Calcutta High Court
India Media Services Pvt. Ltd vs Sbpl Infrastructure Limited on 1 September, 2023
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
Present: Hon'ble Justice Shampa Sarkar
AP/422/2021
INDIA MEDIA SERVICES PVT. LTD.
vs.
SBPL INFRASTRUCTURE LIMITED
For the Petitioner : Mr. Ranjan Deb, Sr. Adv.
Mr. K.R. Thakkar, Adv.
Mr. Pradip Sancheti, Adv.
Mr. Siddhartha Chatterjee, Adv.
Mr. Deepan Sarkar, Adv.
For the Respondent : Ratnanko Banerji, Sr. Adv.
Mr. Jishnu Chowdhury, Adv.
Mr. Ratul Das, Adv.
Mr. Gaurav Khaitan, Adv.
Judgment on: 01.09.2023
Shampa Sarkar, J.:-
1. The petitioner is the award debtor. This is an application under
Section 14 of the Arbitration and Conciliation Act, 1996. The petitioner, inter
alia, seeks a declaration that the mandate of the arbitrator terminated with
effect from August 31, 2020 and the award dated October 27, 2020 was void
ab initio. The prayers in the said application are quoted below:-
"a) A declaration that the mandate of the Learned Arbitrator former
Justice Bhaskar Bhattacharya (Retired), appointed by an Order dated
28th January 2020 as the Sole Arbitrator in arbitration proceedings
between the parties, had terminated on 31st August 2020.
b) A declaration that the purported award dated 27th October 2020
passed by the Learned Arbitrator after the termination of his mandate
is illegal, void ab initio and non est.
c) Stay of operation of the purposed award dated October 27, 2020,
pending disposal of the present application.
d) Stay of all further proceedings initiated pursuant to making and
publishing of the purported award dated 27th October, 2020.
e) Ad-interim order in terms of the prayers made above; and
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f) Such further order or orders and/or direction or directions be given
as your Lordships may deem fit and proper."
2. The arbitration proceeding was held as per the provision of the
unamended Arbitration and Conciliation Act, 1996.
3. The parties had executed a nomination agreement on December 5,
2005 whereby and whereunder the petitioner nominated the respondent in
its place and stead, to obtain conveyance of a property being the Indian
Express Building situated at Hyderabad, directly from its owner, Express
Publication (Madurai) Limited. The petitioner's case is that the respondent
failed to obtain the conveyance from Express Publication (Madurai) Limited
within the time stipulated in the agreement. Disputes arose between the
parties. The disputes were referred to arbitration in terms of the arbitration
clause contained in the nomination agreement dated December 5, 2005.
4. The arbitration clause is quoted hereunder:-
"All disputes and differences by and between the parties relating to,
arising out of or concerning the subject matter of this agreement shall
be referred to the sole arbitration of Mr. Justice Umesh Chandra
Banerjee, Retired Judge of Supreme Court of India in accordance with
the arbitration and conciliation Act, 1996 and the decision of the
arbitrator shall be final and binding on the parties. The venue of
arbitration shall be Kolkata. The arbitration proceedings shall be
concluded within 60 days from the date of entering into reference. In
default the arbitrator shall stand discharged without remuneration
and the party shall apply for appointment of new arbitrator on the
same terms to the Hon'ble High Court at Calcutta."
5. The arbitration clause provided a time frame of 60 days for conclusion
of the proceeding. The arbitration proceeding was not concluded within the
stipulated time and the learned named arbitrator published a Nil Award, on
termination of mandate. The respondent filed an application before the High
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Court under Sections 11 and 15 of the said Act of 1996, for appointment of
a new arbitrator.
6. By order dated July 20, 2016, Justice Jayanta Kumar Biswas (Retired)
was appointed as the sole arbitrator by the High Court. The arbitration
proceeding resumed. After considerable progress, the learned arbitrator
recused himself from the proceeding on April 4, 2019, in the 115th sitting.
7. AP 435 of 2019 was filed by the respondent before the High Court, for
appointment of an arbitrator. By an order dated January 28, 2020, the High
Court appointed Justice Bhaskar Bhattacharya (Retired), former Chief
Justice of Gujarat High Court as the sole arbitrator.
8. The order of the High Court is quoted below:-
"In this application under Section 11(6) of the Arbitration &
Conciliation Act, 1996 the petitioner prays for appointment of a new
Arbitrator in place and stead of the sole Arbitrator appointed by this
Court on July 20, 2016 who has recused himself from the arbitration
proceeding.
Considering the above facts, I find that when the Arbitrator appointed
by this Court has recused himself from the arbitration proceeding a
new Arbitrator should be appointed to adjudicate the disputes
between the parties as directed by the order dated July 20, 2016.
Accordingly, Bhaskar Bhattacharya, the former Chief Justice of
Gujarat High Court is appointed as the sole Arbitrator to adjudicate
the disputes between the parties. The new Arbitrator shall proceed
with the arbitration proceeding on the basis of the pleadings already
filed by the respective parties and the evidence of the respective
parties already on record.
Needless to mention that the parties shall conclude their respective
oral arguments and file their notes, if any, before the learned
Arbitrator within June 10, 2020. Learned Arbitrator is requested not
to entertain any prayer for adjournment of the sittings at the instance
of either of the parties.
The parties shall render all co-operation to the learned Arbitrator to
make and publish his award within the month of August, 2020.
The consolidated remuneration of the learned Arbitrator is fixed at
Rs.30 lakhs (Rupees Thirty Lakhs only). The learned Arbitrator will be
free to engage the necessary secretarial staff for conducting the
arbitral proceeding. The fees of the learned Arbitrator and the
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remuneration of the secretarial staff shall be borne by the parties in
equal share.
Mr. Debanjan Mondal, learned advocate with whom the records of the
arbitral proceeding are presently lying, is requested to make over the
same to the new Arbitrator upon notice to the parties.
