TMI Blog2010 (1) TMI 1140X X X X Extracts X X X X X X X X Extracts X X X X ..... such appointment must be set aside - C.A. 8 OF 2010 - - - Dated:- 5-1-2010 - Tarun Chatterjee, and Aftab Alam, JJ. JUDGMENT 1. Leave granted. 2. These appeals are directed against the final Judgments and orders dated 23rd of March, 2006, and 21st of September, 2007 passed by the High Court at Calcutta in G.A. No.235 of 2006 arising out of A.P. No. 361 of 2005, whereby the High Court had allowed the petition of the respondent and thereby terminated the mandate of the arbitrator and thus appointed a new Arbitrator for deciding the dispute between the parties. 1 3. In order to appreciate the controversy existing between the parties, it may be important to narrate the facts as emerging from the case made by the appellant, which are as follows :- In the month of December 1992, the appellant had issued notice inviting tender for construction of terminal buildings and various ancillary jobs at the Bhubaneshwar Airport at Bhubaneshwar, Orissa. The respondent submitted its offer, which was accepted by the appellant. On 30th of March, 1993, the appellant entered into a contract with the respondent for construction of the aforesaid work at the Bhubaneshwar Airport for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nclude the arbitration proceeding in terms of the order of the High Court before Shri A. K. Gupta, who was appointed as the sole arbitrator by the Chairman-cum-Managing Director of the company had by then already expired. However, both the parties extended the time to conclude the arbitration proceeding and to pass an award accordingly, the time was enlarged for conclusion of the arbitration to 30th of September, 2005. It is also an admitted position that the time limit so fixed i.e. arbitration must be concluded and award must be passed within 30th of September, 2005, could not be adhered to by the arbitrator and he failed to publish the award within this period. About three months after the expiry of the period of concluding the proceeding and passing of the award, it was the respondent who moved an application before the High Court for a declaration that the mandate of the arbitrator had already stood terminated. We may keep it on record that the appellant had not filed any application for enlargement of time for the conclusion of the arbitration proceeding or to pass the award after the expiry of the period. On 22nd of December, 2005, the High Court, vide an interim order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plete his proceedings by 27th of March, 2005 i.e. six months from the date of his appointment. It is pertinent to mention that the appellant did not file any appeal against the above-mentioned order of the High Court. Therefore, it may be taken that the appellant had accepted the aforesaid order of the High Court and thereby accepted its decision to fix the time of the arbitration proceedings to be mandatorily concluded within six months from the date of appointment of the arbitrator. The order, thus having assumed finality, a time limit was imposed for the conclusion of the arbitration proceedings. Thus, the appellant is estopped from raising any objection against the imposition of the time limit as had been done by the Court in this respect. From the records before us, we have noticed that inspite of conducting 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation, could not be resolved and the process lingered on. 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. The contention of the appellant therefore cannot be justified that since the dispute was highly technical in nature, it had to be dealt with elaborately by the arbitrator and thus, he was justified 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... already expired and it could only be extended by a mutual consent of the parties according to the arbitration agreement. It has been correctly observed by the High Court that the arbitrator had become functus officio in the absence of extension of time beyond 30th of September, 2005 to make and publish the award. After the said date, the arbitrator had no authority to continue with the arbitration proceedings. The learned counsel appearing on behalf of the appellant argued that in the absence of any statutory period prescribed under the Act for rendering an award, the direction of the Court to conclude the arbitration proceedings within the time prescribed by it, would not make an award passed beyond the time so prescribed, null and void. He further argued that the High Court was wrong in not extending the time fixed by it in the order dated 20th of September, 2004, for early conclusion of the arbitration proceedings and terminating the mandate of the arbitrator when neither the Act nor the arbitration agreement prescribed any time for making and publishing the award. 6. The learned counsel appearing on behalf of the appellant had drawn our attention to a decision of this Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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. 8. 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 20 th 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 agree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icable to the appointment of the arbitrator. Accordingly, his contention was that the High Court had erred in holding that the appointing authority had not appointed an arbitrator while terminating the mandate of the arbitrator in the same proceedings. It is necessary to mention here Section 14 and Section 15 of the Act for the sake of convenience. Section 14: Failure or impossibility to act - (1) The mandate of an arbitrator shall terminate if- (a) He becomes de jure or de facto unable to perform his functions or for other reasons fails to act without undue delay; and (b) He withdraws from his office or the parties agree to the termination of his mandate. (2) If a controversy remains concerning any of the grounds referred to in clause (a) of subsection (1), a party may, unless otherwise agreed by the parties, apply to the court to decide on the termination of the mandate. (3)If, under this section or sub-section (3) of section 13, an arbitrator withdraws from his office or a party agrees to the termination of the mandate of an arbitrator, it shall not imply acceptance of the validity of any ground referred to in this section or sub-section (3) of section 12. Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad not agreed to the extension of the mandate of the arbitrator failing which, the mandate was automatically terminated. 12. Further, Subsection (2) of Section 14 of the Act stipulates that if a controversy remains concerning any of the grounds referred to under clause (a) of subsection 1, a party may, unless otherwise agreed to by the parties, apply to the Court to decide on the termination of the mandate. Thus the respondent rightly applied to the Court for the termination of the mandate of the arbitrator pursuant to the provisions of this section, and the Court was within its jurisdiction to decide accordingly. 13. However, the contention of the Appellant that the High Court had erred in not allowing the appellant to decide upon the appointment of an arbitrator pursuant to sub-section (2) of Section 15 of the Act must be accepted. Section 15 (2) of the Act provides that where the mandate of an arbitrator terminates, a substitute arbitrator shall be appointed according to the rules that were applicable to the appointment of the arbitrator replaced. In this connection, it would be appropriate to refer to the relevant portion of the impugned judgment of the High Court, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (10) SCC 240] in which a decision of this Court in Ace Pipeline Contracts Private Limited vs. Bharat Petroleum Corporation Limited [(2007) 5 SCC 304] was also referred to, the application for appointment of an Arbitrator under Section 11 of the Act should be referred back to the High Court for fresh decision. Arijit Pasayat, (as His Lordship then was), heading a three-Judge Bench of this Court after considering the scope and object of the Act particularly Section 11 of the Act concluded the following :- A bare reading of the scheme of Section 11 shows that the emphasis is on the terms of the agreement being adhered to and/or given effect as closely as possible. In other words, the Court may ask to do what has not been done. The court must first ensure that the remedies provided for are exhausted. It is true as contended by Mr. Desai, that it is not mandatory for the Chief Justice or any person or institution designated by him to appoint the named arbitrator or arbitrators. But at the same time, due regard has to be given to the qualifications required by the agreement and other considerations. xxxxxxxxxxxxxx In all these cases at hand the High Court does not appear to ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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