Allahabad High Court Judgement

Allahabad High Court Judgement

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JUDGEMENT HEADLINE : High Court Of Allahabad Is Not A Principle Civil Court Of Original Jursidiction Under Section 2(1)(e) Of The Arbitration & Conciliation Act, 1996.
JUDGEMENT TITLE : M/S B.M.G. Construction Vs. National Small Industries Corporation Ltd. And Others On 31/05/2012 By Allahabad High Court
CASE NO : ARBITRATION AND CONCILI. APPL.U/S11(4) NO. 32 OF 2012
CORAM : Hon'ble Pankaj Mithal,J.

HIGH COURT OF JUDICATURE AT ALLAHABAD

?Court No. - 10

Case :- ARBITRATION AND CONCILI. APPL.U/S11 No. - 32 Of 2012

Petitioner :- M/S B.M.G. Construction
Respondent :- National Small Industries Corporation Ltd. And Others
Petitioner Counsel :- J.P. Pandey

Hon'ble Pankaj Mithal,J.

Heard Sri J.P. Pandey, Learned Counsel For The Petitioner.
Certain Disputes Arose Between The Parties In Relation To The Agreement Dated 13.1.2006 Which Contained An Arbitration Clause. Accordingly, On 7.7.2010 Respondent No.3 Was Appointed As The Sole Arbitrator To Resolve The Aforesaid Disputes As Per The Mechanism Provided Under The Agreement Itself.
Now The Petitioner Has Come Up By Means Of This� Petition Seeking� Termination Of The Mandate Of The Aforesaid Arbitrator Respondent No.3 On Various Grounds.
The Mandate Of The Arbitrator Already Appointed Is Terminable Under Section 14/15 Of The Arbitration And Conciliation Act, 1996 (hereinafter Referred To As The Act).
Section 14 Of The Act Provides That The Mandate Of An Arbitrator Shall Terminate, If He Becomes De Jure Or De Facto Unable To Perform His Functions Or�fails To Act For Any Other Reason And Withdraws From His Office Or The Parties Agree To Terminate His Mandate.
Sub-Section (2) Of Section 14 Of The Act Provides That Where Any Controversy Regarding Termination Of The Mandate Of The Arbitrator Aforesaid Arises The Party May Unless Otherwise Agreed By The Parties Apply To The Court To Decide On The Termination Of The Mandate.
Thus, From The Above It Is Sufficiently Clear That The Mandate Of An Arbitrator Is To Be Terminable On An Application To The Court By One Of The Parties.
The 'court' Has Been Defined Under Section 2(1)(e) Of The Act To Mean The Principal Civil Court Of Original Jurisdiction In A District. The Principal Court Of Civil Jurisdiction In A District Is The District Judge. Therefore, The Mandate Of An Arbitrator Has To Be Terminated Not By The High Court But By The Principal Civil Court I.e. The District Judge.
Sri J.P. Pandey, Learned Counsel For The Petitioner Submitted That The Definition Of The Court Under Section 2(1)(e) Of The Act Includes High Court.
It Is True That Under Section 2(1)(e) Of The Act 'court' Means The Principle Civil Court Of Original Jurisdiction In A District And Includes The High Court But Such Inclusion Of The High Court Is Qualified Which Is Evident From The Plain Reading Of The Definition Of The 'court' Contained In Section 2(1)(e) Of The Act Itself. It Reads As Under:-
"Court" Means The Principal Civil Court Of Original Jurisdiction In A District, And Includes The High Court In Exercise Of Its Ordinary Original Civil Jurisdiction, Having Jurisdiction To Decide The Questions Forming The Subject-matter Of The Arbitration If The Same Had Been The Subject-matter Of A Suit, But Does Not Include Any Civil Court Of A Grade Inferior To Such Principal Civil Court, Or Any Court Of Small Causes;
Thus On The Plain Reading Of The Above Definition Of The 'court', High Court Is Included Within The Principle Civil Court Of Original Jurisdiction Only If It Exercises Original Civil Jurisdiction And In Such Exercise Has The Power To Determine The Subject Matter Of Arbitration Had It Been Brought Before It By Way Of A Suit. Therefore, For Including The High Court Within The Principle Civil Court Of Original Jurisdiction Two Conditions Are Necessary Namely;
(i) High Court Must Exercise Original Civil Jurisdiction; And
(ii) In Such Exercise Of Original Jurisdiction It Must Also Have The Jurisdiction To Decide The Subject Matter Of The Arbitration As A Regular Suit.
It Is Not Disputed Before Me That The High Court Of Judicature At Allahabad Does Not Exercise Original Civil Jurisdiction. Therefore, Apparently The First Of The Above Two Conditions Is Not Fulfilled By This High Court So As To Include It Within The Meaning Of The Civil Court Of Original Jurisdiction. Accordingly, The High Court Of Allahabad Is Not A 'court' Under Section 2(1)(e) Of The Act Before Whom An Application For Seeking Termination Of The Mandate Of The Arbitrator Can Be Maintained.
This High Court Is Not Even Vested With The Original Jurisdiction To Decide The Subject Matter Of The Arbitration Had It Been Subjected To The Suit.�
In M/s Pandey & Company Builders Pvt. Ltd. Vs. State Of Bihar And Another AIR 2007 S.C. 465 Their Lordships Of The Supreme Court Held That If A High Court Does Not Exercise Of A Original Jurisdiction It Would Not Be A 'court' Within The Meaning Of Section 2(1)(e) Of The Act.
His Lordship Of This Court In M/s I.T.I. Ltd. Vs. District Judge Allahabad And Others AIR 1998 All. 313 Held That The Court Of District Judge Alone Is The Principle Civil Court Of Original Jurisdiction In A District And An Application Under Section 34 Of The Act For Setting Aside Arbitral Award Which Lies In A 'court' Cannot Be Entertained Even By An Additional District Judge.
In Garhwal Mandal Vikas Nigam Ltd. Vs. Krishna Travel Agency (2008) 6 SCC 741 The Arbitrator Was Appointed By The Supreme Court And As Such The Controversy Arose As To Before Whom The Objections Against The Award Can Be Filed. Their Lordships Of The Supreme Court Held That Irrespective Of The Fact That The Arbitrator Was Appointed By The Supreme Court The Objections Would Lie Before The 'court' And The Matter Should Go To The District Judge And For That Purpose Supreme Court Would Not Be A 'court'.
In View Of Above Discussion, The Mandate Of An Arbitrator Is Terminable On An Application To Be Moved Before The Court I.e. The Principle Civil Court Of Original Jurisdiction In A District And Since High Court Of Judicature At Allahabad Is Not A Court Within The Meaning Of Section 2(1)(e) Of The Act, The Application Is Not Maintainable. It Is Accordingly Rejected With� Liberty To The Petitioner To Approach The Appropriate Court.

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