With the above directions, AP No.435 of 2019 stands disposed of."
9. It was directed that the learned arbitrator shall proceed with the
arbitration proceedings on the basis of the pleadings already filed by the
respective parties and on the evidence of the parties which were already on
record. It was further directed that the parties 'shall' conclude their
respective oral arguments and file their notes, if any, before the learned
arbitrator within June 10, 2020. The learned arbitrator was requested not to
entertain any prayer for adjournment of the sittings at the instance of either
party. The order of the High Court contained the following directions:-
(a) Justice Bhaskar Bhattacyarya (Retired) as the Sole Arbitrator, shall
adjudicate the dispute between the parties.
(b) The new arbitrator shall proceed with the arbitration proceedings on
the basis of the pleadings and evidence already on record.
(c) The learned Advocate, Mr Debanjan Mondal, should make over the
records to the learned arbitrator.
(d) The parties were to conclude their oral arguments and file their
written notes within June 10, 2020.
(e) The parties were to render all cooperation to the learned arbitrator,
to make and publish the award within the month of August, 2020.
10. Preliminary sitting of the arbitration was held on March 3, 2020 in
presence of the parties. The schedule and the steps to be taken as also the
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procedure to be followed, were recorded in the minutes of the said meeting.
The same is set out below:-
"6. By the said order of the Hon'ble High Court, Calcutta dated 28th
January, 2020, I have been substituted and appointed as the Sole
Arbitrator to hear the respective cases of the parties with a direction
to pass award by August, 2020. Accordingly, as discussed today, I
direct the parties to adhere to and comply with the following directions
for proceeding with and completion of this proceeding:-
"a) All original records, including the records filed earlier by the
parties pertaining to this proceeding before the erstwhile
Arbitrator are to be filed by the parties at the next sitting before
this Tribunal.
b) All original Minutes from the 1st sitting to the 115th sitting
recorded by the previous Arbitrators have been filed by the
parties at the present sitting before this Tribunal.
c) Both the parties would file their respective Vakalatnamas at
the next sitting before this Tribunal.
d) In the event, parties need to file anything in writing, they
would use the A-4 size paper and file the same duly paginated.
e) Parties would supply soft copy in Word Form their respective
Statement of Claim, Statement of Defence, Counterclaim,
Objection to the Counterclaim, Affidavits of Evidence of the
witnesses and if possible, soft copy of the cross-examination of
the witnesses deposed in this proceeding.
f) Minutes of each sitting will be sent to the Advocate-on-Record
of the respective parties through email and hard copy of the
same will be served on the Advocate-on-Record on or before the
next date of each sitting.
g) The parties must take a note that the communication as and
when necessary by this Tribunal to the parties may be made by
e-mail to them on the e-mail addresses provided by them to this
Tribunal as furnished below and such communications through
email shall be treated as effective communications to the parties
and their Learned Advocates."
11. The learned tribunal fixed a schedule for the proceedings:-
(a) 25th, 26th, 27, March, 2020 for argument on behalf of the Claimant
in support of the Claim. (b) 28th and 29th March, 2020 for Reply by the
Respondent to the argument of the Claimant and also for submissions
on the Counterclaim lodged by the Respondent. (c) 30th and 31st
March, 2020 for reply by the Claimant against the submission of the
defence case and also against the Counterclaim. (d) 25th and 26th
April, 2020 for reply by the respondent to the submission of the
claimant against the counterclaim, each day from 11 a.m. to 4 p.m. in
two sessions for hearing. The last two dates viz. 25th and 26th April,
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2020 could be advanced to an earlier date subject to the convenience
of both the parties.
12. Thereafter, the Covid-19 pandemic hit the country which resulted in
the lock down. The nationwide complete lock down was announced on
March 24, 2020. The arbitral proceedings could not continue on the basis of
the time schedule fixed by the tribunal and the hearing commenced virtually
on and from July 9, 2020. The 1st and 2nd sitting of the arbitration was held
on July 9, 2020, 3rd and 4th sitting was held on July 10, 2020, 5th and 6th
sitting was held on July 11, 2020, 7th and 8th sitting was held on July 13,
2020, 9th and 10th sitting was held on July 14, 2020, 11th and 12th sitting
was held on July 15, 2020, 13th and 14th sitting was held on July 16, 2020,
15th and 16th sitting was held on July 20, 2020, 17th and 18th sitting was
held on July 22, 2020, 19th and 20th sitting was held on July, 27, 2020, 21st
sitting was held on July 28, 2020, 22nd and 23rd sitting was held on July 30,
2020, 24th, 25th sitting was held on July 31, 2020, 26th and 27th sitting was
held on August 1, 2020, 28th and 29th sitting was held on August 2, 2020,
30th and 31st sitting was held on August 3, 2020, 32nd and 33rd sitting was
held on August 4, 2020, 34th and 35th sitting was held on August 6, 2020,
36th and 37th sitting was held on August 7, 2020 and 38th sitting was held
on August 9, 2020. The parties filed their written submissions around
August 20, 2020 and the award was published on October 27, 2020.
13. The petitioner challenged the award by filing an application for setting
aside under Section 34 of the Act, on January 27, 2021. The proceedings for
execution of the award being EC No.25 of 2022 also commenced. No prayer
for stay of the execution case was made by the petitioner.
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14. On September 27, 2021, after 11 months from the delivery of the
award, the present application was filed. According to the petitioner, the
order of the High Court in AP 435 of 2020 was a mandate upon the learned
Arbitrator to "make and publish" the award within August 31, 2020. It was
contended that the parties had mutually agreed to enlarge the time for
publication of the award till the end of August 2020. That was why, the High
Court had directed the arbitrator to make and publish the award by August
2020 by the order dated January 28, 2020. As the mandate of the arbitrator
terminated on August 31, 2020, a declaration had been sought from the
court with regard to the termination of mandate and further declaration that
the award dated October 27, 2020 was illegal, void ab initio and non-est.
15. Mr. Ranjan Deb, learned Senior Advocate for the petitioner submitted
that although the learned arbitrator was well aware of the fact that the
mandate would expire on August 31, 2020, the award was not published
within the time fixed by the High Court. Reference was made to the e-mails
dated June 20 and July 5, 2020. According to Mr. Deb, the moment the time
limit fixed by the Hon'ble High Court had expired, the arbitrator had become
functus officio and all orders thereafter as also the award were null and void.
Section 14(1)(a) and (b) of the said Act of 1996, laid down the situations
when the mandate of an arbitration terminated. Section 14(2) provided that
in case of controversy concerning any of the grounds referred to clause (a) of
sub-section (1), the parties could apply before the Court, for a decision
thereon. Therefore, the petitioner being the claimant in the arbitral
proceeding, was entitled to apply under Section 14 by raising such
controversy with regard to the termination of the mandate of the learned
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arbitrator and unenforceability of the award, the award being a nullity.
Moreover, the law did not provide any time limit within which such
application could be filed. The application could be entertained even if the
same was filed after the aggrieved party applied for setting aside of the
award. Section 32 provided circumstances which would lead to termination
of the arbitration proceedings, other than expiry of mandate due to efflux of
time. Section 34 prescribed the grounds on which an application for setting
aside an arbitral award could be filed. Section 14 was an exclusive and
specific provision in the Act to deal with the termination of mandate of an
arbitrator, if the arbitrator was de jure or de facto unable to perform. Such
provision was neither subject to Section 32 nor Section 34 of the said Act.
Section 14 was an independent provision. According to Mr. Deb, even if the
application under Section 14 was filed belatedly, the same was maintainable
in law. The contention of the respondents in their affidavit-in-opposition
that the petitioner's claim was barred by law was incorrect. An application
under Section 14, for termination of the mandate after the award had been
published could be entertained by the Court, even if an application for
setting aside the award was pending. The issue had already been answered
by a coordinate Bench of the High Court in the case of AVA Merchandising
Solutions Private Limited vs. Torero Corporation Private Limited
decided in AP No.136 of 2019, AP No.59 of 2019 and GA No.339 of
2019, the relevant portion of the said order is quoted below:-
"Termination of mandate of arbitral proceeding is provided for in
section 14. A further situation has been interpreted by Supreme
Court, to automatically terminate the mandate, as on expiry of the
period prescribed in section 29A. Facts
in this case regarding
application of time period provided under section 29A are undisputed.
The award, relied upon as such by respondent, was passed after
prescribed time had expired. On making of award petitioner has come
forward seeking a declaration that the mandate stood terminated
before its publication. The petition is maintainable under sub-
section(2) of section 14 since respondent has raised a controversy by
contending that award has been made and there can be recourse to
Court only under section 34.
What is clear distinction on facts in this case, from facts in any other
case cited is that in this case there was no order made by the Tribunal
under section 31 or 32 of the 1996 Act, within time prescribed. There
thus is no difficulty in finding that on the expiry of prescribed time,
mandate of the Tribunal had terminated. What the arbitrator went on
to do after termination of mandate is of no consequence, if he did not
have it."
16. Therefore, according to Mr. Deb, the High Court had specifically laid
down the principle of law that an application under Section 14 of the said
Act would be maintainable even when an award had been made and
published. On the expiry of time prescribed, the mandate of the arbuitrator
would terminate. What the arbitrator went on to do after termination of
mandate, was of no consequence.
17. Having answered the preliminary objection with regard to
maintainability, raised by the respondent in their affidavit-in-opposition, Mr.
Deb went on to argue on the merits of the case. Drawing support from the
doctrine of Kompetenz Kompetenz, Mr. Deb urged that arbitration was an
alternative dispute resolution mechanism based on party autonomy. The
jurisdiction of the arbitrator was governed by the agreement between the
parties. Parties, inter alia, were at liberty to choose the applicable law, the
place of arbitration, the rules of proceedings the time period for making the
award and also name the arbitrator who would adjudicate any dispute
between such parties. The learned arbitrator was bound by the terms and
conditions of the agreement between the parties and could not act ultra vires
the terms and conditions of his appointment. The time period fixed by the
High Court at the instance of the parties, was binding on the arbitrator.
Upon expiry of such period, the arbitrator ceased to have jurisdiction over
the dispute and was rendered unable to perform his function. Even courts
were powerless to extend the time except where power was reserved under
the law. Time of 60 days for conclusion of the proceeding was provided in
Clause 12 of Nomination Agreement dated December 5, 2005. Such time
was enlarged till August 31, 2020, at the behest of the parties and this court
by order dated January 28, 2020 fixed the time upto August 2020.
18. The learned arbitrator was de jure unable to perform. Thus necessary
declaration should be made that the mandate of the sole learned arbitrator
had terminated on August 31, 2020 and the award was rendered, illegal,
void ab initio and non-est. The proper course for the learned arbitrator
would be to wait for further extension by the Hon'ble High Court. Mr. Deb
cited the following decisions:-
(i) Ava Merchandising Solutions Pvt. Ltd. vs Torero Corporation
Pvt. Ltd.
(ii) NBCC Limited vs J.G. Engineering Private Ltd. reported in
(2010) 2 SCC 385
(iii) Jayesh H. Pandya and Anr. Vs Subhtex India Limited and Ors.
reported in (2020) 17 SCC 383
(iv) Efcalon The UP Pvt. Ltd. vs Startack Agency Pvt. Ltd.
