The Supreme Court cannot be regarded to be the Court of first instance for all purposes merely because it was the Court which appointed the Arbitrator.

Solely because a superior court appoints the arbitrator or issues directions or has retained some control over the arbitrator by requiring him to file the award in this Court, it cannot be regarded as a court of first instance as that would go contrary to the definition of the term ‘court’ as used in the dictionary clause as well as in Section 31(4).

The Constitution Bench of the Supreme Court decided this issue in Civil Appeal No. 1093 of 2006 between The State of Jharkhand & ors. vs M/s Hindustan Construction Co. Ltd. Decided on 14.12.2017

Challenge:

It was contended before the two-Judge Bench of the Supreme Court that when this Court had directed to file the award in this Court, an application for making the award Rule of the Court is to be filed in this Court, for this Court alone has the jurisdiction to pronounce the judgment in terms of the award. In this regard, the decisions in Bharat Coking Coal Limited v. Annapurna Construction and State of West Bengal and others v. Associated Contractors were placed reliance upon. The matter was referred to Constitution Bench.

The State, on the other hand contended, that if the Court decides the objections to the award, the party will lose its right of appeal. It was also contended that by referring the matter to arbitration this Court had not really retained control of the proceedings of the arbitrator. To bolster the said submissions, heavy reliance was placed on State of Rajasthan v. Nav Bharat Construction Company.

The Court noted the decision in Nav Bharat Construction Company (supra) which had followed the judgment in Mcdermott International INC. v. Burn Standard Co. Ltd. and others and further apprised itself of the principles enunciated in Bharat Coking Coal Limited (supra) which has held that right to appeal is a valuable right and unless there exists cogent reasons, a litigant should not be deprived of the same.

Held:

The Division Bench referred to the principle enunciated in Associated Contractors (supra) wherein the three- Judge Bench had opined that this Court cannot be considered to be a Court within the meaning of Section 2(i)(e) of the Arbitration and Conciliation Act, 1996 (for brevity, ‘the 1996 Act’).

The referral judgment noted the view taken in State of Madhya Pradesh v. Saith and Skelton (P) Ltd.5 and Guru Nanak Foundation v. Rattan Singh and Sons6 wherein it has been held that when an arbitrator is appointed by this Court and further directions are issued, it retains seisin over the arbitration proceedings and in such circumstances, the Supreme Court is the only court for the purposes of Section 2(c) of Act.

It is difficult to accept that the Supreme Court can assume original jurisdiction, solely because of control over the proceedings, for original jurisdiction has been conferred upon the Supreme Court under Articles 32 and 131 of the Constitution.

The decisions rendered in Saith and Skelton (supra) and Guru Nanak Foundation (supra) do not lay the correct position of law and, accordingly, they are overruled. Any other judgment that states the law on the basis of the said judgments also stands overruled.

The jurisdiction of a Court conferred under a statute cannot be allowed to shift or become flexible because of a superior court’s interference in the matter in a different manner.