TMI Blog2013 (4) TMI 412X X X X Extracts X X X X X X X X Extracts X X X X ..... arbitrator, the petitioner cannot be allowed to raise a plea that the arbitrator became functus officio on expiry of two years period or that his mandate stood terminated due to delay on the part of arbitrator. Perusal of the record also indicates that the learne arbitrator had fixed convenient date to accommodate the Advocate representing the petitioner who was also appearing in large number of other matters before the same arbitrator. It is clear that parties did not want to proceed with this arbitration in view of the pendency of various matters on similar issue in this court. The petitioner therefore could not have raised such plea of delay on the part of the learned arbitrator in completing the proceedings within time. As far as reliance placed by learned Counsel on the provisions of Micro, Small, Medium Enterprises Development Act, 2006 that the petitioner having registered under the provisions of the said Act and thus dispute, if any, between the parties is required to be resolved by the Council appointed under the provisions of the said Act is concerned, reference to the judgment of the Division bench of this court in case of M/s Steel Authority of India Ltd., would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is entitled in law to adjudicate the disputes between the parties. 2. The relevant facts for the purposes of deciding this petition are as under: (a) On 12.4.1999 and 4.5.2000, two separate contracts were entered into between the petitioner and the 2nd respondent for supply of LPG cylinders by the petitioner to the 2nd respondent for year 1999-2000 and 2000-2001. It is case of the petitioner that the 2nd respondent illegally and wrongly withheld/deducted the various amounts due and payable to the petitioner. (b) By letter dated 31.10.2000, the respondent no.2 decided to revise the basic price of 14.2 kg. Cylinder to Rs.645/- with effect from 1.7.1999. By letter dated 3.11.2000, the respondent no.2 sent a circular stating that the differential amount towards revised price in previous basic price per cylinder at Rs.645/- with effect from 1.7.1999 would be recovered from future bills submitted by the petitioner subject to final adjustment upon finalization of the cylinder prices. (c) Petitioner filed a petition under section 9 of the Arbitration Act 1996 in this Court seeking injunction against the 2nd respondent from initiating recoveries pursuant to the letters/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter. On 30.11.2005, Mr. A. M. Jagdale retired. (i) By letter dated 23.1.2007, the 2nd respondent proposed to appoint Mr. C.P. Joshi as sole arbitrator. The petitioner objected to the said appointment by letter dated 31.1.2007. By letter dated 29.11.2007, the respondent no.2 appointed Mr. A.C. Das, Dy. General Manager (M I) as sole arbitrator. By letter dated 10.1.2008, the learned arbitrator Mr. A.C. Das fixed a hearing on 28.1.2008. (j) The petitioner by letter dated 27.1.2008 objected to the appointment of Mr. A.C. Das alleging that the respondent no.2 had forfeited its right to appoint another arbitrator in terms of clause 22(g) of the terms and conditions of the contract. On 8.2.2008, the petitioner filed an application under sections 13,14 and 16 of the Arbitration Act 1996 before the learned arbitrator. (k) It is case of the petitioner that on 8.2.2008, the petitioner was registered as Micro Enterprise under the provisions of the Act of 2006. The said Act came into effect on 2.10.2006. (l) By letter dated 12.3.2008, the Director (Marketing) of the respondent no.2 appointed Mr. R. Suresh, Dy. General Manager, the respondent no.2 as sole arbitrator in view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be entitled to raise any objection or protest thereto under any circumstances whatsoever. 4. Mr. Mehta, leaned Counsel for the petitioner placed reliance upon the section 24 of the said Act of 2006 in support of his plea that the provisions of the said Act would have overriding effect over the Arbitration Act 1996. Section 24 of the said Act of 2006 reads thus: Overriding effect- the provisions of sections 15 to 23 shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. 5. Learned Counsel for the petitioner submits that under clause 22(g) of the contract, it was mandatory on the part of the learned arbitrator to make an award in writing and to publish within two years after entering upon the reference or within such extended time not exceeding a further period of one year as the parties shall by writing agree. Learned Counsel submits that 3 years period has already expired from the date of initial appointment of the learned arbitrator by the 2nd respondent. It is submitted that the first arbitrator was appointed by the respondent no.2 on 10.6.2003 who had accepted his appointment by letter dated 25.6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng a number of proceedings, the arbitrator was unable to conclude the proceedings within the time fixed by the High Court. The arbitration clause in the contract enables the arbitrator to extend the time for making and publishing the award by mutual consent of the parties. From a perusal of the documents before us, we notice that the parties mutually agreed to extend the time till 31.8.2005 for making and publishing the award, which was further extended by the parties till 