(v) Sagufa Ahmed and Ors. vs Upper Assam Polywood Products
Pvt. Ltd and Ors. reported in (2021) 2 SCC 317
(vi) Shree Shree Iswar Satyanarayanjee & ors. vs Amstar
Investment Pvt. Ltd. reported in 2013 SCC OnLine Cal15304
19. Mr. Ratnanko Banerji, learned Senior Advocate appeared on behalf of
the respondent. He referred to the minutes of the arbitration proceeding and
submitted that in view of the unforeseen Covid-19 pandemic, followed by the
lock down which was announced with effect from March 25, 2020, the
arbitration proceedings could not be conducted as per the schedule
contained in the minutes of the arbitral proceeding dated March 3, 2020.
After the virtual platform was put in place, the hearing commenced virtually
on and from July 9, 2020 and continued upto August 9, 2020. The parties
submitted their written notes on August 20, 2020 and filed their respective
statements on cost on August 23/24, 2020. The award was published on
October 27, 2020. The instant application was filed in order to prevent the
execution proceedings from continuing. The arbitration proceedings were
governed by the law applicable prior to the 2015 amendment. It was further
submitted that under Section 28 of the Arbitration Act, 1940, there was a
time limit for completion of arbitration and one had to apply for extension of
time. Under the Arbitration and Conciliation Act, 1996, no such time limit
had been prescribed. By an amending act of 2015 which came into effect on
October 23, 2015, Section 29A was inserted. The present arbitration
commenced on October 13, 2011. The amending act would not be applicable
unless the parties agreed. In this case, both parties agreed that the arbitral
proceedings would be governed by the unamended Act of 1996. After the
termination of the mandate of Justice Umesh Chandra Banerjee (Retired)
former Supreme Court Judge, Justice Jayanta Kumar Biswas (Retired) was
appointed as the arbitrator. The proceedings continued for almost three
years and the learned Arbitrator recused himself thereafter.
20. When the parties continued before the learned erstwhile arbitrator for
almost three years from the first sitting upto the 115th sitting, the time limit
of 60 days contained in the arbitration clause or any adherence to any time
limit within which the arbitral proceedings were to be concluded, had been
waived by the claimant/petitioner. The order dated January 28, 2020 did
not direct that the mandate of the arbitrator would terminate on August 31,
2020. The correct interpretation of the order would be that the Court had
expressed a desire that the award should be made and published within
August 2020, subject to the cooperation by the parties and the parties
completing their arguments and filing their written notes by June 10, 2020.
The time schedule mentioned in the order was not adhered to by the
petitioner, either. Thus, not having complied with the time lines for
completing the oral arguments and filing written notes, and having
participated in the arbitration proceedings, without raising any objection,
which were concluded on August 9, 2020, the claimant had waived the right
to challenge the award on the ground of termination of mandate on account
of expiry of time. There was a conscious deviation from the time limit fixed
by the High Court by the claimant. The time fixed by the learned arbitrator
in the preliminary meeting, could not be adhered to due to the pandemic.
For a mandate of an arbitrator to terminate, there should have been an
express condition either in the statute or in the order of the High Court. In
this case, such mandate was absent. Moreover, the Hon'ble Apex Court had
extended all periods of limitation including period of limitation under
Section 29A of the Arbitration Act. The time limits fixed by conditional
orders of courts were also extended. A Full Bench of the High Court also
passed similar orders, on August 7, 2020 and January 17, 2022.
21. Mr. Banerji further submitted that after the award was published, the
question of filing an application under Section 14, seeking declaration for
termination of the mandate would not arise. Referring to the minutes of the
38th sitting of the proceeding dated August 9, 2020, Mr Banerji submitted
that the minutes recorded the consent of the claimant for continuation of
the arbitration proceeding. The relevant paragraphs 3, 5, 7, 9 and 10 of the
said minutes have been pointed out to the Court. Even on August 9, 2020
the learned Advocate for the claimant had assured the learned arbitrator
that the relevant paragraphs of the decisions relied upon by the claimant
would be supplied to the learned Tribunal within the following Tuesday.
Parties were also directed to file their written notes of submissions and send
them to the learned Tribunal by e-mail. Paragraph 5 of the minutes would
indicate that the learned arbitrator had asked the parties to forward the
cross-examination of CW-1 and CW-2 in Word format instead of PDF format
in order to facilitate preparation of the award. The learned Advocate for the
claimant submitted before the learned arbitrator that after preparation and
comparison with the originals by the learned Advocates for both the parties,
the cross-examination of CW-1 would be forwarded to the learned arbitrator
in the shortest possible time, by e-mail.
22. It was also recorded that the learned Advocate for the claimant had
assured the learned arbitrator that the balance amount due, on account of
remuneration of the Clerk and the Stenographer, would be paid.
23. Mr. Banerji heavily relied on the minutes in support of his specific
contention that the parties, by their conduct and on the assurance given by
their Advocates before the arbitrator, expressed their willingness to
participate in the proceedings. Steps were taken even on August 23/24,
2020, in respect of the arbitration proceedings and in furtherance of such
proceeding the parties indicated their intention that they were agreeable to
cooperate so that the arbitral award could be made and published. The
claimant did not raise any objection with regard to the expiry of the time
period fixed by the High Court, at any point of time.
24. According to Mr. Banerji, the time limit fixed by the High Court was a
desire or expression or a request by the High Court. Reference was made to
the decision of Efcalon The Up Private Limited vs. Startack Agency
Private Limited passed in GA No. 2524 of 2017 arising out of AP No.
595 of 2016. He distinguished the decision in NBCC (supra).
