Calcutta HC Sets Aside Arbitration Order Due to Lack of Jurisdiction: Stresses Adherence to Commercial Court Roster [Read Order]

The Calcutta High Court has set aside a 2023 order that had earlier annulled an arbitral award.

The case arose with a contractual dispute between Garden Reach Shipbuilders & Engineers Limited (GRSE) and Marine Craft Engineers Pvt. Ltd., which had undertaken repair work at GRSE's shipyard. Although the respondent completed the job, payments were allegedly not made by GRSE. Marine Craft filed a writ petition and later approached the West Bengal MSME Facilitation Council, seeking redress under the MSME Development Act, 2006.

GRSE invoked the arbitration clause in the contract and unilaterally appointed an arbitrator, who passed an award in GRSE’s favour in 2018. Aggrieved, Marine Craft challenged this award under Section 34 of the Arbitration and Conciliation Act, 1996. That petition was allowed by a Single Judge, effectively setting aside the arbitral award.

GRSE filed an appeal under Section 37 of the Arbitration Act, challenging the 2023 order not on its merits, but on jurisdictional grounds. Their main was that the Single Judge who set aside the arbitral award did not have determination over commercial matters under the High Court roster.

Senior Advocate appearing for GRSE, emphasized that under Section 10 of the Commercial Courts Act, arbitration matters involving commercial disputes of a specified value must be heard by judges designated to the Commercial Division of the High Court. Since the judge who passed the April 2023 order was only assigned writ and non-commercial civil matters at the time, the ruling lacked legal sanctity.

The court examined the determination rosters in place when the matter was first heard in 2019, and also when judgment was reserved and delivered in 2023. It found that on all these dates, the Single Judge in question did not have jurisdiction to entertain arbitration cases under the Commercial Courts framework.

Even though both parties had consented to continue before that judge, the Division Bench consisting of Justice Arjith Banerjee and Justice Om Narayan Rai, ruled that consent cannot cure a jurisdictional defect when it arises from lack of proper judicial allocation.

Citing the Supreme Court’s precedent in Sohan Lal Baid v. State of West Bengal and State of Rajasthan v. Prakash Chand, the Bench asserted that matters not placed before a judge by the Chief Justice or through proper roster assignment are void ab initio.

While GRSE and Marine Craft both made elaborate submissions on the merits, touching upon MSME jurisdiction, composite contracts, registration timelines, and counterclaims, the High Court chose not to delve into those issues.

Accordingly, the Division Bench allowed the appeal and set aside the impugned order dated April 5, 2023. It directed that the case be freshly placed before the Commercial Division Bench of the High Court having jurisdiction over arbitration petitions. Noting that the matter dates back to 2018, the Court also permitted the parties to seek expeditious disposal.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates