Hari Om Properties (P) Ltd. vs B. Datta
1999 Latest Caselaw 229 Del

ORDER

S.K. Mahajan, J.

1.On 20.11.1991 the Division Bench of this Court had allowed the application of the petitioner against the order dismissing the petition under Section 20 of the Arbitration Act and had referred the matter to the arbitration of Mr. Justice J.D. Jain, a former Judge of this Court. The order of the Court, it appears was not communicated to the arbitrator and he entered upon the reference only on 18.8.1994. Time of four months for making and publishing the award having expired on 18.12.1994 the respondent refused to agree to the extension of time to enable the Arbitrator to make and publish his award. This necessitated the petitioner to file the present petition under Section 28 of the Arbitration Act for extension of time to enable the arbitrator to make and publish his award.

2. Notice of the application having been served upon the respondent, reply thereto has been filed and the respondent has objected to the time being extended. It is stated that the petitioner was guilty of undue delay and of contumacious conduct and this Court, therefore, should decline to exercise its discretionary power to enlarge the time as prayed for in the petition. The alleged delay and contumacious conduct of the petitioner is stated to be evident from the fact that the signatures of the respondent were allegedly secured by fraud and misrepresentation on the collaboration agreement which renders the same void as it was alleged to be without consideration. It is also stated that while the order of the Division Bench was passed on 20.11.1991 directing the matter to be referred to the arbitration of Mr. Justice J.D. Jain (Retd.) the petitioner ensured that the arbitrator did not enter upon the reference till 18.8.1994 and kept the order of the Division Bench allegedly with him till 30.5.1994. Certain other pleas have also been taken regarding the merits of the case and according to the respondent the petitioner by using the legal proceedings as means of extortion obtained Form C, Form D and completion certificate on the dates mentioned in the reply. It is, therefore, the contention of the respondent that no case has been made out by the petitioner for extension of time to enable the arbitrator to make and publish his award.

3. In rejoinder the petitioner has refuted the allegations made in the reply find it is stated that since the order appointing Mr. Justice J.D. Jain (Retd.) as the arbitrator was not communicated by the High Court, the arbitrator was unable to enter upon the reference despite being approached by the parties to do so.

4. The main objection of Mr. Gulati to the time being extended is that for a period of almost three years the petitioner did not take any step to enable the arbitrator to proceed with the reference. While the order in appeal was passed on 20.11.1991 the arbitrator entered upon the reference only on 18.8.1994. This, according to the respondent, clearly shows undue delay and contumacious conduct of the petitioner which disentitles him from seeking the discretionary order of extension of time.

5. While a specific plea has been, raised in the petition that the order of the High Court was not communicated to the arbitrator to enable him to enter upon the reference despite he having been approached by the parties to do so, no reply to this plea has been given by the respondent. I have, therefore, no reason to disbelieve the contention as raised in the petition that the arbitrator was unable to proceed with the reference in the absence of the order of the High Court being communicated to him. The contention of Mr. Gulati that the collaboration agreement was entered into as a result of fraud, misrepresentation and the same was void and without consideration is not for this court to consider at the stage of deciding this application under Section 28 of the Arbitration Act. Moreover, if the agreement was without consideration and was void there was no occasion for the respondent to concede before the Division Bench in appeal and agree to the matters being referred to the arbitrator. It is entirely for the arbitrator to decide as to whether the agreement was without consideration or was entered into as a result of fraud and misrepresentation on the part of the petitioner and what is the effect of the same. In my view, this cannot be a ground to deny the extension of time if on the facts of the case the time is otherwise to be extended to enable the arbitrator to make and publish his award.