25. Mr. Banerji, also referred to Sections 4 and 32 of the Arbitration and
Conciliation Act, 1996 to assert that the claimant had waived his right to
challenge the award on the ground of termination of mandate on account of
expiry of time limit fixed by the High Court. Reliance was placed on the
decision in Shree Shree Iswar Satyanarayanjee & Ors. Vs Amstar
Investment Pvt. Ltd. reported in 2013 SCC OnLine Cal 15304, in support
of the contention that the time limit imposed by agreement of parties could
be waived by the parties by participating in the arbitration proceeding and
the arbitrator could continue to function. In the present case, such waiver of
the time limit of 60 days contained in Clause 12 took place when the parties
continued to participate in the arbitral proceedings for three years, before
Justice Jayanta Kumar Biswas (Retired). The award was published under
Section 32 of the Act. The mandate of the learned arbitrator also came to an
end with the making of the award. Therefore, once award was passed, there
was no question of filing a petition under Section 14 of the said Act.
26. The question which falls for consideration in the present application
is whether the mandate of the learned arbitrator terminated on August 31,
2020. If the question is answered in the affirmative, what consequences
would follow.
27. First and foremost, the time limit of 60 days as per the arbitration
clause for completion of proceedings stood waived by the parties. The parties
participated in the proceedings before Justice Jayanta Kumar Biswas
(Retired) from July 22, 2016 till April 4, 2019. Therefore, the 60 days time
limit in the agreement was no longer relevant after the first mandate
terminated and the learned arbitrator Justice UC Banerjee, former Judge of
the Hon'ble Apex Court, had recused. Secondly, the minutes of the meeting
which have been strongly relied upon by the respondent, indicates that the
first meeting was held on March 3, 2020 when the learned arbitrator fixed a
schedule as hereunder:-
(a) 25th, 26th, 27, March, 2020 for argument on behalf of the
Claimant in support of the Claim. (b) 28th and 29th March, 2020 for
Reply by the Respondent to the argument of the Claimant and also
for submissions on the Counterclaim lodged by the Respondent. (c)
30th and 31st March, 2020 for reply by the Claimant against the
submission of the defence case and also against the Counterclaim.
(d) 25th and 26th April, 2020 for reply by the respondent to the
submission of the claimant against the counterclaim, each day
from 11 a.m. to 4 p.m. in two sessions for hearing. The last two
dates viz. 25th and 26th April, 2020 could be advanced on an earlier
date subject to the convenience of both the parties.
28. Learned arbitrator fixed the entire schedule at short intervals so that
the time limit mentioned in the order dated January 28, 2020 could be
complied with. However, due to the pandemic, the schedule could not be
adhered to. India underwent a nationwide lock down on and from March 25,
2020. Gradually, when people adapted themselves to the available
technology, preparation was made for holding courts and other proceedings,
virtually. The learned arbitrator fixed the arbitration proceedings day to day
and also at times two sessions per day, on and from July 9, 2020. All the
dates were fixed with consent of the parties. In view of the Covid-19
pandemic, there was a gap between the preliminary meeting and resumption
of proceedings. The arbitral proceedings could not continue on the basis of
the time schedule fixed by the arbitrator and the hearing commenced
virtually on and from July 9, 2020.
29. Learned Advocate for the claimants and the respondents attended
from their chambers/residences upto August 9, 2020. The proceedings
continued and the learned Advocate for the claimant relied on new decisions
and also undertook to reframe the notes by filing comprehensive notes of
arguments. Such notes were sent to the learned arbitrator via e-mail around
August 20, 2020. It was recorded that both the parties agreed that the
written notes of arguments filed on various dates would create confusion
and hence a comprehensive note containing all points would be filed within
a week from August 9, 2020. The submissions of the learned Advocate for
the claimant were recorded in the minutes. Thus, the minutes would show
that the parties were conscious of the dates and had agreed to participate in
the proceeding. The obligation of completing the oral submissions by June
10, 2020 had long expired. The order of the High Court dated January 28,
2020 enjoined a duty upon the parties to complete their oral arguments and
furnish their written notes within June 10, 2020. The fulfilment of the first
part of the order was a pre-condition to the second part, i.e., the award be
made and published by August, 2020. The inability of the parties to comply
with the time limit fixed by the High Court is reflected from the schedule
fixed by the learned arbitrator, after the pandemic hit the country. The
principle of party autonomy had been followed in this case. Despite the High
Court having mentioned a time frame for arguments/submissions and
written notes, the parties continued to participate in the proceeding and
take steps even upto August, 23/24, 2020. The claimant could have
approached the learned arbitrator for orders under Section 32(2)(c) of the
said Act. The relevant provision is quoted below:-
"32. Termination of proceedings.--(1) The arbitral proceedings shall
be terminated by the final arbitral award or by an order of the arbitral
tribunal under sub-section (2).
(2) The arbitral tribunal shall issue an order for the termination of the
arbitral proceedings where--
(a) the claimant withdraws his claim, unless the respondent objects
to the order and the arbitral tribunal recognises a legitimate
interest on his part in obtaining a final settlement of the dispute;
(b) the parties agree on the termination of the proceedings; or
(c) the arbitral tribunal finds that the continuation of the
proceedings has for any other reason become unnecessary or
impossible.
(3) Subject to section 33 and sub-section (4) of section 34, the
mandate of the arbitral tribunal shall terminate with the termination
of the arbitral proceedings."
30. The claimant waived his right to object to the proceeding and pray for
declaration of termination of mandate. The claimant did not derogate but
continued to participate in the proceeding upon awarding consent to the
dates fixed. Section 4 of the said Act, is quoted below:-
"4.Waiver of right to object.--A party who knows that--
(a) any provision of this Part from which the parties may derogate, or
(b) any requirement under the arbitration agreement, has not been
complied with and yet proceeds with the arbitration without stating
his objection to such non-compliance without undue delay or, if a
time limit is provided for stating that objection, within that period of
time, shall be deemed to have waived his right to so object."
31. Moreover, even if the order dated January 28, 2020 is taken as a
direction upon the arbitrator to conclude the award published within August
31, 2023, the benefit of the orders passed by the Hon'ble Apex Court
extending period of limitation in respect of all suits and proceedings before
Courts and Tribunals including the time limits under Section 29A of the
said Act of 1992 would also be applicable.