30.9.2005 on account of the arbitrator having failed to conclude the proceedings within the previous date fixed by the parties. But the arbitrator having failed to do so by 30- 9-2005, the respondent moved the High Court to terminate the mandate of the arbitrator on account of his failure to publish the award within the time fixed by the parties. We are of the opinion that the High Court was perfectly justified in doing so on an application filed by the respondent before it. 11. Quite interestingly, it has come to our notice that the arbitrator in question had appeared before the High Court and submitted that the award was ready but the same could not be published on account of the interim order passed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustified in being late. The High Court had thus correctly fixed the time for the arbitration to be concluded within a period of six months from the appointment of the fourth arbitrator Shri A.K. Gupta considering the time that had been spent for the arbitration process prior to Mr. Gupta's appointment. 15. That apart, even assuming that the arbitration process involved highly technical and complex issues, which were time consuming, even then, it was then for the arbitrator or for the parties to approach the Court for extension of time to conclude the arbitration proceedings which was not done either by the arbitrator or by any of the parties. 16. As had been correctly noted by the High Court in its impugned judgment, there was no cogent reason for the delay in making and publishing the award by the arbitrator. He already had the relevant materials at his disposal and could base his findings on the observations made by three arbitrator who were appointed prior to him. The arbitrator was bound to make and publish his award, within the time mutually agreed to by the parties, unless the parties consented to further enlargement of time. Therefore, the condition precedent for e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther party. Where however the Arbitration agreement itself provides the procedure for enlargement of time and the parties have taken recourse to it, and consented to the enlargement of time by the arbitrator, the Court cannot exercise its inherent power in extending the time fixed by the parties in the absence of the consent of either of them. 23. The counsel for the appellant further contended that the High Court could not have terminated the mandate of the arbitrator on the ground that the award was passed beyond the time limit fixed by it. It is clear from an apparent perusal of the judgment of the High Court and the records before us that the High Court had not terminated the mandate of the arbitrator on the ground that the arbitrator could not pass the award within the time fixed by it vide its order dated 20th of September, 2004. In fact, the arbitrator had continued to proceed with the arbitration procedure after the time fixed by the Court had expired on account of the mutual consent of the parties to extend the time limit. Such an action was clearly warranted under the arbitration agreement in force between the parties. On the contrary, the arbitrator had ceased to have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s terminated only because of the fact that the arbitrator having failed to conclude his proceedings within time did not warrant to be continued as an arbitrator in the absence of the consent of both the parties. It is clear from a bare reading of Sub-section 1(a) of Section 14 of the Act, the mandate of an arbitrator shall terminate if he fails to act without undue delay. 7. Mr. Mehta, learned Counsel placed reliance upon the judgment delivered by the learned Single Judge of this court in case of Teltech Instrumentation Pvt. Ltd. Vs. Bharat Petroleum Corporation Limited [ (2012) (4) Mah. L.J. 355] and reliance placed on para-9, 11 to 17 which read thus: 9 It is relevant to note Clause 21 (a) and (b) of the terms and conditions, which reads as under: 21(a) Any dispute or difference of any nature whatsoever any claim, crossclaim, counterclaim or set off of the Corporation against the Contractor or regarding any right, liability, act, omission or account of any of the parties hereto arising out of or in relation to this agreement shall be referred to the Sole Arbitration of the Director (Marketing) of the Corporation or of some officer of the Corporation who may be no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whatsoever. 11. The learned counsel appearing for the Respondents has strongly relied on the Judgment of this Court Jayesh H. Pandya Anr. Vs. Subhtex India Limited Ors. whereby referring to Sections 4,11,14 and 16 it is observed as under: Parties to an arbitration agreement are entitled to stipulate the time within which an arbitral award is to be rendered. In the present case, the time which was prescribed was four months. In such a case, however, where a party intends to assert a rigid adherence to the time prescribed by the arbitration agreement, it must at the earliest opportunity make its intention known to ensure compliance with a rigid standard as to time. The petitioners stood by and allowed the Arbitrator to fix a time schedule for the filing of pleadings. If they had a serious intent of not allowing the proceedings to continue beyond the period of four months, it was the duty of the petitioners to inform the Arbitrator at the