6. The Arbitrator admittedly entered upon the reference on 18.8.1994 when an order was passed by him directing the petitioner to file the statement of claim. The statement of claim by the petitioner, as well as counter claim by the respondent were failed before the arbitrator on 5.10.1994 on which date the respondent also made an application for a direction to the petitioner to produce certain documents. On 28.10.1994 when the matter again came up for hearing before the arbitrator the petitioner sought time to file reply. The matter again came up for hearing before the arbitrator on 21.11.1994 when the petitioner again asked for time to file rejoinder/reply to the counter claim. On 7.12.1994 the petitioner filed an application before the arbitrator praying for stay of the proceedings insofar as they related to the counter claim of the respondent inasmuch as according to the petitioner they were not referred to the arbitrator by the Court and the respondent had already filed a suit in this Court for the same relief about which the counter claim was filed before the arbitrator. On 14.12.1994 reply to the stay application was filed by the respondent and on 16.12.1994 when the matter came up for hearing before the arbitrator he is stated to have directed that he will not pass a separate order on this application and this plea can be taken in reply to the counter claim which will be considered finally. On 16.12.1994 itself the arbitrator directed the parties to file affidavits by way of evidence and the next date of hearing was fixed as 4.1.1995. The order passed on 16.12.1994 was passed with the consent of the parties as is evident from the order of 4.1.1995 passed by the arbitrator. However before the case could be taken up on 4.1.1995 by the arbitrator the respondent wrote a letter to him informing him that as the time to make and publish the award had expired on 19.12.1994 the arbitration proceedings had become infructuous and that the respondent was not willing to give his consent to the extension of time to enable him to proceed with the matter and make and publish his award. It was in these circumstances that on 4.1.1995 when the matter came up before the Arbitrator he passed the following order :

"The counsel for the respondent sent me an application through someone at about 12 to 10 p.m. today. It is stated therein that the Claimant is adopting delaying tactics so the respondent withdraw his consent to extension of time on 3.1.1995. A photo-copy of the letter dated 3.1.1995 of the respondent addressed to his counsel is attached with the application.

Since the four months period for making and pronouncement of the award expired on 19.12.1994, it would appear that the Arbitration becomes infructuous but it may be pertinent to mention that on 16.12.1994 the next date of hearing viz. 4.1.1995 was given with the consent of both the parties.

Anyhow, the Arbitration proceeding stand adjourned sine die and it is open to any party to get time for making and pronouncing the award extended from the Court."

7. On a perusal of the proceedings of the Arbitrator between the period 18.8.1994 and 4.1.1995, I do not find any undue delay or contumacious conduct of the petitioner which may indicate that the petitioner intended to delay the proceedings before the arbitrator. The arbitrator had been proceeding with the matter very diligently and within a period of four months he had even fixed the date for recording of evidence. It is now well settled that the Courts have always favoured enlargement of time for making the award even when one of the parties to the arbitration has expressed its disinclination or even opposition to the said extensions where the party seeking such an extension had not been guilty of a condemnable delay or contumacious conduct. One of the basic ideas in discountenancing delay in arbitration proceedings is the possibility of the long lapse of time resulting in loss of the valuable evidence of the parties. When such is not the case, a greater latitude has to be given by the Court in the extension of time for making an award.

8. It is not the case of the respondent that because of the alleged delay any material evidence has been lost or that the arbitrator was guilty of misconduct and the time is, therefore not to be extended for that reason. The only objection to the extension of time is that there was undue delay on the part of the petitioner in proceeding with the reference and because of his contumacious conduct the time should not be extended.

9. As I have already observed, in my opinions there was neither undue delay on the part of the petitioner to proceed with the reference nor his conduct can be said to be contumacious so as to disentitle him to the extension of time to enable the arbitrator to make and publish his award. I also do not see any other reason as to why the time should not be extended. I am, therefore, of the view that the arbitrator must proceed with the reference.

10. I accordingly extend the time by four months from today to enable the arbitrator to make and publish his award. Parties are directed to appear before the arbitrator on 24.3.1999 at 3 p.m. in the Conference Room of the Supreme Court Bar Association. No further orders are required to be passed on this application and the same stands disposed of with no order as to costs. Let a copy of the order be supplied to the counsel for the parties so as to forward it to the arbitrator.