Section 11 of the Arbitration Act I

The nature and scope of the jurisdiction of the Chief Justice or his designate, under Section 11 of the Arbitration and Conciliation Act, 1996 (“Act”) has been expounded upon by many. SBP & Co. v. Patel Engineering Ltd& Anr., (2005) 8 SCC 618 has put beyond doubt that the Chief Justice, in performance of its role espoused by Section 11, in essence, performs a ‘judicial function’ and is therefore entitled to adjudicate on contentious preliminary issues such as a) whether the party making an application under Section 11 of the Act has approached the appropriate High Court; b) whether there is a valid Arbitration Agreement; c) whether the claim is time barred; etc. [See, National Insurance Co. Ltd.  v. Boghara Polyfab, (2009) 1 SCC 267]. To borrow the words of Hon’ble Justice Ruma Pal in Modi Korea Telecommunication Ltd. v. Appcon Consultants Pvt. Ltd., (1999) 2 CHN 107 (“Modi Korea”), these ‘contentious preliminary issues’ are better described as “pre-conditions [that must be met] for the exercise of the power [by the Chief Justice or his designate] to appoint an Arbitrator. ”

In Modi Korea, notably, Hon’ble Justice Ruma Pal, a Calcutta High Court Judge then, came up with a rather interesting proposition. It was considered that, “The legislature could not have intended to burden either the Chief Justice of India (in connection with all International Arbitrations) or the Chief Justice of a High Court (in connection with all Domestic Arbitrations) to be saddled with the impracticable task of determining the existence of the pre-conditions for appointment of an Arbitrator/Arbitrators in all cases.” As a solution, it was held that it is possible that, first, a designated Single Judge determine whether an Arbitrator should be appointed in terms of Section 11 and thereafter, the designated Single Judge, place the matter before the Chief Justice for naming the Arbitrator.

The two-tier approach suggested, in dealing with applications under Section 11 of the Act, has, ever since, been the norm at the Hon’ble High Court at Calcutta. Nonetheless, the approach has not found any favor at Hon’ble Supreme Court of India. In a recently delivered judgment of Hindustan Copper Ltd. v. Monarch Gold Mining Co. Ltd., (2012) 10 SCC 167 (“Hindustan Copper”) Hon’ble Justice R.M. Lodha has held, that, “The procedure that is being followed by the Calcutta High Court with regard to the consideration of the applications under Section 11 of the Act is legally impermissibleThe piecemeal consideration of the application under Section 11 by the Designate Judge and another Designate Judge or the Chief Justice, as the case may be, is not contemplated by Section 11. The function of the Chief Justice or Designate Judge in consideration of the application under Section 11 is judicial and such application has to be dealt with in its entirety by either the Chief Justice himself or the Designate and not by both making it a two-tier procedure as held in Modi Korea Tel.” To that extent thus, Modi Korea has been overruled.

In Hindustan Copper, notably, a Designate Judge had first passed an order holding that the application for appointment of the Arbitrator was proper and then he had referred the application to another Designate Judge (of the Hon’ble Chief Justice) for actual appointment of the Arbitrator.

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