In this case, the petitioner, Ms. C.P. Rama Rao, a sole proprietor, filed against the National Highways Authority of India (NHAI) concerning a dispute arising from an arbitral award. Ms. Rama Rao sought to challenge this award by filing a petition under Section 34 of the Arbitration and Conciliation Act, 1996 (referred to as the “Arbitration Act”), which allows for the setting aside of arbitral awards based on specific grounds. This petition was filed with a commercial court, as the petitioner believed it to be the appropriate venue for her challenge.

However, in an order dated August 22, 2023, the District Judge ruled that Ms. Rama Rao’s Section 34 petition was inadmissible before the commercial court. The Judge relied on Section 42 of the Arbitration Act, which stipulates that once an application related to an arbitration agreement has been filed in a particular court, all subsequent applications must be submitted to the same court. 

The District Judge reasoned that, since Ms. Rama Rao had previously submitted a Section 11(6) petition (a request for the appointment of an arbitrator) to the High Court, any future applications concerning the same arbitration—including her Section 34 petition—needed to be filed in the High Court as well. 

Consequently, the commercial court declined jurisdiction, directing that the matter be pursued in the High Court instead. This decision by the District Judge effectively required the petitioner to seek redress solely from the High Court, setting up a procedural hurdle in her efforts to challenge the arbitral award at the commercial court level.

Issues

The primary issue is whether the District Judge’s interpretation of Section 42 of the Arbitration Act was correct, specifically concerning the requirement to file subsequent applications with the High Court after a previous Section 11(6) petition. Another issue is whether a Section 11 petition counts as an “application to a court” under Section 42 of the Arbitration Act, mandating that subsequent applications be filed with the High Court.

Analysis

Section 42 of the Arbitration and Conciliation Act, 1996 serves to streamline the judicial process by preventing parties from filing multiple applications related to the same arbitration agreement in different courts, which could lead to conflicting judgments and jurisdictional confusion. 

The section explicitly requires that once any application pertaining to an arbitration agreement is filed with a particular court, all subsequent applications involving the same agreement must also be filed in that same court. This provision aims to ensure consistency in judicial proceedings and to establish a single point of authority over arbitration-related matters, thus avoiding multiple cases before forums and maintaining judicial efficiency.

However, Section 11 of the Arbitration Act, which governs the appointment of arbitrators, is an exception to this rule. Under Section 11, applications for the appointment of an arbitrator are directed not to a regular “court” as defined by the Act, but rather to the Chief Justice of the High Court or the Supreme Court, or their designated representatives. 

This arrangement is intended to assign the authority for arbitrator appointments to a high-level judicial figure, thereby reinforcing the integrity of the arbitration process. Importantly, since the Chief Justice or their delegate does not act as a “court” under the Act’s definition, a Section 11 application does not trigger the application of Section 42.

In its analysis, the Delhi High Court examined Supreme Court precedents, including BGS SGS Soma JV v. NHPC Limited and Associated Contractors v. State of West Bengal, which provided critical guidance on this interpretation. 

In these cases, the Supreme Court clarified that applications filed under Section 11 do not initiate the sequence of filings bound by Section 42, as these are directed to the Chief Justice or their delegate, not to a traditional court. The Supreme Court emphasized that Section 42 only applies to applications made to courts as defined under the Arbitration Act. 

Thus, the Delhi High Court, following these precedents, ruled that a previous Section 11 application does not restrict the filing of a Section 34 petition in a different court, as Section 42 does not cover applications made under Section 11. This interpretation preserves the autonomy and specificity of the roles assigned to the Chief Justice or their delegate under the Act, separating them from the broader jurisdictional constraints designed for regular courts.

The Supreme Court in BGS SGS Soma clarified that only specific orders falling under Section 34 of the Arbitration and Conciliation Act, namely those directly involving a refusal to set aside an arbitral award on the grounds specified within that section, are covered by clause (c) of Section 37(1) for appeal purposes. In BGS SGS Soma, the Supreme Court addressed a situation where a Section 34 petition was returned by the Special Commercial Court in Gurugram due to a lack of jurisdiction. 

The Court held that this type of jurisdictional decision does not amount to a refusal to set aside an award as per the grounds in Section 34, and therefore does not qualify for appeal under clause (c) of Section 37(1). This distinction ensures that only substantive decisions on the merits of an arbitral award’s validity fall within the scope of appealable orders, as opposed to procedural or jurisdictional rulings. 

These cases clarified that applications under Section 11 are not filed with a “court” as defined by the Act, and thus, Section 42 does not apply to Section 11 applications. The Delhi High Court found that the District Judge misinterpreted Section 42 by considering a Section 11 application as equivalent to other court applications. Thus, requiring the petitioner to file the Section 34 petition only with the High Court was unfounded and would cause procedural injustice.

Conclusion

The Delhi High Court concluded that the District Judge had misinterpreted the provisions of the Arbitration and Conciliation Act, specifically regarding the application of Section 42. According to the High Court, Section 42, which mandates that all subsequent applications related to an arbitration agreement be filed in the same court where the first application was submitted, did not apply in this instance. 

The reason is that a Section 11 petition, which concerns the appointment of an arbitrator, is directed to the Chief Justice or their designate, not to a “court” in the conventional sense under the Arbitration Act’s definition. Consequently, Section 42 did not restrict the petitioner from filing her Section 34 petition in the commercial court. 

In light of this reasoning, the High Court ruled that the petitioner’s Section 34 application, which seeks to set aside an arbitral award, could rightfully be heard by the commercial court. Therefore, the High Court allowed the petitioner’s writ petition, overturning the District Judge’s order that had dismissed the Section 34 petition as inadmissible before the commercial court. 

The High Court directed that the Section 34 petition be reinstated and scheduled for a fresh hearing by the commercial court. This decision ensured that the petitioner could proceed with her challenge to the arbitral award without unnecessary procedural barriers and reinforced the principle that not all arbitration-related applications fall under the jurisdictional limitations imposed by Section 42.