Calcutta High Court
Aditya Birla Finance Ltd vs Mcnally Bharat Engineering Co Ltd ... on 28 April, 2023
OD-3
ORDER SHEET
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
ORIGINAL SIDE
AP/632/2022
ADITYA BIRLA FINANCE LTD
-VS-
MCNALLY BHARAT ENGINEERING CO LTD AND ORS
BEFORE:
The Hon'ble JUSTICE SHAMPA SARKAR
Date: April 28, 2023.
Appearance:
Mr. Rohit Das, Adv.
Mr. Dwaipayan Basu Mallick, Adv.
Mrs. Suchismita Ghosh Chatterjee, Adv.
Mr. Abhishek Kisku, Adv.
Mr. Pranshu Paul, Adv.
Mr. Subhankar Das, Adv.
...for the petitioner
Mrs. Pubali Sinha Chowdhury, Adv.
Mr. A. Kothari, Adv.
...for the respondent nos. 2 & 4 to 8
The Court: Affidavit-of-service filed in Court is taken on record.
None appears on behalf of the respondent nos. 1 and 3.
AP/632/2022 is an application for extension of the period of time for
completion of the arbitration by the learned Arbitral Tribunal.
The mandate of the learned arbitrator expired on September 1, 2022.
Learned advocate for the respondent nos. 2 and 4 to 8 opposes such
prayer and submits that as talks of compromise are going on, the
application should not be taken up. Learned advocate further submits that a
proceeding had been initiated for termination of the mandate of the learned
Arbitrator under Section 14 of the Arbitration and Conciliation Act, 1996.
Such application was rejected and some of the respondents are planning to
prefer an appeal therefrom.
The submissions of learned advocate for the respondents appear to be
mutually destructive. If talks of compromise are going on, the question of
preferring an appeal by challenging the order passed by the Co-ordinate
Bench, would not arise.
In any event, the issue as to whether some of the respondents would
prefer an appeal challenging the order of the Co-ordinate Bench or
compromise the matter, is beyond the scope of this application.
The claimant appointed an Arbitrator in terms of the arbitration
agreement. During the pendency of the proceeding, the mandate of the
learned arbitrator expired. Consequently, the application has been filed for
extension of time for completion of the arbitration proceeding. Such
application is allowed.
However, the contention of the respondents is taken note of. In the
event of any compromise or in the event any further orders are passed in
any appeal or by any competent court, the respondents will be at liberty to
approach the learned Arbitrator for appropriate orders.
As this is simplicitor an application for extension of time to enable the
learned Arbitrator to complete the arbitration proceedings, this Court finds
that there is no reason to protract the matter by passing a direction for
affidavit-in-opposition as the allegation of the respondent nos.2 and 4 to 8
against the arbitration proceedings has been put to rest by the judgment
and order passed by a Co-ordinate Bench in AP/106/2020. The said
judgment is a matter of record.
The relevant portion of the judgment of the Co-ordinate Bench is
quoted below:
"57. The present case is of a unilateral appointment which is
factually distinguishable (as in the decisions cited) from an
arbitrator whose eligibility is compromised by any one or more
of the Entries in the Seventh Schedule. There is an obvious
difference - and so the decisions say - between an arbitrator
who is disqualified under the Seventh Schedule and an
arbitrator who himself is a party to the dispute. The two
situations are different in fact, in logic as also in the decisions
shown to the Court. The arbitration clause in the present case
belongs to the first category since the Arbitrator was appointed
by the respondent no. 1.
58. The petitioner filed an application under section 13 of the
Act challenging the Arbitrator's appointment on 11.2.2020
which is 10 months after the dispute had arisen between the
parties and 7 months after the petitioner had obtained consent
orders pursuant to Statement of Defence/affidavit filed by it.
The petitioner sought for a fresh disclosure from the Arbitrator
despite being fully aware that the Arbitrator had made such
disclosure much earlier on 12.5.2019.
59. The petitioner bombarded the arbitration with multiple
applications filed before different forums: a) the section 13
application before the Arbitrator; b) an application under
section 14 for termination of the Arbitrator's mandate; c) a
section 34 application for setting aside the Award passed by the
Arbitrator on 30.6.2020 and d) an SLP before the Supreme
Court challenging the order of the High Court dated 4.8.2020
whereby the petitioner was directed to secure an additional
amount of Rs. 40 crores. The petitioner did not secure this
amount and filed the SLP. The petitioner however withdrew the
SLP after 2 years on 2.5.2022 without complying with the order
of the High Court with regard to furnishing of security.
60. It is also significant to note that the petitioner raised an
issue of bias against the Arbitrator without waiting for the
Arbitrator to decide on the application filed under section 13 of
the Act (challenging the appointment of the Arbitrator) and
without waiting for the respondent no. 1 to file their response to
the application.
61. The petitioner has obtained the benefit of the consent orders
dated 15.7.2019 based on the statements made by the
petitioner in the Statement of Defence/affidavit whereby the
respondent no. 1 had given up the security prevailing at the
time. The petitioner therefore persuaded the respondent no. 1 to
alter its position and obtained consent orders while failing to
comply with the directions passed by the High Court on
furnishing of security.
62. The petitioners' actions amount to a clear and unambiguous
agreement, express and in writing, under the proviso to section
12(5). Any other construction would encourage a context-
abhorrent construction of the Act of 1996.
IV. Finally and for the above reasons;
63. Section 14 of the Act provides for two instances whereby the
mandate of an arbitrator shall terminate. The dispute is not
with regard to the Arbitrator withdrawing from his office or the
parties before the Court agreeing to the termination of his
mandate or the Arbitrator acting with undue delay. The
controversy is whether the Arbitrator has become de jure or de
facto unable to perform his functions by reason of the statutory
bar under section 12(5) of the Act.
64. After discussing the import of section 12(5) read with the
proviso, this Court finds and accordingly holds that section
12(5) is not applicable to this case since the alleged
disqualification does not breach any one or more of the conflict-
protections in the Entries of the Seventh Schedule. Even if it is
assumed that the Arbitrator became ineligible by reason of the
Seventh Schedule, the petitioners waived such disqualification
by their express writings, conduct and agreement as envisaged
under the proviso to section 12(5) of the Act.
65. Therefore, there is no material disclosed in the petition for
terminating the mandate of the Arbitrator. The law does not
support the petitioners' case.
66. AP 106 of 2020 is accordingly dismissed without any order
as to costs."
Under such circumstances, there are no grounds for not allowing the
prayer for extension of time to enable the learned arbitrator to complete the
proceeding and publish the award. The prayer for termination of the
mandate has been disallowed by a competent forum.
The Court directs that the learned Arbitrator shall complete the entire
proceeding and publish the Award in accordance with law, within a period of
six months from the date of communication of this order.
The application is disposed of.
All the parties are directed to act on the basis of the server copy of this
order.
(SHAMPA SARKAR, J.)
s.pal/sp3
