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| Civil Court has no power to confirm arbitral award: HC | | | Early Times Report
JAMMU, July 3: In a significant ruling reinforcing the autonomy of arbitration proceedings, the High Court of Jammu & Kashmir and Ladakh has held that a civil court has no jurisdiction to confirm an arbitral award or make it the "rule of the court" once a dispute has been referred to arbitration under Section 89 of the Code of Civil Procedure (CPC). The Court set aside the decree passed by the Principal District Judge, Anantnag, holding that it was without jurisdiction.
Justice Shahzad Azeem, while allowing a Regular First Appeal filed by the Union Territory of J&K, ruled that once parties voluntarily opt for arbitration under Section 89 CPC, the civil suit permanently exits the court's stream and the arbitral proceedings thereafter are governed exclusively by the Arbitration and Conciliation Act, 1996.
The case arose from a recovery suit instituted in 2005 by contractor Abdul Rashid Gilkar, who sought recovery of Rs 50.65 lakh for construction of a bridge at Brakpora. During the pendency of the suit, the parties jointly requested that the dispute be referred to arbitration. A three-member Arbitral Tribunal subsequently awarded ?25.52 lakh, including interest, in favour of the contractor. However, the Principal District Judge, Anantnag, later made the arbitral award the rule of the court and decreed the suit, prompting the UT administration to challenge the order before the High Court.
Government Advocate Mr. Ilyas Nazir Laway represented the appellants, while the respondent was represented by Mr. Mian Tufail, Advocate, assisted by Mr. Babar Bilal Malik, Advocate.
The High Court observed that under Sections 34, 35 and 36 of the Arbitration and Conciliation Act, an arbitral award is final and binding and is directly enforceable as a decree of the court. The referring civil court has no authority to examine the award on merits, confirm it, or pass a decree on its basis. If any party is aggrieved, the only remedy lies in challenging the award under Section 34 of the Arbitration Act before the competent court.
Relying on the Supreme Court's decision in Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd., Justice Azeem held that after a dispute is referred to arbitration under Section 89 CPC, the civil court becomes functus officio, meaning it ceases to have any further jurisdiction over the dispute. The Court remarked that the trial court had incorrectly followed the procedure under the repealed Arbitration Act, 1940, by making the arbitral award the rule of the court, a course no longer permissible under the 1996 Act.
Holding that the trial court had assumed jurisdiction not vested in it by law, the High Court quashed the order and decree dated August 29, 2022. However, it granted liberty to the parties to pursue the remedies available under the Arbitration and Conciliation Act and directed that the period spent litigating before the High Court would be excluded while computing limitation for such proceedings. (JNF) |
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