Isabella Mariam

The High Court of Telangana Division Bench of Justice Moushumi Bhattacharya and Justice B.R. Madhusudhan Rao held that a Commercial Court lacks jurisdiction to extend the mandate of an Arbitrator when the Arbitrator was originally appointed by the High Court under Section 11(6) of the Arbitration and Conciliation Act, 1996. The Court declared the extension order granted by the Commercial Court as erroneous and clarified that such powers exclusively rest with the High Court in domestic arbitrations initiated by its appointment. The Civil Revision Petition was disposed of as academic following the expiry of the Arbitrator’s mandate.

The matter originated from a Civil Revision Petition filed against an order dated 5 February 2025 passed by the Commercial Court at Hyderabad in a commercial original petition concerning arbitration proceedings among the petitioner and three respondents. The impugned order had extended the mandate of the Arbitrator for a further period of six months, i.e., from 24 September 2024 to 23 March 2025, under Section 29A of the Arbitration and Conciliation Act, 1996.

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The Arbitrator had been appointed earlier by the Telangana High Court on an application under Section 11(6) of the Act. The arbitration proceedings had progressed but were not concluded within the stipulated time as prescribed by Section 29A(1), i.e., within twelve months of the completion of pleadings.

Respondent No. 1 thereafter filed an application before the Commercial Court seeking an extension of the Arbitrator’s mandate under Section 29A(4). The Commercial Court granted the extension by the order now under challenge.

The petitioner argued that the Commercial Court was not the competent forum for granting such an extension since the Arbitrator was appointed by the High Court under its exclusive jurisdiction conferred by Section 11(6). It was submitted that under Section 2(1)(e) read with Section 29A(4), the power to extend or terminate the mandate rests with the same authority that appointed the Arbitrator, i.e., the High Court.

The respondent, on the other hand, contended that the Commercial Court was within its jurisdiction as it qualifies as a “Court” under Section 2(1)(e)(i) of the Arbitration and Conciliation Act. It was further submitted that the definitions and procedural distinctions between courts under the Act permit such jurisdiction to be exercised by Commercial Courts in non-international arbitration matters.

The matter became academic on 25 March 2025 when the parties informed the Court that the extended mandate of the Arbitrator had expired on 23 March 2025. Despite this, the Court proceeded to address the legal issue of jurisdiction given its importance for arbitration procedure and future reference.

The Division Bench began its reasoning by analyzing Sections 2(1)(e), 11(6), and 29A of the Arbitration and Conciliation Act, 1996. The Court recorded:

“Section 2(1)(e)(i) of the Act does not contain any language which specifically excludes the High Court from arbitrations under Part I of the Act, i.e., those that are not international commercial arbitrations.”

The Bench stated that the present arbitration clearly fell within the domestic category and not under international commercial arbitration, and the appointment had been made by the High Court under Section 11(6):

“In the present case, it is undisputed that the Arbitrator was appointed by the High Court in an application made by the petitioner herein under section 11(6) of the Act.”

“The High Court, exercising its special powers of appointment under Section 11(6) of the Act, was the appointing authority of the Arbitrator in a case involving an arbitration other than international commercial arbitration.”

On the issue of extending the Arbitrator’s mandate, the Court clarified the structure of Section 29A:

“Section 29A(4) of the Act contemplates a scenario where the arbitral Award is not made within twelve months + six months... the Court can step in and extend the mandate of the Arbitrator upon an application filed by either of the parties.”

The Court examined the overlap and harmony between the provisions, observing:

“Section 2(1)(e) read with section 11(6) of the Act is hierarchy-sensitive... The High Court, as the appointing authority, also becomes the exclusive deciding authority in matters concerning the extension of the Arbitrator’s mandate.”

The Court specifically rejected the application of Section 42 of the Act in such circumstances:

“Section 42 applies to any dispute concerning the arbitration agreement or situations arising after the commencement of the arbitration proceedings... The appointment of an Arbitrator under section 11 of the Act occupies a distinct space.”

The judgment also identified procedural anomalies if inconsistent jurisdiction were permitted:

“Knocking the doors of different Courts at different stages of the arbitration process would be contrary to the hierarchy envisaged under the Act... and in violation of maintaining the continuity of that hierarchy.”

The Court supported its conclusion with decisions from other High Courts:

“The Bombay High Court opined that in the event an Arbitral Tribunal constituted by the High Court under section 11(6) fails to complete the proceedings... an application under section 29A(4) would lie to the High Court in case of a domestic arbitration.”

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The Division Bench concluded:

“The extension of the Arbitrator’s mandate in the present case was erroneously permitted by the Commercial Court.”

 “We wish to reiterate that the issue has become academic... We also clarify that we have not expressed any opinion on the petitioner’s prayer for substitution of the Arbitrator.”

The Court issued the following directions: “C.R.P.No.739 of 2025, along with all connected applications, is accordingly disposed of in terms of the above. There shall be no order as to costs.”

Advocates Representing the Parties

For the Petitioners: Mr. V. Prasad Rao, Advocate

For the Respondents: Mr. M. Satyanarayana, Advocate; Mr. Rusheek Reddy, Advocate

Case Title: Somuri Purnachandra Rao v. M. Satyanarayana & Ors.

Case Number: Civil Revision Petition No. 739 of 2025

Bench: Justice Moushumi Bhattacharya and Justice B.R. Madhusudhan Rao

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