M/S Jairath Constructions vs Triveni Engineering And ...
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HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

AFR
 
Court No. - 07
 
Case :- ARBITRATION AND CONCILI. APPL.U/S11(4) No. - 62 of 2015
 
Applicant :- M/S Jairath Constructions
 
Opposite Party :- Triveni Engineering And Industries Ltd. And Anr.
 
Counsel for Applicant :- K.K. Arora
 
Counsel for Opposite Party :- Diptiman Singh
 

 
AND
 

 
Case :- ARBITRATION AND CONCILI. APPL.U/S11(4) No. - 72 of 2016
 
Applicant :- M/S Jairath Constructions
 
Opposite Party :- Triveni Eng. And Industries Ltd. And Another
 
Counsel for Applicant :- Kiran Kumar Arora
 
Counsel for Opposite Party :- Diptiman Singh
 

 
Hon'ble Surya Prakash Kesarwani,J.

1. Heard Sri K.K. Arora, learned counsel for the applicant and Sri Dipti Man Singh, learned counsel for opposite party.

2. This application has been filed praying for the following relief:

"It is, therefore, most respectfully prayed that this Hon'ble Court may be pleased to extend the period as specified in the order dated 6.2.2015 for disposal of the arbitration proceedings by such time as this Hon'ble Court may deem fit and proper in the circumstances of the case and/ or may be pleased to pass such other and further which this Hon'ble Court may deem fit and proper in the circumstances of the case."

3. Section 29A of the Arbitration and Conciliation Act, 1996 as inserted by Act III of 2016 (w.e.f. 23.10.2015) reads as under:

"29A. Time limit for arbitral award.--(1) The award shall be made within a period of twelve months from the date the arbitral tribunal enters upon the reference.

Explanation.-- For the purpose of this sub-section, an arbitral tribunal shall be deemed to have entered upon the reference on the date on which the arbitrator or all the arbitrators, as the case may be, have received notice, in writing, of their appointment.

(2) If the award is made within a period of six months from the date the arbitral tribunal enters upon the reference, the arbitral tribunal shall be entitled to receive such amount of additional fees as the parties may agree.

(3) The parties may, by consent, extend the period specified in sub-section (1) for making award for a further period not exceeding six months.

(4) If the award is not made within the period specified in sub-section (1) or the extended period specified under sub-section (3), the mandate of the arbitrator(s) shall terminate unless the Court has, either prior to or after the expiry of the period so specified, extended the period:

Provided that while extending the period under this sub-section, if the Court finds that the proceedings have been delayed for the reasons attributable to the arbitral tribunal, then, it may order reduction of fees of arbitrator(s) by not exceeding five per cent for each month of such delay.

(5) The extension of period referred to in sub-section (4) may be on the application of any of the parties and may be granted only for sufficient cause and on such terms and conditions as may be imposed by the Court.

(6) While extending the period referred to in sub- section (4), it shall be open to the Court to substitute one or all of the arbitrators and if one or all of the arbitrators are substituted, the arbitral proceedings shall continue from the stage already reached and on the basis of the evidence and material already on record, and the arbitrator(s) appointed under this section shall be deemed to have received the said evidence and material.

(7) In the event of arbitrator(s) being appointed under this section, the arbitral tribunal thus reconstituted shall be deemed to be in continuation of the previously appointed arbitral tribunal.

(8) It shall be open to the Court to impose actual or exemplary costs upon any of the parties under this section.

(9) An application filed under sub-section (5) shall be disposed of by the Court as expeditiously as possible and endeavour shall be made to dispose of the matter within a period of sixty days from the date of service of notice on the opposite party."

4. Although it is true that when the present application was filed, the provisions of Section 29A were not on the statute. Subsequently, the applicant filed the connected application being Arbitration Petition No.72 of 2016 on 31.07.2016 praying that either a fresh order of appointment of the same Arbitrator namely Sri Virendra Kumar Agarwal (Former District Judge) be passed or another arbitrator may be substituted to consider and decide arbitration proceedings.

5. Perusal of the leading application shows that the arbitrator was appointed by this Court under Section 11(6) of the Act by order dated 13.10.2014. Against that order, the opposite party filed a Review Application No.367351 of 2014, which was rejected by order dated 12.12.2014. It appears that thereafter the opposite party filed an application under Section 11(4) being Application No.7 of 2015, which was disposed of by this court by order dated 06.02.2015 as under:

"1. Heard Sri C.B. Gupta, learned counsel for the applicant and Sri K.K. Arora, Advocate appearing for respondent no. 2.

2. After some argument, learned counsel for the parties, stated at the Bar that order dated 13.10.2014 has already been passed by this Court in Arbitration and Conciliation Application No. 71 of 2011, requiring the Arbitrator to finalize the proceedings within 11 effective sittings but, this Court has not provided a specific time period within which proceeding should be completed.