earliest when the time schedule was fixed by the Arbitral Tribunal. Counsel appearing on behalf of the petitioners, in fact, fairly stated before the Learned Arbitrator on 27th August, 2007 that the contention which was sought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ically terminated after the expiry of the time fixed by the parties to conclude the proceedings. Arbitration is an efficacious and alternative way of dispute resolution between the parties. There is no denying the fact that the method of arbitration has evolved over the period of time to help the parties to speedily resolve their disputes through this process and in fact the Act recognizes this aspect and has elaborate provisions to cater to the needs of speedy disposal of disputes. The present case illustrates that inspite of adopting this efficacious way of resolving the disputes between the parties through the arbitration process, there was no outcome and the arbitration process had lingered on for a considerable length of time which defeats the notion of the whole process of resolving the disputes through arbitration. 7. It is true that apparently there is no provision under the Act for the Court to fix a time limit for the conclusion of an arbitration proceeding, but the Court can opt to do so in the exercise of its inherent power on the application of either party. Where however the Arbitration agreement itself provides the procedure for enlargement of time and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directed the Arbitrator to adjudicate upon the dispute within 6 months from the date of receipt of the order. Thereby also contended in view of the terms of the contract continuation of the Arbitration Proceedings cannot be stated to be bad in law, merely because time schedule was not adhered. 14. Before adverting to the legal issue, it is necessary to consider the Arbitration terms and conditions between the parties. As recorded, apart from peremptory condition to complete the Arbitration proceedings within two years and/or within extension period of 12 months which in the present case admittedly would expire by efflux of time and in view of clause itself. It is relevant to note that the parties have agreed specifically that in case the Arbitrator appointed by the Director (Marketing) and/or Respondents, if transferred or vacated its office unless such other Officer/Arbitrator is appointed, he shall continue the Arbitration proceedings notwithstanding his transfer. It is also specifically agreed that if such officer is unable and/or refused to act and vacate the office and/or expressed inability and/or refused to act, the Respondents shall designate another person to act as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preme Court recently, I am not accepting the submission that the appearance of the Petitioners before the subsequent Arbitrators, even in the year 2007, 2008 and 2009 that itself is nothing but the acquiescence or waiver of the basic clause. A time, if extended by consent of the parties, if provided, is one thing but if the Agreement clauses itself mandated that Arbitration proceedings should be concluded within two plus one year, and further provide that even subsequent Arbitrator should continue from the point at which his/her predecessor left the Arbitration, itself means the intension was that it should be finished within three years from the date of commencement. In the present case, it was in the year 2002. Therefore, further proceedings, in my view, after 2005 even if any, is unsustainable. 16. There is no provision under the Arbitration Act to condone the delay when agreement between the parties binds them to see that the Arbitration proceedings should be finished within time prescribed. This time restriction is well within the scope and purpose of Arbitration Act, at national and international arbitrations. 17. I would have, in a given case, refer the matter to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eement extending the term. Therefore, the award had to be made within two years. Admittedly, the award has been made beyond that date. Threfore, in view of the law laid down by the Supreme Court in its judgment in NBCC Ltd., referred to above, the award will have to be set aside. The award impugned in the petition is, therefore, set aside. Petition disposed of. No order as to costs. 9. Mr. Mehta, learned Counsel placed reliance upon the judgment delivered by the Division Bench of this court on 2.5.2012 in the case of Bharat Oman Refineries Ltd. Vs. Mantech Consultants Pvt. Ltd [(2012) (2) Arb. L.R. 482] in Appeal No.702 of 2011. Mr. Mehta, learned Counsel submits that the Division Bench of this court has considered the judgment of the Supreme Court in case of N.B.C.C.Ltd (Supra), judgment of the Division Bench in case of M/s Snehdeep Auto Centre Vs. Hindustan Petroleum Corporation Ltd. in appeal no.143 of 2012 decided on 16.4.2012, judgment of the learned Single Judge in the case of Teltech Instrumentation Pvt. Ltd.