OP(ATE).No.27 OF 2020

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR** **MONDAY, THE 09TH DAY OF NOVEMBER 2020 / 18TH KARTHIKA, 1942** ## **OP(ATE).No.27 OF 2020** ## **PETITIONERS:** |**1**|**M/S.EKK AND CO.**| |---|---| ||**A REGISTERED PARTNERSHIP HAVING ITS OFFICE AT 2ND**| ||**FLOOR,MUNICIPAL BUILDING,A.M.ROAD,PERUMBAVOOR,**| ||**ERNAKULAM-683542,REP.BY ITS MANAGING PARTNER,SANJU**| ||**MOHAMMED.**| |**2**|**M/S.EKK INFRASTRUCTURE LTD,**| ||**A COMPANY INCORPORATED UNDER THE INDIAN COMPANIES**| ||**ACT,2013,HAVING ITS REGISTERED OFFICE AT**| ||**NO.16,DHARMARAJA KOVIL STREET,CHENNAI-600002,AND**| ||**CORPORATE OFFICE AT 2ND FLOOR,MUNICIPAL**| ||**BUILDING,A.M.ROAD,**| ||**PERUMBAVOOR,ERNAKULAM-683542,REP.BY ITS MANAGING**| ||**DIRECTOR,SANJU MOHAMMED.**| **BY ADVS. SRI.K.BABU THOMAS SMT.MARYKUTTY BABU** ## **RESPONDENTS:** |**1**|**STATE OF KERALA**| |---|---| ||**REPRESENTED BY THE SECRETARY TO THE GOVERNMENT,PUBLIC**| ||**WORKS DEPARTMENT,**| ||**SECRETARIAT,THIRUVANANTHAPURAM-695001.**| |**2**|**THE PROJECT DIRECTOR,**| ||**KERALA STATE TRANSPORT PROJECT KSTP,**| ||**PROJECT MANAGEMENT TEAM,T.C.11/339,**| ||**SREE BALA BUILDING,KESTON ROAD,KOWDIAR.P.O,**| ||**THIRUVANANTHAPURAM-695003.**| ## **BY GOVERNMENT PLEADER DR. THUSHARA JAMES** **THIS OP(Arbitration Time Extension) HAVING COME UP FOR ADMISSION ON 09.11.2020, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:** 2 **OP(ATE).No.27 OF 2020** ## **JUDGMENT** The petitioners have approached this Court seeking an extension of the period for the Arbitral Tribunal to complete the arbitration proceedings. It is seen that the appointment of the Arbitrator in this case was not done by this Court under Section 11 of the Arbitration and Conciliation Act,1996 (hereinafter referred to as “the Act”). Rather the nomination of the Arbitrators was by the parties, in accordance with the terms of the Arbitration Agreement, which mandated that each party would appoint an Arbitrator, and the nominees of both the parties would in turn would appoint a 3[rd] Arbitrator as the presiding Arbitrator. It is not in dispute that the 1[st] extension of six months as contemplated under the Act has already been granted by the Arbitral Tribunal and the petitioners here seeks a further extension in accordance with Section 29A of the Act. The provision of Section 29A(4) reads as follows: ## “ **29-A. Time-limit for arbitral award** - [(1) …........................... (2) …........................... 3 **OP(ATE).No.27 OF 2020** (3) …........................... (4) If the award is not made within the period specified in sub-section (1) or the extended period specified under sub-section (3), the mandate of the arbitrator(s) shall terminate unless the Court has, either prior to or after the expiry of the period so specified, extended the period: Provided that while extending the period under this sub-section, if the Court finds that the proceedings have been delayed for the reasons attributable to the arbitral tribunal, then, it may order reduction of fees of arbitrator(s) by not exceeding five per cent. for each month of such delay. [Provided further that where an application under sub-section (5) is pending, the mandate of the arbitrator shall continue till the disposal of the said application: Provided also that the arbitrator shall be given an opportunity of being heard before the fees is reduced].” 2. In this connection, the question arises as to which is the Court that has to extend the period for completion of arbitration under the Act. The definition of “Court” under the Arbitration and Conciliation Act is found in Section 2(1) (e) and reads as follows: “ **2. Definitions.** -(1) In this Part, unless the context 4 **OP(ATE).No.27 OF 2020** otherwise requires,- (a) …................................... (b) …................................... (c) …................................... (d) …................................... [(e) “Court” means - (i) in the case of an arbitration other than international commercial arbitration, the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary 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; (ii) in the case of international commercial arbitration, 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, and in other cases, a High Court having jurisdiction to hear appeals from decrees of Courts subordinate to that High Court.]” 