Jurisdictional dispute anent the appointment of an arbitrator by the High Court: Supreme Court elucidates again!

The tug of war over jurisdiction has surfaced many times in the arbitration proceedings. The Hon'ble Supreme Court had to step in once more to settle the dispute in the case titled General Manager East Coast Railway Rail Sadan and Anr. Vs. Hindustan Construction Co. Ltd.1

Initially, the Appellant and the Respondent ("the Parties") entered into a contract, which resulted in a dispute between the Parties. The Respondent, the original Claimant in the above case, initiated proceedings before the Additional District Judge, Visakhapatnam under Section 9 of the Arbitration and Conciliation Act, 1996 ("the Act") seeking an interim injunction against the encashment of the performance bank guarantee and forfeiture of the security deposit.

Section 9 of the Act states that a party may, before or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced, file an application for grant of interim injunction. The plea for an interim injunction was allowed.

Subsequently, at the request of the Respondent, the Appellant initiated arbitration proceedings by appointing an Arbitral Tribunal to adjudicate the parties' dispute. The Respondent, however, questioned the validity of the appointed Tribunal.  Consequently, they filed an application in the High Court of Orissa for the appointment of an arbitrator. The Court, by exercising its powers under Section 11(6) of the Act, appointed an arbitrator to resolve the dispute between the parties.

The Appellants contested the above verdict by filing a civil appeal in the Supreme Court in light of Section 42 of the Act, which deals with the jurisdiction of the courts.

It is undisputed that, prior to filing an application under Section 11(6) of the Act before the High Court of Orissa at Cuttack, the Respondent - Claimant himself filed an application under Section 9 of the Act before the Court at Visakhapatnam.

"42. Jurisdiction.-Notwithstanding anything contained elsewhere in this Part or in any other law for the time being in force, where with respect to an arbitration agreement any application under this Part has been made in a Court, that Court alone shall have jurisdiction over the arbitral proceedings and all subsequent applications arising out of that agreement and the arbitral proceedings shall be made in that Court and in no other Court."

The High Court of Orissa committed a significant error in appointing the sole arbitrator. In light of the foregoing, coupled with the reasons stated above, the Appeal was allowed and the impugned Judgement and Order of the Orissa High Court, as well as the appointment of the sole arbitrator, were thus quashed and set aside.

I concur with the Hon'ble Supreme Court's view that the Judgement should be overturned since the Court lacked the authority to consider the application made in accordance with Section 11(6) of the Act with regard to the Contract Agreement. Not to mention that the Respondent-Claimant had filed an interim application with the High Court of Andhra Pradesh in accordance with Section 9 of the Act. Therefore, the application for the appointment of the arbitrator shall only be considered by the High Court of Andhra Pradesh.

By - Muskan Maheshwari

  1. 2022 SCC OnLine SC 907; Civil Appeal No. 4747 of 2022