Analysis of Section 42 on Section 8, 9 and 11 of the Arbitration and Conciliation Act

The concept of Arbitration and conciliation ensures speedy recourse to parties when disputes arise. The aim of arbitration is to ensure that the time of the Court is not wasted. Although the Act does not give recourse to the parties under the CPC, there are instances where they can approach the High/Supreme Court for remedies or even challenge an arbitral award. The scope, of challenging such award is very narrow, as it would lose the validity of speedy remedies (through arbitration and conciliation) if done otherwise.

In brief, Section 42 confers power upon Courts over arbitral proceedings. It states that only Courts that show cause over the subject matter would be conferred exclusive jurisdiction to hear and give interim measures as required. This also implies that the parties have the right to file an interim application in any place where cause of action had arisen with regard to said suit. T

he same however, has changed over the course of time (the 2015 Amendment) and can been see through the Indus Mobile Distribution Pvt. Ltd Vs Datawind Innovations Pvt. Ltd. [1] case wherein the Supreme Court held that where the parties confer exclusive jurisdiction to Courts (essentially the “seat” of the arbitration”), as stated in the arbitration agreement, would immediately oust the jurisdiction of the others (Courts) that even have the slightest connection to the subject matter. This section is read along with Sections 8, 9 and 11 of the Act. Section 8 essentially states two things-

1. That judicial authority can refer the parties to arbitration if they are both willing and,

2. That when prima facie power is given to the Courts by submitting their first statement, the parties later cannot challenge the same to arbitration. Section 9 deals with interim measures that the parties can avail from the Court. Section 11 on the other hand talks about appointment of arbitrators.

In particular Section 11(6) states that if parties under certain circumstances are unable to appoint an arbitrator; they may approach the High Court or Supreme Court requesting them to appoint a relevant arbitrator for the same[2].

Prior to the Amendment, the main question at hand was with respect to the applicability of Section 11 under the purview of Section 42. The same had been answered with regard to Section 8 and 9 as well. In the case of Rodemadan India Ltd. Vs. International Trade Expo Centre Ltd[3], the Court held that Section 11(6) of the Act is the power of a designate, and that would not include the Supreme Court. The Court continues to hold that the Chief Justice or his designate would not be constituted as a “Court” under 11(6). Section 42 would only apply to the definition of a Court as mentioned under Section 2(1) (e). In the case of Union of India Vs. S.R. Constructions Company and Another[4], the Court further went on to say that merely passing an order under 11(6) does not confer it the exclusive jurisdiction under 42 to entertain such matter when brought under Section 34 of the Act, unless it had pecuniary jurisdiction over said matter.

The Supreme Court ultimately differentiated the treatment of 8, 9 and 11with respect to its application to that of 42 in the case of State of West Bengal vs. Associated Contractors[5]. They held that Sections 9 and 34 would fall under its purview; however, that of Sections 8 and 11 would be outside its scope. They had arrived at two conclusions-

1. Section 2 (1) (e) as a whole was exhaustive in defining “Court” as it considers Principle Civil Court of original jurisdiction in a district or the High Court having original jurisdiction in the state to be considered as “Courts”. Nothing else under this definition would be construed under this section.

2. Section 42 will be applicable only when the application is made under part 1 of the Act, provided they fall under the definition of 2 (1) (e).

Since Sections 8 and 11 applications are made to judicial authorities and Chief Justices (or their designate) respectively, they cannot be considered to fall under the definition of Courts, and hence are outside the scope of 42.

Through the 2015 Amendment, a few changes are brought to the Sections. Section 11 has the insertion of “High Court” and “Supreme Court” in place of “Chief Justice” and “Chief Justice of India”. No substantial change has been brought about to Section 8. As far as Sections 42, 9 and 11 are concerned; it is significant to point out this difference with reference to the Indus Mobile[6] case. Prior to the said case, any application made under Sections 42, 9 or 11 could be made in any Court as long it could be shown that the respective Court had a cause of action (direct or indirect) to the subject matter.

Therefore, any Court could appoint a required arbitrator, give interim reliefs or hear such award, when challenged. Post said case, the Supreme Court had held that seat would be of the utmost importance while determining a Court’s jurisdiction over the matter. The decided seat as per the arbitration agreement would place exclusive jurisdiction over the Court to hear such matters. Even the interim measure that have been sought under Section 9 would only be granted under such Court only. Furthermore, with the recent addition of Courts to Section 11, it can be said the parties must also abide by the seat that has been decided by them as per the agreement.

The same was held in the case of Dalim Kumar Chakraborty vs Smt. Gouri Biswas & Anr, [7]which upheld Indus’s case about Section 42. They stated that the Section covers arbitration agreements and thereby includes particular arbitral references as well. They additionally stated that Sections 8 and 11 is outside the purview of 42, despite the Amendment. However, in the case of Aaa Landmark Private Ltd. vs M/S Akme Projects Ltd. & Anr[8], the Court had not regarded the Amendment as the case was filed in the year of 2014. This case was again, with regard to the jurisdiction of the Courts. They had reiterated Indus and also agreed to the fact that Sections 8 and 11 are outside the purview Section 42, and Section 9 within it. However, the Court had decided the case per Amendment, although it argued Indus.

We can see that substantial change has been made to these sections, however it has been limited. There have not been any Supreme Court cases, with regards to Sections 11 and 8 after the Amendment. Hence, it cannot be properly be construed post 2015. The cases discussed above are mostly High Court decisions concerning the mentioned Sections. These Amendments are relatively new and it would be a while before substantive judgment is construed on the same. Considering that Arbitration is a developing relief in legal fields, many changes are bound to occur over time.

Regarding these Sections, its basic structure/definition, are not bound to change, but will be amended from time to time, to prevent inconsistencies with the Act, or any other provisions of the law. These provisions help make a consistent procedure for the Courts to follow so that they do not encroach upon the powers of the arbitral tribunal. It helps create specific guidelines, which allows the Courts to interfere thereby maintaining the autonomy of the arbitral tribunals. This harmony helps resolve parties’ disputes faster and efficiently without any confusion.

Endnotes

[1] (2017) 7 SCC 678: 2017 SCC Online SC 442

[2] This interpretation is with reference to the latest (2015) Amendment with the insertion of “High Court” and “Supreme Court” in substitution for “Chief Justice” and “Chief Justice of India”

[3] (2006) 11 SCC 651

[4] (2007) 144 DLT 580

[5] (2015) 1 SCC 32

[6] (2017) 7 SCC 678: 2017 SCC Online SC 442

[7] APO No. 33 of 2018, order dated 16-02-2018

[8] Arb. P 418/2017

Author Details: Janavi Venkatesh (OP Jindal Global University)

The views of the author are personal only. (if any)