3. With the consent of learned counsel for the parties, I direct the Arbitrator to complete proceedings within three months from the date of production of a certified copy of this order before him, subject to other conditions as already stipulated in this Court's order dated 13.10.2014 passed in Arbitration and Conciliation Application No. 71 of 2011.

4. The application is accordingly disposed of. "

6. Thus, by the afore-quoted order dated 06.02.2015, the arbitrator was directed to complete the proceedings within three months. From perusal of the copy of the order sheet, it appears that a copy of the afore-quoted order was produced before the arbitrator on 19.02.2015. but the arbitrator could not conclude the arbitration proceedings within three months and as such he observed that a request be made to the Hon'ble High Court to extend time of arbitration proceedings.

7. Submission of the learned counsel for the applicant is that Section 29A itself provides a period of 12 months to make an award by an arbitrator. It contains provision for extension of time for sufficient cause and on such terms and conditions as may be imposed by the Court. Sub-section (6) of Section 29A provides that while extending the period referred to in sub- section (4), it shall be open to the Court to substitute one or all of the arbitrators and if one or all of the arbitrators are substituted, the arbitral proceedings shall continue from the stage already reached and on the basis of the evidence and material already on record, and the arbitrator(s) appointed under this section shall be deemed to have received the said evidence and material.

8. Learned counsel for the opposite party submits that in terms of Section 15(2) of the Act, the arbitrator has become functus officio and, therefore, the period cannot be extended in view of the law laid down by Hon'ble Supreme Court in the case of NBCC Ltd. vs. J.G. Engineering Private Ltd. [(2010) 2 SCC 385] (para-16), Huawei Technologies Company Ltd. vs. Sterlite Technologies Ltd. [(2016) 1 SCC 721] (Para-8) and Yashwith Constructions (P.) Ltd. vs. Simplex Concrete Piles India Ltd. and another [(2006) 6 SCC 204] (Para-4).

9. I have carefully considered the submissions of learned counsel for the parties.

10. The judgments relied by opposite party are distinguishable on facts of the present case. These judgments do not deal with the provisions of Section 29A of the Act which is the specific provision for extension of time for making an award.

11. The provisions of Section 29A as afore-quoted leaves no manner of doubt that it provides for extension of time and substitution of arbitrator. The relief sought in the leading application is merely for extension of time and substitution of arbitrator. The connected petition has been filed as an alternative, praying for extension of time or for substitution of an arbitrator to which the provisions of sub-section (6) may be applicable.

12. Newly inserted Section 29A provides for the award to be made within a period of twelve months from the date the arbitral tribunal enters upon the reference. Sub-Section (2) provides for an incentive in the form of fees to the arbitral tribunal if the award is made within a period of six months from the date the arbitral tribunal enters upon the reference. Time for making award as provided under Sub-Section (1), may be extended with the consent of parties for a further period of not exceeding six months. In the event, award is not made within the period specified under sub-section (1) or the extended period specified under sub-section (3), the mandate of the arbitrator(s) shall terminate unless the Court has, either prior to or after the expiry of the period so specified, extend the period, provided that while extending the period, if the Court finds that the proceedings have been delayed for the reasons attributable to the arbitral tribunal, then, it may order reduction of fees of arbitrator(s) by not exceeding five per cent for each month of such delay. Thus while sub-section (2) provides an incentive for disposal of arbitration proceeding within a time bound period, sub-section (4) provides for reduction in fees of the arbitral tribunal in the event award is not made within a period of twelve months or within extended period of six months.

13. The power to extend the period is vested in the parties who may extend the period by consent upto six months. The power to extend the period vested in court under sub-section (5), is required to be exercised by the court on application of mind. The period can be extended by court only for sufficient cause and on such terms and conditions as may be imposed by the Court. Sub-section (6) further confers power to the court that while extending the period referred to in sub- section (4), it may substitute one or all of the arbitrators and if one or all of the arbitrators are substituted, the arbitral proceedings shall continue from the stage already reached and on the basis of the evidence and material already on record, and the arbitrator(s) appointed under this section shall be deemed to have received the said evidences and material. The arbitral tribunal so reconstituted shall be deemed to be in continuation of the previously appointed arbitral tribunal. To discourage the delay in conclusion of the arbitral proceedings, the court has been conferred power under sub-section (8) to impose actual or exemplary costs upon any of the parties. Thus, Section 29A of the Act is in itself a complete code with respect to the period for making award and extension of period for making award as well as substitution of one or all of the arbitrator (s).

14. On facts of the present case, I find sufficient cause for extension of time to conclude arbitration proceeding. Therefore, in terms of sub-section (4) read with sub-section (5) of Section 29A of the Act, the time for making the award by the arbitral tribunal is extended by six months from the date of presentation of a certified copy of this order before him. The arbitral Tribunal shall conclude the proceedings and make the award in accordance with law, without granting any unnecessary adjournment to either of the parties.

15. Both the applications stand disposed of with the directions made above.

Order Date :- 17.04.2018

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