M/S. Flowmore (P.) Ltd. vs National Thermal Power ...
1995 Latest Caselaw 876 Del

JUDGMENT

Jaspal Singh, J.

1. Some time in May, 1991, while dealing with sub-section (1) of Section 28 of the Arbitration Act I had said :

"There is no doubt in my mind that no formal application need be moved and that the court may act suo motu. The discretion lies with the court. But then 'discretion' being a much maligned, much misused term, the wise-men of law have with a view to tame this wild horse, and to control its swift hoofs, held that discretion must be exercised judicially and only if cogent reasons are forth coming. If this be the prescription or specification for the grant of extension, and I have no doubt that this is, is it a fit case for exercising the discretion in favour of extension ?"

Union of India v. M/s. Associated Producers Co. (1991 (3) Delhi Lawyer 191).

The learned counsel for the respondent implores that I may as well pose the same very question in the present petition too which also happens to be under Section 28 and proceed to answer it within the parameters of my above observations. As per him, I must turn down the prayer for extension of time on two grounds. First, that the petitioner had been guilty of dilatory tactic and, secondly, the Arbitrators had themselves been guilty of misconduct.

2. I do stand by my words. Surely there must be cogent reasons for extension of time. But then, is not every case an island unto itself ?

3. True, as a general rule where a party seeking extension of time has itself been guilty of negligence or dilatory tactics, it cannot get extension (See : J. W. Oliver v. Main Dost Mohammad (AIR 1935 Lahore 191) : Hindustan Steel v. Amar Nath (AIR 1971 Orissa 288). But then, does it stand attracted to the case in hand ? I believe it is here that the respondent meets its Waterloo.

4. The record shows that the first meeting of the arbitrators took place on January 24, 1991 in which the petitioner were directed to file their claim by February 16, 1991. However, this was not done "due to reasons beyond their control" and as such the time was extended. A date was also fixes for reply and counter claim by the respondents. Though the petitioner did file its claim, the respondents failed to submit its reply inviting the following comments from the arbitrators :

"Mr. Seth, learned counsel for the N.T.P.C. made a request for time for filing reply. This is rather unfortunate because on our last hearing on 9th April, 1991, we had given time schedule for filing counter reply. We had given sufficient time to N.T.P.C. and we really feel that there is no real justification for not having filed the reply in time ..."

On the next hearing adjournment was necessitated on account of illness of counsel for the petitioner. The next date fixed was March 26, 1992. Howeve, before the date fixed a letter was received from the petitioner seeking extension of time for filing reply. That letter is of March 20, 1992 and runs as under :

"We were directed by the Hon'ble Arbitrators to file our reply by 25th January, 1992 but, due to prolonged strike, which is still continuing, at our Works, we could not enter the factory-premises and take-out relevant records. As such, we could not hand-over complete documents to our Lawyer for preparing our reply in the matter.

We, therefore, request the Hon'ble Arbitrators to grant us four more weeks to file the reply and also adjourn the hearing fixed for March 26, 1992 as useful purpose would not be served in the hearing fixed for March 26, 1992. We, sincerely regret the delay and the inconvenience caused to the Hon'ble We, sincerely regret the delay and the inconvenience caused to the Hon'ble Arbitrators and the opposite party."

On this the time was extended till May 3, 1990. The order having been complied with, the respondent was directed to file rejoinder by July 20, 1992 and as rejoinder was not filed, more time was granted. The next three meetings were consumed by some applications, while the 11th meeting saw the respondent taking objection that arbitration could not proceed as the matter required to be referred first to the Engineer. Arguments were heard and appropriate orders were passed. At the 12th meeting issues were framed, while the 13th meeting saw some directions being given by the Arbitrators. The 14th meeting was adjourned because of the filing of an application by the petitioner objecting to encashment of bank guarantee. During arguments on the application, the respondents raised a point that it might not be legal for the Arbitrators to continue the hearing as the time for giving award expired on May 14, 1992 and as the respondents were not agreeable to join the request of the petitioner for further extension of time.

5. As would be apparent, it is not that the petitioner had not sought any adjournment but then, if it comes to sharing of the blame, the respondent, comparatively speaking, appears to be much more at fault. True, the petitioner had to seek a few adjourments. But then, as the record reveals, there were justifiable reasons for the same, while the respondents were castigated for not adhering to the schedule without sufficient cause. Thus whereas the petitioner took adjournments for cogent reasons the respondents asked for them when they could be easily avoided. In any case, it is not every delay that would invite wrath of the court. The delay must be undue and on account of either negligence or dilatory tactics. The conduct, thus, must be contumacious. When tested on this anvil the petitioner emerges unscathed. Thus goes the first objection.

6. The respondent also wants me to turn down the request for extension of time on the ground of misconduct of the Arbitrators. However, the petitioner claims that for purposes of an application under Section 28 the allegations of misconduct by Arbitrators would be of no relevance. I tend to disagree. The court is bound to take all the circumstances of the case into consideration including allegations of misconduct of Arbitrator. (See : Anand Das v. Rambhushan Das. (AIR 1933 Patna 566).

7. But, then, first thing first. What do we really mean by so ambiguous a word as "misconduct" ? Though even the Supreme Court has declined, and with respect rightly so, to define the word (See : Food Corporation of India v. Joginderpal Mohinderpal and another ), it may be said that the expression "misconduct" is of wide import and does not necessarily imply moral turpitude. It comprehends action opposed to rational and reasonable principles and would attract breach or neglect or failure to perform all those essential duties and responsibilities which devolve upon Arbitrator's shoulders while acting judicially and which may most likely lead to substantial miscarriage of justice. It would also include any irregularity of action which is not in consonance with the general principles of equity and good conscience. Improper motive is not necessarily essential since there may be misconduct in a legal sense without even slightest degree of such imputation. Thus, for example, adjudication upon a matter which is not the subject matter of adjudication, would be a legal misconduct. (See P. M. Paul v. Union of India ).

8. With the preliminaries over, can the Arbitrators be said to be guilty of misconduct ? The respondent claims they are in as much as they held and urgent meeting on the application of the petitioner seeking stay of invocation of the Bank guarantees although they had no jurisdiction over the matter. True, it would be impossible to allow an Arbitrator to arrogate to himself jurisdiction over a question which is beyond his jurisdiction. It is equally ture that he cannot widen the area of his jurisdiction. But then, in the case before me the Arbitrators did not pass any order on the application. Since the application was seeking an urgent relief, an urgent meeting was held. The Arbitrators cannot be faulted for it. And, as the Arbitrators stayed their hands on objection of the respondent and did not dispose of the application by either passing an order favourable to the petitioner or adverse to the respondent, I am unable to see how the Arbitrators can be held to have been guilty of any misconduct. To me, it appears to be a much ado about nothing.

9. Keeping in view the circumstances of the case and what has been noticed by me above, I allow the application and further extend the period by another four months.

10. Application allowed.