(Supra) and various other judgments and after considering the same in para 17 to 23, 27 and 28 of the said judgment dismissed the appeal. Para-17 to 23 and 27 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the arbitration proceedings. In our view, therefore, it can be construed as an act of waiver or active participation in the arbitration proceedings as after the arguments are over, there was no question of any other party to take part in the arbitration proceedings and simply because stamp paper might have been produced by the respondent or might have written a letter of acknowledgement after receipt of the arbitration award itself cannot be treated as an act of waiver in any manner. In any case, after the arguments were concluded, the arbitrator gave his award after about 2 years and four months. As per the clause in the arbitration agreement, even extension was permissible only for one year and admittedly the award was not published within the extended time. In view of the above, the arbitrator becomes functus officio to proceed further and it cannot be said that the respondent had participated in the arbitration proceedings as after conclusion of arguments, there is no question of participating further in the proceedings. Even sending a stamp paper to the arbitrator can be said to be a ministerial act on the part of the respondents and it cannot be said to be in any manner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned single Judge regarding setting aside the award is required to be upheld. It cannot be said that the respondent had waived its right of proceeding further with the arbitration proceedings as there has been inordinate delay after conclusion of argument and after the arguments were concluded there was no question of either side to have further participation and it can never be said to be a participation in a pending proceeding before the Arbitrator. Since the award of the arbitrator can be said to be against the mandate given to him in the agreement, the subsequent proceeding after conclusion of arguments, in our view, cannot be said to be legal and valid and, therefore, on the ground of lacking inherent jurisdiction at a later stage i.e. after conclusion of argument and before publishing the award, the point in issue can certainly be raised in a petition under Section 34 of the Act. 20. The object and the scheme of the Arbitration Act is to secure expeditious resolution of disputes. Its foundation is based upon National and International Commercial Arbitration practice. The Arbitrator is required to adjudicate the disputes in view of the agreed terms of contract and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... like this, the party is bound by the clauses and so also the arbitrator. Once the agreed period is over, they even would not be in a position to appoint or substitute a new Arbitrator, unless by fresh consent in writing if they fail to appoint a new Arbitrator, if required, during the agreed period of 2+1 year. We are not concerned with the fresh agreement between the parties to settle the dispute after expiry of the agreed period of three years. Therefore the respondent has no choice and/or option but to challenge the Award even on these grounds, apart from substantial delay in passing the Award in Section 34 of the Arbitration Act. 27. In Snehadeep, (Supra) the Written statement was filed before the Arbitrator, though period was expired. Both the parties, participated, before the Arbitrator, even after expiry of mandatory period. The facts are totally different here. The clause also very distinctive in the present case. There is no conflict of law in view of clear distinguishable facts. The law is binding if facts are similar and not when facts are different. In the present case such objection was raised and the Court had decided the same. Even the challenge about mandate o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23016 of 2011, and particularly para-5 and 9 which read thus: 5. Learned counsel would contend that the reading of section 18 of the Act, 2006 makes it clear that insofar as it CWP No.23016 of 2011 (O M) and connected cases [6] makes provision for conciliation, the provisions of sections 65 to 81 of the Act, 2006 as applicable, it should be so read that even the provision under section 80 of the Act, 1996 that bars a conciliator for acting as an Arbitrator must be applied. According to the learned counsel, section 18(2) itself allows for a full applicability of sections 65 to 81 and therefore, the non-obstante clause in section 18(1) ought not be used to eclipse section 80 itself. In my view this is not a correct reading of section 80. The Act, 2006 itself contains provisions, which are at once consistent with the Act, 1996. It must be remembered that the Act, 2006 is also an Act of Parliament and it is a special enactment meant for a particular class of persons only namely the Micro, Small and Medium Enterprises and for facilitating the promotion, development and enhancing their inter se competitiveness. The Act insofar as it contains a specific provision for conciliation a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be informed the future date of hearing. The petitioner shall have his recourse only under the Act, 206 and with reference to the procedures for which the Act, 2006 does not make provision for conducting the arbitral process, he shall entitled to resort to the Act, 1996 to the extent to which it is applicable. 