32. By order dated March 8, 2021, in Suo Moto writ petition (Civil) No. 3
of 2020, the Hon'ble Apex Court directed that the period of limitation in
filing objections, applications and other proceedings irrespective of period of
limitation prescribed under the general or special laws, stood extended with
effect from March 15, 2020, till further orders. The relevant paragraph is
quoted below:-
"2. In cases where the limitation would have expired during the
period between 15.03.2020 till 14.03.2021, notwithstanding the
actual balance period of limitation remaining, all persons shall
have a limitation period of 90 days from 15.03.2021. In the event
the actual balance period of limitation remaining, with effect from
15.03.201, is greater thatn 90 days, that longer period shall apply."
By order dated July 10, 2020, in Suo Moto writ petition (Civil) No. 3 of 2020,
the Hon'ble Apex Court directed that the period of limitation in Section 29A
of the Arbitration and Conciliation Act, 1996 shall also be extended. The
relevant paragraphs are quoted below:-
"Parties have prayed to this Court for extending the time where
limitation is to expire during the period when there is a lockdown
in view of COVID-19 or the time to perform a particular act is to
expire during the lockdown.
I.A. No. 49221/2020 -Section 29A of the Arbitration and
Conciliation Act, 1996 Taken on Board.
In Suo Moto Writ Petition (C) No. 3/2020, by our order dated
23.03.2020 and 06.05.2020, we ordered that all periods of
limitation prescribed under the Arbiration and Conciliation Act,
1996 shall be extended w.e.f. 15.03.2020 till further orders.
Learned Attorney General has sought a minor modification in the
aforesaid orders. Section 29A of the Arbitration and Conciliation
Act, 1996 does not prescribe a period of limitation but fixes a time
to do certain acts, i.e. making an arbitral award within a
prescribed time. We, accordingly, direct that the aforesaid orders
shall also apply for extension of time limit for passing arbitral
award under Section 29A of the said Act. Similarly, Section 23(4) of
the Arbitration and Conciliation Act, 1996 provides for a time
period of 6 months for the completion of the statement of claim and
defence. We, accordingly, direct that the aforesaid orders shall also
apply for extension of the time limit prescribed under Section 23(4)
of the said Act.
The application is disposed of accordingly."
33. By order dated September 23, 2021, the Hon'ble Court disposed of MA
665 of 2021 and directed as follows:-
"III. The period from 15.03.2020 till 02.10.2021 shall also stand
excluded in computing the periods prescribed under Sections 23(4)
and 29A of the Arbitration and Conciliation Act, 1996, Section 12A
of the Commercial Courts Act, 2015 and provisos (b) and (c) of
Section 138 of the Negotiable Instruments Act, 1881 and any other
laws, which prescribe period(s) of limitation for instituting
proceedings, outer limits (within which the court or tribunal can
condone delay) and termination of proceedings."
34. The outer limits for institution and conclusions of proceedings before
any Court or Tribunal had been extended. When the time period prescribed
by the amended Act of 1996 under Section 29A had been extended, it would
be an absurd proposition that the order of the High Court dated January 28,
2020 directing publication of award by the end of August, 2020 would be
treated as a mandate and the proceedings would not be protected by the
extension of time granted by the Hon'ble Apex Court, which was also
adopted by this High Court. The Full Bench of the High Court by order
dated August 7, 2020 had directed all time limits prescribed in all
conditional orders would also stand extended. The relevant portion of the
order is quoted below:-
"All other conditional orders of Court will continue to remain in
operation until further orders, notwithstanding the non-fulfilment
of the conditions imposed. This will apply to non-fulfillment of the
conditions for the period beginning 15th March, 2020 till 30th
November, 2020 or earlier order of Court."
35. The time limit in the order of the High Court dated January 28, 2020
stood extended, by virtue of the orders of the Apex Court and the High
Court. There was no default clause to the effect that on the failure of the
learned arbitrator to publish an award within August 31, 2020, the mandate
would stand terminated. It has to be borne in mind that the proceeding was
under the unamended 1996 Act, which did not prescribe any time for
making or publishing of an award.
36. The mandate terminated with the publication of the award. The award
has been challenged by filing an application under Section 34 of the Act. All
points are open for the parties to agitate. At this stage, this application does
not deserve to be allowed. The decision in Ava (supra) would not be
applicable. As the said decision was in respect of termination of a mandate
by operation of the statute, that is, by the application of Section 29A of the
amended Act of 1996.
37. The relevant portion of the decision is AVA Merchandising Solution
Pvt. Ltd. (supra) is quoted below:-
"Termination of mandate of mandate of arbitral proceeding is provided
for in section 14. A further situation has been interpreted by Supreme
Court, to automatically terminate the mandate, as on expiry of the
period prescribed in section 29A. Facts in this case regarding
application of time period provided under section 29A are undisputed.
The award, relied upon as such by respondent, was passed after
prescribed time had expired. On making of award petitioner has come
forward seeking a declaration that the mandate stood terminated
before its publication. The petition is maintainable under sub-section
(2) of section 14 since respondent has raised a controversy by
contending that award has been made and there can be recourse to
Court only under Section 34.
What is clear distinction on facts in this case, from facts in any other
case cited is that in this case there was no order made by the Tribunal
under section 31 and 32 of the 1996 Act, within time prescribed.
There thus is no difficulty in finding that on the expiry of prescribed
time, mandate of the Tribunal had terminated. What the arbitrator
went on to do after termination of mandate is of no consequences, if
he did not have it."
38. Thus, the entire decision was on the effect of Section 29A of the
amended Act and consequential termination of the mandate of the arbitral
proceeding.
