The Commercial Courts Act (CCA) does not interfere with or impair the rights of the High Court or Supreme Court to select arbitrators under the Arbitration and Conciliation Act (Act), according to a recent ruling by the Bombay High Court in the case of Uttam Energy Ltd. v. Shivratna Udyog Ltd.
The Court made its decision in response to an application made by the business Uttam Energy Ltd., which asked for the establishment of an arbitral tribunal to settle a dispute between parties deriving from a contract.
Regarding the agreement’s arbitration provision, the petitioner acknowledged there was no disagreement. Invoking the provision, the petitioner corporation informed Shivratna Udyog, the respondent, that a lone arbitrator would be appointed.
However, the present petition was eventually filed because there was no response to the original. Given that the parties’ disagreement was believed to be a commercial disagreement, this case was initially submitted on the original side of the High Court as a petition for commercial arbitration.
The case was allowed to be transferred to the appellate side after it was determined that there had been no cause of action to seek such jurisdiction inside Mumbai.
The respondent objected to the petition’s maintainability in order to oppose the application. In it, the following was argued:
that the High Court on the appeal side lacks jurisdiction to name an arbitrator because the current proceedings are in the type of commercial arbitration procedures;
that any applications or appeals arising out of an arbitration under the ACA, if it is not an international commercial arbitration, must be brought before any major civil court of original jurisdiction in the district (and not a High Court) with territorial jurisdiction over the arbitration;
that the selected court in Pune or Solapur, rather than Mumbai, would be the primary civil court with original jurisdiction over the current matter.
The petitioner responded by claiming that only the High Court has the authority to name an arbitral panel in accordance with Section 11 of the ACA.
The High Court determined that Section 10(3)(1) and Section 6 of CCA do not interfere with or divest the High Court’s authority and jurisdiction under Section 11 of ACA after hearing arguments from both sides.
To take within the of Section 10(3)(1) of CCA the jurisdiction and power in relation to the appointment of an arbitral tribunal, to be exercised by the Commercial Court exercising territorial jurisdiction over such arbitration, when the exclusive jurisdiction to make appointment of an arbitral tribunal within the meaning of section 11 of the ACA is conferred on the High Court or the Supreme Court as the case may be under section 11 of ACA, it would amount to a complete misreading of Section 10(3)(1) of CCA and in fact would lead to an absurdity,”
The Court Held
After resolving this matter, the Court also stated that an arbitration agreement existed, which was necessary for exercising jurisdiction under Section 11(6) read with sub-section (6-A) of the ACA, and since the agreement existed, an arbitrator could be chosen.
The petitioner was represented by attorneys Aman Kacheria, Rahul Agarwal, and Jasmin Puranik. The respondent was represented by advocates Milind Prabhune and Abhijit Kulkarni.
[Read Order]