12. Mr. Tulzapurkar, learned Senior Counsel appearing on behalf of the 2nd respondent on the other hand submits that there was dispute between the LPG cylinders manufacturers who were more than 75 and the respondent no.2 which was referred to arbitration which disputes were similar in nature. It is submitted that some of the parties appointed common Advocate to represent them before the learned arbitrator. In more than 11 matters pleadings were completed by the parties and even evidence was recorded by the learned arbitrator. The parties had filed written submissions in those cases and thereafter matters were closed for passing award. In all those 11 matters, on 29.11.2005 the learned arbitrator made awards wherein the claim of the LPG Cylinders manufacturers were upheld and the arbitrator directed the respondent no.2 to pay the amounts as set out in the award to such L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rse of action in the matter. The said meeting was attended by the Advocate representing the petitioner. Learned senior counsel points out that the Advocate who was representing the petitioner in this matter was also representing other LPG cylinders manufacturers in similar matters before the learned arbitrator which were placed for hearing on the same date for the convenience of the said Advocate who was based in Delhi and had to travel to Mumbai for hearing. In the said meeting, the petitioner made a statement that interim application made by the petitioner would not be pressed at that stage and the same would be taken up alongwith the statement of claim as preliminary objection. It was pointed that during the course of hearing, Advocate for the parties were not aware of the exact status of the pleadings of the matters which were listed for hearing on 4.4.2011. The Advocate for the petitioner agreed to file statement of claim along with all documents within a period of 4 weeks or intimate status of claim if already filed and the Advocate for the respondents also agreed to file reply to the statement of claim along with documents in 4 weeks from the receipt of statement of claim as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... already completed parties undertake to appraise the exact status thereof within a period of 4 weeks. It is further stated in the said affidavit that the parties further agreed to extend the time to complete arbitration proceedings and at the end of the meeting, discussion between the parties was duly recorded and the minutes of the meeting were prepared. After finalization of minutes of meeting, the secretary of the learned arbitrator took out a print of the said minutes which were given to the learned arbitrator. All persons present in the said meeting including Mr. D.H. Shetye have signed on the said minutes. The Advocate for the petitioner also signed on the said minutes. It is stated that thereafter photocopy of the said minutes were taken out and one copy each was handed over to the Advocate for the petitioner as well as the Advocate for the respondent no.2 by the learned arbitrator. 16. Mr. Tulzapurkar, learned senior counsel submits that in view of the dispute raised by the petitioner about the contents of the minutes of meeting recorded by the learned arbitrator held on 4.4.2011 or that same was not received by the petitioner or his Advocate, the learned arbitrator fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ormed that the respondent no.2 had filed cross appeals in the said matters. It is further stated in the said affidavit that Advocates for the claimants and Advocate for the respondents submitted that the statement of claim and reply along with documents would be filed and both parties agreed in the meeting that the pleadings relevant to the issue involved will be completed at an early date and the parties have extended time for completion of the arbitration proceedings. The learned arbitrator further deposed that after considering all the facts narrated in the said affidavit, minutes were drawn up by him and handed over to the parties immediately at the end of the meeting personally to the Advocates for the petitioner and the respondents. In the said affidavit, the learned arbitrator annexed copy of the minutes of meeting which shows signature of Mr. Pravin Mahajan on behalf of the claimants (petitioner herein) and Advocate for the respondent and their officers. The learned arbitrator also stated that neither the petitioner nor the LPG cylinders manufacturers or their Advocate complained him about the non receipt of the said minutes of meeting held on 4.4.2011. The learned arbitrat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner having extended time by giving consent to the learned arbitrator, it has waived its right to object the continuation of the arbitration proceedings. Para 13 and 14 of the said judgment read thus: 13. In the present case, the appointment of Mr.Justice V.D. Tulzapurkar was by an order dated 14th November 2003. The sole Arbitrator held a meeting on 23rd December 2003. Ordinarily, the period of four months for the conclusion of the arbitral proceedings would have commenced from this date where the order of the High Court and the arbitration agreement dated 28th April 2000 were brought to the notice of the Learned Arbitrator. After the dismissal of the Writ Petition filed by the Petitioner on 20th January 2004, the Petitioners moved a Special Leave Petition before the Supreme Court in which further proceedings were stayed on 8th March 2004. But for the order of stay, the period of four months for Mr.Justice V.D. Tulazapurkar to conclude the proceedings would have expired on 23rd April 2004. The Supreme Court dismissed the Special Leave Petition on 24th April 2007. The contention