in Section 2(1), which qualifies all definitions thereof and thus, creates room for contextual interpretation by the courts.
While some courts found it necessary to contextually interpret the term “court”, in order to decide the jurisdictional issue under Section 29A, others were satisfied with a textual reading of the provision. This ultimately resulted in a complete divergence in opinions expressed by different high courts, thereby splitting them into two broad groups. The High Courts belonging to the former category, subscribed to the opinion that applications under Section 29A would have to be filed before the principal civil courts exercising original jurisdiction i.e., the District Courts. The latter set of High Courts however, adopted the exercise of contextual interpretation which led them to hold that applications under Section 29A would lie before the constitutional courts which exercise the power of appointment of arbitrator under Section 11(6).
1. High Courts Favouring Jurisdiction of Civil Courts
The line of reasoning adopted by High Courts belonging to the former category primarily draws support from the literal rule of interpretation of statutes and further, from the courts’ understanding of the jurisdiction vested with referral courts under Section 11.
In Dr. V.V. Subba Rao v. Dr. Appa Rao Mukammala,[i] a Division bench of the Andhra Pradesh High Court observed that the stage of Section 11 and the jurisdiction vested in referral courts thereof, is sui generis from the stage of Section 29A. Drawing reference to the ratio of the Apex Court in Nimet Resources Inc. v. Essar Steels Ltd. (“Nimet Resources”),[ii] the Division bench noted that once the power of appointment under Section 11 stands duly exercised by constitutional courts, they become functus officio and do not retain any residual jurisdiction over the arbitral proceedings.
While holding that an application under Section 29A would only lie before a “court” as defined under Section 2(1)(e) and not before itself i.e., a High Court sans ordinary original civil jurisdiction, the Bench rejected the need for contextual interpretation. In doing so, the Court held that exercise of powers under Section 29A by civil courts, would not impinge on the jurisdiction exercised by constitutional courts under Section 11 and thus, no jurisdictional anomaly would arise.
The Allahabad High Court also gave a comprehensive judgement on the issue in M/S A’Xykno Capital Services Private Ltd. v. State of U.P. (“M/S A’Xykno”),[iii] wherein it countered the need to contextually interpret the term “court” with reference to Section 29A. The Court drew reference from Section 2(1)(e) itself, and observed that the legislature conferred exclusive jurisdiction to High Courts in cases pertaining to international commercial arbitrations thereby, expressly excluding civil courts. Therefore, the Court reasoned that if the intent of the legislature was to exclude the jurisdiction of civil courts from exercising powers under Section 29A, it would have categorically expressed the same. The Court placed reliance on the amendment to Sections 47 & 56 of the Act to buttress this contention. Through the 2015 amendment, the legislature expressly ousted the jurisdiction of civil courts under Sections 47 & 56 and conferred such jurisdiction upon the High Courts. In light of the aforesaid, the Court observed that the exclusion of High Courts, not having ordinary original civil jurisdiction, was deliberate and intentional in Section 29A.
Akin to the Andhra Pradesh High Court, the Allahabad High Court also rejected the contention that a jurisdictional anomaly would arise if civil courts are permitted to exercise powers of substitution under Section 29A, to replace an arbitrator appointed by “superior” constitutional courts under Section 11(6).
The Allahabad High Court took a different approach to dismantle this contention. The Court observed that accepting this argument would imply that a jurisdictional anomaly also arises when civil courts exercise their powers under Section 34 and set aside an award passed by an arbitrator, duly appointed by a constitutional court under Section 11(6). Therefore, it would mean that even applications seeking setting aside of the award under Section 34 would need to be filed before the court which exercised jurisdiction under Section 11(6), in order to prevent a “jurisdictional anomaly”. The Court noted that this would inevitably result in a situation where once a constitutional court exercises the power to appoint an arbitrator under Section 11, it ousts the jurisdiction of all other courts in all curial matters. Ruling that such a situation would make the statute unworkable and fall afoul of the scheme of the Act, the Allahabad High Court rejected this contention.
The dictum laid down in M/S A’Xykno (supra) came to reconsidered by the Allahabad High Court in Jaypee Infratech Limited v. EHBH Services Pvt. Ltd.. The Court expressed its disagreement with the view taken by the Learned Single Judge in M/S A’Xykno (supra) and therefore, referred the question of law to a larger bench in light of conflicting decisions rendered by coordinate benches of equal strength.
Notably, even prior to Jagdeep Chowgule (supra), the Supreme Court had an opportunity to interpret the law and clarify its stance on the jurisdictional issue arising out of Section 29A. In Chief Engineer v. M/S BSC & C and C JV (“Chief Engineer”),[iv] the Court dismissed a Special Leave Petition and refused to interfere with an order of the Meghalaya High Court whereby, it had dismissed an application for extension under Section 29A for want of jurisdiction. The Apex Court held that as per Section 2(1)(e), only High Courts possessing ordinary original civil jurisdiction are empowered to entertain applications under Section 29A and since, the Meghalaya High Court lacked the same, it was not vested with jurisdiction under Section 29A. The Court notably observed that the power of substitution under Section 29A is only a consequential power, vesting in the Court which is empowered to extend time.