3. The learned counsel for the petitioner would rely on a decision 5 **OP(ATE).No.27 OF 2020** of the Division Bench of this Court in **Lots Shipping Company Ltd. (M/s.) v. Cochin Port Trust [2020 (2) KHC 595],** to contend that the application for extension of time has to be made before this Court. I am not, however, persuaded to accept the said contention. Paragraphs 7 and 9 of the said judgment read as follows: “7. Learned counsel appearing for the parties in the case as well as Advocate P.B. Krishnan, Amicus Curiae, assisting the Court had taken the view that the power of appointment of arbitrator under S.11(6) has to be read with S.14 and S.15 dealing with termination of the mandate and substitution of the arbitrator. Those powers are treated as part and parcel of the power for appointment of the arbitrator, as reiterated through the rulings of the Hon'ble Supreme Court in A.C.C. Ltd. v. Global Cements Ltd. (2012 KHC 4336 : 2012 (7) SCC 71 : 2012 (3) KHC SN 6 : 2012 (3) KLT SN 16 : 2012 (5) SCALE 778 : AIR 2012 SC 3824) and in Shailesh Dhairyawan v. Mohan Balakrishna Lulla (2015 KHC 4715 : 2016 (3) SCC 619 : 2015 (5) KHC SN 22 : 2015 (11) SCALE 684). On that basis it was argued that, the jurisprudential nature and character of the power conferred under S.29A(4) could be envisaged as species of the genus of the power for appointment of the arbitrator as well as the power for termination of the mandate and for substitution of the arbitrator, as envisaged under S.11(6) and S.14 & 15 of the Act. It was pointed out that, depending upon whether the arbitral proceedings is domestic arbitration or international arbitration, the High Court or the Supreme Court, as the case may be, is exercising power to appoint the arbitrator as provided under S.11(6) of the Act. Quite anomalous are the powers conferred on the High Court or the Supreme Court, as the case may be, with respect to 6 **OP(ATE).No.27 OF 2020** termination of the mandate and substitution of the arbitrator, as provided under S.14 & S15 of the Act. The power under S.29A is more akin to the power of appointment, termination of mandate and substitution of the arbitrator. If a literal interpretation is given to the word, “Court” used in S.29(4) by referring to the meaning of “Court” contained in S.2(1)(e)(i) of the Act, the fallout could be that, where the Apex Court appoints the arbitrator in a case of international commercial arbitration, then the Court to grant extension of time in such case would be the High Court and not the Apex Court. So also, in a case where the High Court appoints an arbitrator in a domestic arbitration, the court to grant extension of time would be the principal court of original civil jurisdiction in the District and not the High Court. Therefore the necessity for a contextual interpretation is pressed into service. It is argued that a 'purposive interpretation' or 'purposive construction' will be relevant and necessary. Reliance was placed on the decision of Shailesh Dhairyawan (supra) to emphasize that, 'purposive interpretation' or 'purposive construction' is based on the understanding that the Court is supposed to attach that meaning to the provisions, which serve the “purpose” behind such a provision. The basic approach should be to ascertain what it is designed to accomplish. In the interpretive process the Court is supposed to realise the goal that legal text is designed to realise. Based on the above arguments, the case is referred for decision of a Division Bench for an authoritative pronouncement on the issue. 9. Question to be decided is whether the term “court” contained in S.29A(4) requires a contextual interpretation apart from the meaning contained in S.2(1)(e)(i) of the Act. A contextual interpretation is clearly permissible in view of the 7 **OP(ATE).No.27 OF 2020** rider contained in sub-section (1) of Section (2), “unless the context otherwise requires”. As argued by the counsel on either side and as submitted by the learned Amicus Curiae, a contextual interpretation is required since the power conferred on the court under S.29A, especially under sub-sections (4) and (5), are more akin to the powers conferred on the Supreme Court and the High Court, as the case may be, under S.11(6), S.14 & S.15 of the Act, for appointment, termination of mandate and