of the Petitioners is that the Learned Arbitrator is in error in holding that the period of f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the claimants had not filed a compilation of documents. Be that as it may, the Learned Arbitrator granted a further extension till 20th July 2007 for filing the Written Statement since there was a delay on the part of the claimant. Right from 4th May 2007, when the first meeting took place before Mr.Justice S.N. Variava, until 27th August 2007, there was no indication on the part of the Petitioners that they were going to punctiliously hold the parties to the proceedings down to the stipulation of four months contained in the arbitration agreement dated 28th April 2000. On the contrary as the facts which have been disclosed before the Court would show that on 4th May 2007 the Petitioners were initially granted time until 6th July 2007 to file their Written Statement since the claimant was to file the Statement of claim on 20th June 2007. Parties to an arbitration agreement are entitled to stipulate the time within which an arbitral award is to be rendered. In the present case, the time which was prescribed was four months. In such a case, however, where a party intends to assert a rigid adherence to the time prescribed by the arbitration agreement, it must at the earliest oppo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l protect the object which Parliament had in view. 14. There is no merit in the petition. The Petition shall accordingly stand dismissed. 19. Mr. Tulzapurkar, learned senior counsel placed reliance upon the judgment of this court in the case of M/s Snehdeep Auto Centre Vs. Hindustan Petroleum Corporation Ltd. (supra) in which the Division Bench of this court dealt wity the judgment of the Supreme court in case of N.B.C.C. Ltd (supra). Reliance is placed on para-6 to 8 and 12 of the said judgment, which read thus: 6. It is an admitted position that award was passed after the period provided for in the agreement was over. The award was passed on April 10, 2008 after the period specified in the agreement both initial and extendable for making the award was over. However, to our mind the Judgment of the Apex Court in the case of N.B.C.C Ltd., (supra) relied upon by the learned single Judge does not lay down an absolute proposition that moment the award is made after the stipulated period then it must be set aside. In that case the six months period was provided by the High Court by its order and not by agreement between the parties. The respondent in that case had moved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling written submissions cannot be termed as formal steps but were integral part of the proceedings before the arbitrator. The respondents had opportunity, both at the time of making oral submissions on December 14, 2006 and December 21, 2006 to raise the contention that the mandate of the arbitrator has come to an end by efflux of time. Respondent also had an opportunity to put on record this contention in the written submissions filed on March 12, 2007. This conduct of the respondent amounts to clear waiver on their part to the condition of time limit stipulated in the agreement. 12. Thus, in conclusion we are not in agreement with the learned single Judge that the present arbitration Petition needs to be automatically allowed because the award of the arbitrator was passed after the period stipulated in the agreement had come to an end without looking into any other aspect. Having considered the facts narrated above, we find that the conduct of the respondent is such that a clear inference can be drawn that it had waived the time limit stipulated in the agreement and the objection regarding the jurisdiction of the arbitrator. 20. Mr. Tulzapurkar, learned senior counse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "19. Mr. Rajiv Nayar in support of his contention that the petitioner will be deemed to have waived its right to object within the meaning of Section 4 of the Act, has sought support from the Supreme Court decision in the case of Narayan Prasad Lohia v. Nikunj Kumar Lohia and Ors., MANU/SC/0114/2002 (SO ; Inder Sain Mittal v. Housing Board, MANU/SC/0117/2002; and a Karnataka decision in the case of K.S.R.T.C. v. M. Keshava Raju, MANU/KA/0732/2003. In Narayan Prasad Lohia's case (supra), the Court considered the question of waiver of a right to object by a party in relation to the constitution of an arbitral tribunal and held that a conjoint reading of Sections 10 and 16 shows that an objection to the composition of the Arbitral Tribunal is a matter which is derogable. The Court further ruled that it is derogable because a party is free not to object within time prescribed in Section 16(2) of the Act and if a party chooses not to so object, there will be a deemed waiver under Section 4. The Court repelled the submission that Section 10 is a non-derogable provision. 