Which court has jurisdiction to extend deadline to complete arbitration? Bombay High Court answers

The Bombay High Court Goa Bench on Wednesday delivered a judgment clarifying which court has the jurisdiction to extend the deadline to complete arbitration proceedings under Section 29A of the Arbitration and Conciliation Act, 1996 [Sheela Chowgule v. Vijay V. Chowgule]..After observing inconsistencies in two Bombay High Court judgments, a single judge had referred the matter to a larger Bench in April this year. The larger Bench, comprising Justices M.S. Karnik and Valmiki Menezes, has ruled that the High Court has the jurisdiction to extend the time for completing arbitration if the arbitral tribunal has been constituted by the High Court. However, the Court further held that the principal civil court with original jurisdiction, which includes the district court and the High Court, can handle time extension applications if the tribunal was constituted by agreement between the parties."In the event an Arbitral Tribunal constituted by the High Court under Section 11(6) fails to complete the proceedings within the stipulated period/extended period, then an application under Section 29-A(4) would lie to the High Court in case of a domestic arbitration ... in the event an Arbitral Tribunal consisting of three Arbitrators is constituted as per Section 11(2) i.e. with agreement and consent of the parties, fails to complete the proceedings within the stipulated period/extended period, the application under Section 29-A(4) would lie to the principal Civil Court of original jurisdiction in a district and includes the High Court in exercise of its ordinary original jurisdiction," the August 7 judgment stated..This ruling resolves a conflict within the Bombay High Court, which stemmed from differing interpretations of Section 29A of the Arbitration Act in previous cases. The controversy arose from two conflicting judgments that created uncertainty over which court had the authority to extend the time for arbitration proceedings.In the first case, Mormugao Port v. Ganesh Benzoplast Ltd (2020), the Court held that district courts have jurisdiction under Section 29A when the arbitral tribunal is constituted by an agreement between the parties. This interpretation allowed district courts to extend the time for arbitration proceedings. However, in the 2024 judgment of KIPL Vistacore InfraProjects JV v. Municipal Corporation of the City of Ichalkarnji, a different Bench of the Bombay High Court held that only the High Court has the power to extend the time under Section 29A, even in cases where the arbitral tribunal is constituted by an agreement.This inconsistency led to significant legal uncertainty, prompting Justice Bharat P Deshpande to refer the matter to a larger Bench in April 2024 for a definitive interpretation. .The specific case that brought this issue to the forefront was a writ petition challenging a January 2024 decision by a district commercial court to extend the time for completing certain arbitral proceedings. The petitioner argued that only the High Court had the authority under Section 29A, while the respondents maintained that district courts also had jurisdiction under the Commercial Courts Act..In its August 7 ruling, the larger Bench has now aligned with the Gujarat High Court's interpretation in the case of Nilesh Ramanbhai Patel vs. Bhanubhai Ramanbhai Patel. The Gujarat High Court had observed that Section 29A imposes specific time limits for the completion of arbitral proceedings and requires an award to be made within twelve months. If the award is not made within this period or an extended period, the mandate of the arbitrator terminates unless the court extends the period.Crucially, the Gujarat High Court held that the definition of "court" in Section 2(1)(e) of the Act - which ordinarily refers to the Principal Civil Court or the High Court in certain cases - does not extend to all situations under Section 29A. The Court reasoned that the legislature did not intend for the Principal Civil Court to have the power to substitute an arbitrator appointed by the High Court or the Supreme Court..Advocates Pawan Jhabakh, Gajendra Kanekar and Aniket S. Kunde represented the petitioners before the Bombay High Court.Advocates Parag Rao, Sowmya Drago, Ajay Menon, Akhil Parrikar, Pulkit Bandodkar, Rahul Mantri, Angali Kumari, and Shailesh Redkar represented the respondents..[Read Judgment]