39. In the decision of NBCC Ltd. (supra), although the time limit to
conclude the arbitration proceedings in terms of the order of the High Court
had expired, both the parties extended the time for conclusion of arbitration
proceedings upto September 30, 2005. The award was not passed within
September 30, 2005. The time limit agreed between the parties, was not
adhered to by the learned arbitrator. After three months from expiry of such
agreed period of time, the arbitrator passed the award. The respondent
before the Supreme Court, moved an application before the High Court for a
declaration that the mandate of the arbitrator stood terminated. The High
Court terminated the mandate of the arbitrator on the ground of delay in
making the award. The said order of the High Court was challenged before
the Hon'ble Apex Court. Under such fact scenario, the Apex Court held that
the arbitrator had extended the time provided to him without any concrete
reason whatsoever and thus, the mandate was liable to be terminated. The
agreement between the parties did not indicate that the mandate of the
arbitrator had been extended beyond September 30, 2005. Thus, it was
construed that the parties had not agreed for extension of the time and the
mandate stood automatically terminated.
40. In the present case, there was no such agreement apart from one
contained in Clause 12 of the Nomination Agreement. Parties agreed that
the award should be published within 60 days from reference. Such time
had long expired. Thereafter, the parties continued to participate in the
proceedings before Justice Jayanta Kumar Biswas (Retired) for a period of
almost three years. The proceeding continued before Justice Bhaskar
Bhattacharya (Retired) upto end of August 2020. It would be a preposterous
argument in the facts of the given case that within 11 days from filing of the
composite written notes, the learned arbitrator would prepare and publish
the award by August 31, 2020. Moreover, the claimant did not comply with
the direction of the High Court to complete oral arguments and file notes
within June 10, 2020. All dates from July to August, 2020 were fixed by the
learned arbitrator on the consent of the parties. At no point of time did the
claimant raise any objection. Thus, Section 14 of the said Act for
termination of the mandate before the learned arbitrator, would not apply.
The ratio of NBCC Ltd. (supra) would also not apply.
41. The decision of Jayesh H. Pandya (supra) does not come to the aid of
the petitioner. In the said case, the appellants before the Hon'ble Apex Court
had filed a written objection before the learned arbitrator, inter alia, stating
that as the period of four months for making and publishing the award had
expired on September 4, 2007, the arbitral tribunal had become functus
officio and did not have the jurisdiction to proceed with the arbitral
proceedings. The said objection was rejected by the learned arbitrator. Such
rejection was challenged before the Bombay High Court by invoking Section
14 of the 1996 Act, seeking a declaration that the arbitrator had become de
jure unable to perform his functions and the mandate should be terminated.
The application was dismissed by the Bombay High Court, inter alia, holding
that the objectors had waived their right, by their conduct. In this case, the
Hon'ble Apex Court held that as the arbitrator was required to conclude and
pass the award within four months which stood expired on September 4,
2007, and in the meantime, the appellant before the Supreme Court had
recorded an objection to the extension of time, it could be construed that
there was no agreement for continuation of the mandate of the arbitrator.
The application for termination of mandate was found to be rightly filed and
it was held that the arbitrator could not go beyond the clause of the
agreement.
42. In the said case, the arbitration agreement provided that the
arbitrator was under obligation to make the award within four months from
the date of service of copy of the agreement with a further condition that the
arbitrator would have the power to extend the period for making and
publishing the award with the consent of both the parties. One of the parties
refused to consent to such extension. The learned arbitrator fixed a date
later than four months. At this stage, one of the parties filed an application,
inter alia, stating that the mandate had terminated and the learned arbitral
tribunal had become functus officio. The said application was rejected by the
learned arbitrator and thereafter by the Bombay High Court. The Apex Court
held that the mandate had expired as the time period agreed upon had
expired and one of the parties objected to extension of time.
43. In Shree Shree Iswar Satyanarayanjee (supra), it was held that
even if participation in the arbitration proceedings amounted to waiver, such
issue would have to be raised before the learned arbitrator and not before
the High Court. The High Court left the issue of waiver to be decided by the
Arbitrator. The decision in Sagufa Ahmed and ors. vs. Upper Assam
Polywood Products Pvt. Ltd and ors. reported in (2021) 2 SCC 317, does
not apply. In the case in hand, all dates were fixed by the learned arbitrator
on and from July 9, 2020 to August 9, 2020 with the consent of the parties.
Thus, the parties indicated their intention to continue with the arbitration
proceedings and wanted the learned arbitrator to prepare and publish the
award. The claimant had a choice to either oppose or object to such time
schedule being fixed by the learned arbitrator, but they chose not to. Rather,
by their conduct, the claimant exhibited willingness and a desire to allow
the arbitrator to publish the award.
44. In this regard, the following paragraphs of the minutes of the meeting
dated August 9, 2020 are quoted below to demonstrate conduct of the
claimant:-
"1. Pursuant to the liberty given to Mr. K.R. Thakker, Learned
Counsel for the Claimant, at the 37th sitting held on 7th August,
2020, today Mr. Thakker has made his submissions on the
decisions which were relied on by Mr. S. Ravi, Learned Senior
Counsel for the Respondents, in reply. Mr. Thakker has also made
his submissions relating to the execution proceeding, being
Execution Case No.1 of 2006, which had been referred by Mr. Ravi
in his reply.
2. Regarding the chart which Mr. Ravi had referred to and relied on
in course of his argument with regard to the shareholding of the
CW-1, Mr. Thakker fairly concedes that there is no document on
record in this proceeding to show that CW-1 had 99% shareholding
in the holding company. Mr.Ravi submits that in view of the
admission of Mr. Thakker that the 99% shareholding of the CW-1 is
not borne out from any record in this proceeding, he is withdrawing
the chart prepared by client and at the same time, since the said
chart produced by the Respondent was based on the un-exhibited
portion of the entire document, being RD-3, the same should not
form part of the record of the Tribunal.