20. Inder Sain Mittal's case (supra), was considered under the provisions of the 1940 Act and, therefore, is not o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings after the expiry of the stipulated period. Not only that, no objection was raised about the continuation of the Arbitral proceedings but the petitioner continued to participate in substantive proceedings before the Arbitrator up till the final stage of the proceedings. In the opinion of this Court, these facts and circumstances are so glaring so as to attract the doctrine of waiver within the meaning of Section 4 of the Act. It is a settled legal position that waiver will be deemed to have taken place when a party knowing that an irregularity has been committed, did not object to the same but participated in the Arbitration proceedings without protest. Section 4 of the 1996 Act corresponds to Article IV of 'UNCITRAL Modern Law'. The principle of waiver is not new in the Arbitration law as it was so far contained in the case law and has been codified in the statute. Besides, in the opinion of the Court the right to object the continuance of the proceedings on the ground of expiry of the stipulated period is one which falls in Part-I of the Act and which is derogable. The object of providing time limit for rendering an Award by the Arbitrator is aimed at expeditious resolu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent view on question of law but has only distinguished the facts of that case and thus reliance placed by the petitioner on the judgment of the Division Bench in the case of Bharat Oman Refineries is of no assistance to the petitioner. 22. On the issue raised by Mr. Mehta that the provisions of Micro, Small and Medium Development Act would have overriding effect and thus from the date of the said Act having come into effect even pending proceedings before the learned arbitrator appointed under the provisions of the Arbitration and Conciliation Act 1996 can be referred to the Council appointed under the provisions of the said Act of 2006 is concerned, Mr. Tulzapurkar placed reliance upon the judgment of the Division Bench of this court in the case of M/s Steel Authority of India Ltd. and Anr. Vs Micro, small Enterprises Facilitation Council through Joint Director of Industries [AIR 2012 Bombay 178) in support of his plea that it cannot be said that Section 18 of the said Act provides for forum of arbitration and independent agreement entered into between the parties still cease to have effect. It is thus submitted that all pending arbitrations based on arbitration agreement wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 18 provides for a forum of arbitration an independent arbitration agreement entered into between the parties will cease to have effect. There is no question of an independent arbitration agreement ceasing to have any effect because the overriding clause only overrides things inconsistent therewith and there is no inconsistency between an arbitration conducted by the Council under Section 18 and arbitration conducted under an individual clause since both are governed by the provision of the Arbitration Act, 1996. 12. At this stage, it is necessary to deal with another contention raised on behalf of the Council by Mrs. Dangre, the learned Addl. Government Pleader. According to the learned Addl. Government Pleader, the procedure of conciliation contemplated by Section 18 (2) of the Act is a procedure, which has been specially enacted for the purposes providing a Forum for conciliation which itself is capable of setting a dispute between the micro, small and medium enterprises and any other party. We find that the arbitration agreement in question, like most arbitration agreements, does not contain a specific provision for conciliation and, therefore, it would be necessary for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re purpose that the arbitration proceedings shall be disposed of expeditiously has been frustrated in this case and thus the mandate of the learned arbitrator shall be declared as termimnated. 25. Mr. Tulzapurkar, learned senior counsel for the respondent no.1 points out from the order passed by the Supreme Court in the case of Bharat Oman Refineries that the Supreme Court has issued notice and in the meantime has stayed the proceedings filed by the parties having succeeded in the said matter under section 11 of the Arbitration Act 1996. He thus submits that the proceedings under section 11 of the Arbitration Act 1996 having been stayed by the Supreme court, the judgment of the Division bench in the case of Bharat Oman Refineries is subjudice before the Supreme Court and thus no reliance can be placed by the petitioner on the said judgment of Division Bench of this Court. 26. On perusal of the records in the present proceedings, it is clear that on acceptance of appointment by the first arbitrator Mr. A.M. Jagdale was on 22.6.2003. The petitioner had filed an application under Section 12 of the Arbitration Act 1996 challenging his appointment. The respondent no.2 filed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for adjudication before Division Bench of this court. 28. The learned arbitrator fixed a meeting on 28.1.2008 to decide further course of action when the Advocate for the petitioner and the Advocate for the 2nd respondent informed the learned arbitrator that pleadings in the matter on behalf of the parties would be completed and requested to fix date of hearing after pleadings were filed for deciding further course of action in the matter. The learned arbitrator accordingly directed respective parties to complete the pleadings. No objection was raised by the petitioner that the respondent no.2 had forfeited its right to appoint another arbitrator in terms of clause 22(g) of the agreement prior to 28.1.2008. 