substitution of the arbitrator. It is pointed out that, the amendments introduced in the year 2015, with effect from 23/10/2015, has recognized the judgment of the Constitutional Bench of the Apex Court in SBP & Company v. M/s Patel Engineering Company Ltd. (2005 KHC 1909 : 2005 (8) SCC 618 : AIR 2006 SC 450 : 2005 (128) Comp Cas 465.) and Another and conferred the power of appointment on the Supreme Court or the High Court. The amendment has not in any manner enhanced the power of the principal civil court, which continues only with respect to matters provided under S.9 and S.34 of the Act. It is significant to note that the orders passed by the principal civil court of original jurisdiction under S.9 and S.34 are made appealable under S.37 of the Act. So also, order if any passed refusing the parties to arbitration under S.8 of the Act, was also made appealable under S.37(1) (a) of the Act. S.29A was introduced to make it clear that, if the arbitration proceedings is not concluded within 18 months, even if the parties have consented for an extension, it cannot be continued unless a judicial sanction is obtained. The power to grant extension by the court is introduced under an integrated scheme which also allows the court to reduce the fees of the arbitrator or to impose cost on the parties and/or to substitute the arbitrator(s). The power of extension is to be exercised on satisfying “sufficient cause” being made out. In all 8 **OP(ATE).No.27 OF 2020** respect, such power conferred under S.29A for permitting extension with respect to the proceedings of arbitration, is clearly akin to the powers conferred under S.14 & S.15 of the Act. The absence of any provision for an appeal with respect to the exercise of such power under S.29A, in the nature as mentioned above, would indicate that the power under Section.29A is not to be exercised by the principal Civil Court of original jurisdiction. Otherwise, it will create anomalous situation of identical powers being exercised in a contrary manner, prejudicial to the hierarchy of the Courts. In a case where appointment of an arbitrator is made under S.11(6) of the Act by the High Court or the Supreme Court, as the case may be, it would be incongruous for the principal civil court of original jurisdiction to substitute such an arbitrator or to refuse extension of the time limit as provided under S.29A, or to make a reduction in the fees of the Arbitrator. Therefore a purposive interpretation becomes more inevitable.” 4. In my view, the aforesaid observations of the Division Bench pertain to cases where the initial appointment of an Arbitrator is by the High Court under Section 11 of the Act and not to cases such as the present where the initial appointment of arbitrators was by the parties themselves without intervention of this Court. The reasoning in the said judgment that, it would be incongruous to permit a principal civil court of original jurisdiction to substitute an Arbitrator or refuse extension of time limit as provided under Section 29A, in cases where the initial appointment of Arbitrator is made by the High Court, applies only in 9 **OP(ATE).No.27 OF 2020** those cases were the initial appointment of the Arbitrator is by the High Court. I am of the view that inasmuch as the statutory provision mandates that it is the Court, as defined under the Statute, that would have to extend the period for completion of Arbitration in circumstances, it is the principal civil court of original jurisdiction concerned that would have the power to extend the time for completion of the arbitration in this case. Accordingly, without prejudice to the right of the petitioner to move the principal civil court of original jurisdiction concerned, the present OP(ATE) is dismissed. Sd/- **A.K.JAYASANKARAN NAMBIAR JUDGE** mns 10 **OP(ATE).No.27 OF 2020** ## **APPENDIX** ## **PETITIONER'S/S EXHIBITS:** **EXHIBIT P1 TRUE COPY OF THE RELEVANT PORTION OF AGREEMENT NO.228/KSTP/PMT/PWD/2013 EXHIBIT P2 TRUE COPY OF THE NOTICE INVOKING ARBITRATION CLAUSE IN THE AGREEMENT EXHIBIT P3 TRUE COPY OF REPLY OF THE RESPONDENTS TO THE 2ND PETITIONER INTIMATING APPOINTMENT OF HON.JUSTICE MR.P.S.GOPINATHAN. EXHIBIT P4 TRUE COPY OF RELEVANT PORTION OF THE AMENDED STATEMENT OF FACTS AND CLAIMS FOR PAYMENT.** ## **RESPONDENTS EXHIBITS:NIL** **//TRUE COPY//** **P.A TO JUDGE**