3. Pursuant to the liberty given to Mr. Thakker earlier for filing a
short note, in the event, on final analysis he found that some points
needed to be clarified and brought to the notice of this Tribunal, the
Claimant through emails on 5th and 6th August, 2020 has
forwarded total six notes. Mr. Ravi draws the attention of this
Tribunal to the fact that several new decisions have been
incorporated in such note without, however, indicating the
paragraph nos. of those decisions on which the Claimant intends to
rely. Mr. Thakker assures that the relevant paragraph nos. of those
decisions shall be supplied by his client to this Tribunal as well as
to the Respondents by Tuesday next. Both the parties are also
directed to prepare notes of their respective submissions on Clause
Nos.10 and 11 of the agreement and send the same to this Tribunal
by email. In view of reframing of the notes by the Claimant, the
Respondents are given liberty to deal with all those new decisions
cited by the Claimant and furnish a note in reply thereto by Friday
next by email.
4. This Tribunal directs that the notes now to be prepared and
submitted by the parties would include only the decisions actually
cited and relied on by the respective parties and the arguments
made by them in this proceeding and no other decisions or new
points should be included in such notes. It may also be recorded
that till date various notes have been forwarded by the parties
through emails. Both the parties agree that this Tribunal should not
take note of those piecemeal submissions forwarded through
emails; instead, the parties would file a comprehensive note
containing all those points within a week from today.
5. To facilitate preparation of the award, this Tribunal asked the
parties to forward the cross-examinations of the CW-1 and CW-2 in
Word format instead of PDF format. Mr. Thakker submits that after
preparation and comparison with the originals by the Learned
Advocates of both the parties, those would be forwarded to this
Tribunal at the shortest possible time by email.
6. It is submitted on behalf of the Respondents that after the
Preliminary sitting before the present Arbitrator, there was no scope
of the Respondents to file or handover the Vokalatnama to the
present Tribunal which is still lying with them The Respondents are
directed to send the said Vokalatnama through Speed Post at the
residential address of the Arbitrator.
7. The Respondents are directed to supply the recorded video of
today's sitting immediately.
8. In the event this Tribunal requires any further clarifications in
any matter pertaining to the subject matter of this reference, the
same would be communicated to the parties through email and the
parties will send the required information to this Tribunal also
through email with a copy to the other side.
9 Parties are directed to furnish the entire statement of accounts of
costs incurred by them since inception of the arbitration
proceedings before the erstwhile Arbitrators and the present
Arbitrator, indicating the payments made by them towards the fees
of the Arbitrators, remuneration of the Clerk and the Stenographer
or any other staff, Venue charges as well as other incidental
expenses, if any, and forward such statement of account by Speed
Post within a fortnight from today at the residential address of the
Arbitrator. It is pertinent to mention, that all such expenses must
be supported by documentary evidence showing actual payment.
Today, Mr. Thakker on behalf of the Claimant assures that the
balance amount due and payable on account of the remuneration of
the Clerk and the Stenographer shall be paid by his client within a
week from today. Mr. S. Ravi on behalf of the Respondents assures
that his clients shall make the entire payments of the Secretarial
Staff by Monday next.
10. Parties are also directed to send through Speed Post along with
their respective statement of accounts of costs, the Stamp Paper
worth Rs.150/- each at the residential address of the Arbitrator
within fortnight from today.
11. Hearing concluded. Award reserved.
12. Before concluding, this Tribunal records appreciation of the co-
operation rendered by the parties and their Lawyers during the
entire proceeding."
45. Rather, in this case, the principle laid down in the decision in Efcalon
The-Up Private Limited (supra) with regard to the spirit of a direction of
the High Court upon an Arbitrator (Retired Judge of the High Court) to
publish an award within a particular time frame, is pressed into service. The
relevant paragraph is quoted below:-
"This court is deeply embarrassed.
By its order dated 15th September, 2016 it had appointed the Hon'ble
Mr. Justice Tapen Sen, a retired Judge of this court as the arbitrator.
At the outset, I make it absolutely plain that there was no time limit
set by this order to make and publish his award. This court had only
made a request to the learned arbitrator 'to conclude the reference
within a period of ten months of the statement of claim being lodged
before him.' This part of the order was absolutely directory.
It was very gracious on the part of the learned arbitrator to consider
the request made by the court as a command and direct the parties to
seek extension of time.
In spite of this belief of the learned arbitrator this court would not
treat the said direction as mandatory. Under the Arbitration and
Conciliation Act, 1996, prior to its amendment on 23rd October, 2015
there was no time limit to make and publish the award. There is no
dispute that the arbitral proceeding commenced before coming into
force of the Amendment Act. It was sought to be contended that the
provision in the amendment Act with regard to the time limit upon the
learned arbitrator to make and publish the award was procedural and
was not covered by the protection of section 6 of the General Clauses
Act, 1897. In other words, the said new provision could have
retrospective operation. I am unable to agree. Take the case of an
arbitral reference which had commenced 363 days before coming into
force of the new Act. So, let us assume that 23rd October, 2015 was
the 363rd day of the reference. If the old Act had continued the
arbitrator would not have to think about any time limit to conclude
the reference. When the amendment Act came into force on 23rd
October, 2015, the arbitrator would have just two days to make and
publish the award or become absolutely functus officio. This kind of
an absurdity was never intended by the legislature. At any rate, the
right to obtain an award from a particular arbitrator, without being
bound by time is usually a part of an agreement between the parties.
It cannot be said that this kind of a right is procedural. Therefore, in
my opinion, the Arbitration and Conciliation Act, 1996 prior to its
appointment applied to this arbitration. There was no requirement for
the learned arbitrator to obtain an extension of time from this court to
make and publish the award."
46. Under such circumstances, the application is dismissed.
47. There shall be no order as costs.
48. Parties to act on the server copy of this judgment.
(Shampa Sarkar, J.)