29. It appears that after setting aside of the awards in 9 matters by this court and in view of the appeals filed by both parties being pending in this court, the learned arbitrator fixed a meeting on 4.4.2011 for deciding the further course of action in the matter. It is not in dispute that the said meeting was attended by the petitioner through his Advocate Mr. Pravin Mahajan. Records of the proceedings reveals that the said Mr. Pravin Mahajan who was representing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng held on 4.4.2011. The learned arbitrator in his affidavit deposed that Mr. Pravin Mahajan, Advocate had by his email dated 25.3.2011 had requested the learned arbitrator to defer the hearing in all the 15 matters in which he was appearing including this matter to 4.4.2011 as other 10 matters were already scheduled before the learned arbitrator on 4.4.2011 where the same Advocate was appearing for LPG cylinders manufacturers. The learned arbitrator accordingly rescheduled the meeting on 4.4.2011 along with other 10 matters wherein Mr. Pravin Mahajan, Advocate was appearing. In the said affidavit, the learned arbitrator also deposed about agreement about filing of pleadings and to appraise learned arbitrator of exact status of the arbitration proceedings. The learned arbitrator also deposed that the parties had agreed to extend time for completion of arbitration proceedings. It was also stated in the said affidavit that minutes of meeting was drawn up and handed over to the parties immediately at the end of the meeting personally through the Advocates of the petitioner and the respondents. The learned arbitrator also annexed copy of the minutes of meeting to the said affidavit hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the Supreme Court though the parties had extended time to make an award, the learned arbitrator failed to conclude the proceedings within extended time. One of the party therefore filed proceedings in the High court for termination of mandate of the arbitrator on account of his failure to publish the award within time fixed by the parties. In the facts of that case the Supreme Court held that that the arbitrator was bound to make and publish his award within time mutually agreed by the parties unless the parties consented to further enlargement of time. It is held that the condition precedent for enlargement of time would depend only on the consent of the parties i.e. to say, that if the parties agree for enlargement of time. If consent is not given by the parties, then the authority of the arbitrator would automatically cease to exist after the expiry of the time limit fixed. It is thus clear that if both parties have enlarged time to make an award, the arbitrator does not cease to have jurisdiction to proceed with the matter and to make an award. 34. The question that arises for consideration of this court is whether any parties have consented for enlargement of time befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h was subject matter in case of Snehadeep Auto Centre (supra) was totally different and distinguished in the case before the division bench in case of Bharat Oman Refineries. Special leave petition against the order passed in the case of Bharat Oman Refineries is pending. By order dated 31.8.2012, notice is directed to be issued by the Supreme Court and the Supreme Court has stayed the proceeding filed under section of 11 of Arbitration and Conciliation Act 1996 in this court. 36. In case of Snehadeep Auto (supra), the Division bench of this court after considering the judgment of the Supreme Court in the case of NBCC Ltd has held that parties having not taking clear and unambiguous stand before the learned arbitrator that he could not proceed to declare the award as his mandate has come to an end, such conduct amounts to clear waiver to the objection of time limit being mandatory requirement for pronouncement of the award. The Division bench also held that in view of the conduct of the respondent showing clear waiver on their part in the time limit in the agreement, a clear inference can be drawn that it had waived the time limit stipulated in the agreement and the objection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dge of this Court. 40. Perusal of the records indicates that the petitioner had raised objection of jurisdiction from beginning by filing application under section 12 and 13 even before expiry of the two years period. Petitioners had also filed application for discovery and inspection. In view of such applications filed by the petitioner raising issue of jurisdiction of the arbitrator, in my view the petitioner cannot be allowed to raise a plea that the arbitrator became functus officio on expiry of two years period or that his mandate stood terminated due to delay on the part of arbitrator. 41. Perusal of the record also indicates that the learned arbitrator had fixed convenient date to accommodate the Advocate representing the petitioner who was also appearing in large number of other matters before the same arbitrator. It is clear that parties did not want to proceed with this arbitration in view of the pendency of various matters on similar issue in this court. The petitioner therefore could not have raised such plea of delay on the part of the learned arbitrator in completing the proceedings within time. 42. As far as reliance placed by Mr. Mehta, learned Counse ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