Seemingly, the Supreme Court had settled the jurisdictional controversy with its order in Chief Engineer (supra), however, this was not the case since the judgement came to be distinguished subsequent to its pronouncement thereby, keeping the question of law alive.
In conclusion, the Courts belonging to the first category have firmly rejected the occasion of any jurisdictional anomaly in case of exercise of powers under Section 29A by civil courts. Courts have primarily reasoned that since referral courts become functus officio after exercising powers under Section 11 and cease to retain any jurisdiction over arbitral proceedings, exercise of jurisdiction under Section 29A by civil courts would not impinge on the jurisdiction of the referral courts.
2. High Courts Favouring Jurisdiction of Referral Courts
High Courts belonging to the latter category however, have readily placed reliance on contextual interpretation in order to prevent, what they understand to be, a jurisdictional anomaly in the procedure under Section 29A. The rationale followed by the Courts in this category is that once the power to appoint an arbitrator under Section 11 is exercised by the referral court, being a “superior” court, it would be improper for a civil court to exercise powers of extension or substitution under Section 29A. Such an exercise, according to these courts, was contrary to the hierarchical structure on which the Indian Judicial system functions.
The Delhi High Court in DDA v. M/S Tara Chand Sumit Construction Co.,[v] held the power of substitution to be a subset of the wider power of appointment under Section 11. Thus, the Court observed that once a “superior” court exercises the power of appointment, powers of substitution under Section 29A would also vest in it. The Court found it inconceivable that the legislature would on one hand, confer jurisdiction to appoint arbitrators on constitutional courts and on the other, allow civil courts to substitute such arbitrators while exercising powers under Section 29A(6). The High Court interpreted this to be a conflict between the powers under Section 11 and 29A and thus, ruled that the power of substitution would only vest in referral courts.
In Sheela Chowgule (supra), the Goa bench of the Bombay High Court gave the judgement which was subsequently set aside in appellate proceedings before the Supreme Court in Jagdeep Chowgule (supra). The law laid down by the Division bench has already been discussed however, another pertinent aspect of the judgement in question is the part where the High Court distinguished the ruling of the Apex Court in Chief Engineer (supra).
The Court undertook a brief analysis of what constitutes ratio decidendi and consequently, attracts application of the Doctrine of Binding Precedent in terms of Article 141 of the Constitution. Placing reliance on a number of precedents, it noted that in determining the ratio, due consideration has to be given to the factual matrix before the Court and the context in which such decision was rendered.
Upon considering the facts of Chief Engineer (supra), the Court found that the arbitral tribunal therein, was constituted by mutual consent of the parties under Section 11(2), and there was no exercise of the power of appointment under Section 11(6). Therefore, in such a case, there was no occasion for any jurisdictional anomaly, as had been observed in cases where power of appointment is exercised by constitutional courts under Section 11(6) and thereafter, civil courts attempt to exercise powers of substitution under Section 29A. Thus, the Division bench was of the considered opinion that Chief Engineer (supra) could not be treated as a binding precedent in view of the peculiar facts of Sheela Chowgule (supra).
The Telangana High Court in Smt. Somuri Ravali v. Somuri Purnachandra Rao,[vi] upon a conjoint reading of Sections 2(1)(e) and 11, observed that the Act envisaged High Courts to be the focal point of all domestic arbitrations. It observed that High Courts are vested with exclusive jurisdiction to appoint an arbitrator, extend or terminate his mandate, and even exercise the powers of substitution. The Division bench opined that the provisions of the Act are hierarchy-sensitive and placed reliance on the judgement of the Bombay High Court in Sheela Chowgule (supra), endorsing the view expressed therein. The Court ultimately observed that applications under Section 29A are to be filed before High Courts, barring the exceptional situation where an arbitrator is appointed by mutual consent of the parties, in terms of Section 11(2) of the Act. Only in such a case would civil courts be empowered to entertain application under Section 29A.
[i] 2024 SCC OnLine AP 1668
[ii] (2009) 17 SCC 313
[iii] 2023 SCC OnLine All 2991
[iv] 2024 SCC OnLine SC 1801
[v] 2020 SCC OnLine Del 2501
[vi] Order dated 10.04.2025 in Civil Revision Petition No. 739 of 2025
While deciding Jagdeep Chowgule (supra), at the very outset, the Apex Court rejected the distinction between arbitral tribunals constituted under Section 11(2) by consent of the parties and the ones constituted by constitutional courts in exercise of their powers under Section 11(6). The Court found the distinction to be artificial in nature since, neither the scheme of the statute, nor the provisions of Section 29A stipulated the same.
Thereafter, the Court clarified the scope of power exercised by constitutional courts under Section 11(6) and categorically rejected the line of reasoning adopted by the High Courts belonging to the latter category. It held that the powers of appointment under Section 11 cannot be conflated with supervisory jurisdiction over arbitral proceedings. The Court reiterated the ratio laid down in Nimet Resources (supra) and held that jurisdiction of constitutional courts stands exhausted upon constitution of the arbitral tribunal and that courts become functus officio upon appointment of the tribunal.
On the issue of whether contextual interpretation of the term “court”, for the purposes of Section 29A was warranted, the Apex Court answered in the negative. Applying the principles of statutory interpretation, the Court reasoned that a defined term must ordinarily bear the meaning assigned to it, unless the same leads to absurdity or renders the provision unworkable in the larger scheme of the act. In the marked absence of any such consequence in the present case, the Court held that there was no occasion to undertake such an exercise with reference to Section 29A, since the definition provided under Section 2(1)(e) was perfectly workable.
Lastly, the Court also rejected the contention that if a District Court is permitted to substitute an arbitrator, initially appointed by a High Court, it would lead to a jurisdictional anomaly, in that, an “inferior court” would replace an arbitrator appointed by a “superior court”. The Apex Court observed that no such anomaly would arise and held that courts cannot artificially supply “context” in order to deviate from a definition provided by the legislature. Since the contention was entirely rooted in the perception of status of courts on the basis of their hierarchy, the Supreme Court held it to be impermissible in the rule of law.
The law pertaining to jurisdiction of courts under Section 29A largely stands settled in that, all applications thereunder are required to be filed before civil courts exercising ordinary original civil jurisdiction in a district and before a High Court, only where such High Court exercises ordinary original civil jurisdiction. However, the application of this judgement raises significant concerns, particularly in the absence of any indication by the Supreme Court that the judgement would operate prospectively. In the absence of any express invocation of the Doctrine of Prospective Overruling, the judgement would ordinarily apply retrospectively.
The retrospective application of this judgement however, carries serious implications and has the potential to wreak havoc in the domestic arbitration regime. Orders granting extension of mandate of the tribunal passed by High Courts lacking ordinary original civil jurisdiction, would be rendered non est, having been passed by a coram non juris, in light of the judgement. Thus, failure to secure extension from a competent court would ultimately result in the termination of mandate of the arbitral tribunal under Section 29A.
This peculiar situation would have a cascading effect since, parties and arbitrators would continue with the arbitration proceedings, acting under the bona fide belief that the mandate of the tribunal stood extended in light of the order passed by the High Court. However, due to the operation of this judgement, all such orders would effectively become a nullity.
These consequences assume greater significance in light of the judgement of the Apex Court in Mohan Lal Fatehpuria v. M/S Bharat Textiles, wherein it was held that where an application seeking extension of mandate of an arbitral tribunal is not preferred by the parties, the tribunal would become functus officio. Thereafter, it would not be permissible to let the same arbitrator continue to administer the arbitral proceedings and the courts would have to exercise the power of substitution of the arbitrator under Section 29A(6).
Accordingly, failure to file an application for extension of the mandate of the arbitral tribunal before a competent court would result in terminating the jurisdiction of the arbitrator. Thus, any proceedings conducted subsequently, in light of the extension granted by the High Court, would be sans jurisdiction. As a result, all awards, interim or final, arising out of such arbitrations would be liable to be set aside on the singular ground of the tribunal acting without jurisdiction, in light of not having secured a valid order of extension.
This position of law results in excessive uncertainty in that, it risks reopening cases decided years earlier in accordance with the procedure and practice in vogue at the time. Retrospective operation of this decision would hand another opportunity to parties aggrieved from the award passed by the tribunal and thus, hundreds of arbitral awards stand the risk of getting set aside.
This unsettling character of the judgement could have been mitigated by applying the Doctrine of Prospective Overruling. The Apex Court, in exercise of its inherent powers under Article 142 of the Constitution, possesses the power to mould relief in cases where the Court is of the opinion that allowing its judgement to operate retrospectively would result in reopening fully resolved cases and cause unnecessary hardships and complexities.
It is imperative that the Supreme Court invoke this doctrine and fix a date from which its judgement in Jagdeep Chowgule (supra) becomes operable, in order to prevent undue hardship to parties and avoid handing litigants another opportunity to reopen settled disputes, thereby undermining the finality of arbitral awards.
The doctrinal clarity provided by the Apex Court in Jagdeep Chowgule (supra) marks a significant step forward by finally settling the jurisdictional conflict arising from Section 29A. While considering divergent opinions expressed various High Courts, the Supreme Court has ruled that all matters of curial supervision such as conduct, continuation, extension, substitution, etc. are to be instituted before “court” as defined under Section 2(1)(e). In doing so, the Court has also provided much needed clarity on the scope of jurisdiction vested with referral courts.
The importance of this definitive interpretation by the Apex Court cannot be understated, however, its impact on the domestic arbitration regime remains to be seen in light of the concerns regarding operation of the judgement and its effect on finality of past arbitral proceedings.
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