Tarun Kr. Jain, Sole Proprietor vs M.C.D.
2011 Latest Caselaw 2064 Del

1&2

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

+                       Date of Decision: 18.04.2011

%                    Arb. P. Nos. 202/2005 & 203/2005

       TARUN KR. JAIN, SOLE PROPRIETOR               ..... Petitioner
                        Through:  Mr. A.K.Singla, Sr.Advocate with
                                  Mr.Vivek Kishore & Mr.Anurag Jain,
                                  Advocates.

                      versus

       M.C.D.                                         ..... Respondent
                              Through:   Ms. Mini Pushkarna, Standing
                                         Counsel with Mr.Rajesh Singh,
                                         Advocate.

       CORAM:
       HON'BLE MR. JUSTICE VIPIN SANGHI

       1. Whether the Reporters of local papers may
          be allowed to see the judgment?           :       NO

       2. To be referred to Reporter or not?           :    YES

       3. Whether the judgment should be reported           YES
          in the Digest?                               :


VIPIN SANGHI, J. (Oral)

I.A. No. 6885/2010 in ARB.P.No.202/2005 I.A. No. 6887/2010 in ARB.P.No.203/2005

1. These are the two applications preferred by the petitioner under

Sections 14 & 15 of the Arbitration and Conciliation Act to seek

appointment of a substitute arbitrator in place of the originally

appointed arbitrator Mr. M.L. Jain, Advocate.

2. The petitioner preferred the aforesaid two petitions under

Section 11 of the Act. Both these petitions were allowed by the Court

vide order dated 8th December, 2005 and in both these cases Mr.M.L.

Jain, Advocate was appointed as the sole arbitrator.

3. The present applications have been preferred by the petitioner

on 13th May, 2010. In the applications, it is averred in para 16 that in

the month of April, 2010, counsel for the petitioner enquired about the

status of these cases. It is stated that the learned arbitrator refused to

conduct the arbitration proceedings as he has been suffering from ill

health.

4. Upon issuance of notice, the respondent has filed its reply. The

respondent has raised an issue of limitation, by urging that the claims

now sought to be raised are barred by time. It is stated in para 10 that

if the petitioner is now permitted to file its statement of claim, the

same would be barred by limitation.

5. Vide order dated 20th October, 2010, the Court had requested

the learned arbitrator to file the proceedings undertaken by him in a

sealed cover. They have been filed.

6. The proceedings were started before him on 20th January, 2006.

It appears that for some time the proceedings were adjourned as the

petitioner stated that he would move an application to get the fee of

the arbitrator fixed by the Court. The order sheet shows that the fees

of the arbitrator was fixed at Rs.60,000/- vide order dated 4th

September, 2006 passed in I.A. No. 6037/2006 in Arb P.No.202/2005.

However, it appears that no similar application was moved in

Arb.P.no.203/2005.

7. The learned arbitrator in the proceedings held on 18th October,

2006 in the presence of the parties, withdrew from the office of the

arbitrator by observing:

"I am down with fever for a few days and confined to bed. I regret, I will not be able to entertain or take up the cited matters. Parties/their learned Counsels may kindly note and take appropriate steps to arrange for their re- reference."

8. However, he continued to conduct proceedings in yet another

reference pending before him arising out of Arb. Petition No. 193/2005.

The learned Arbitrator rendered the award in that case on 25.09.2007.

9. Learned Senior Counsel for the petitioner Mr. Singla submits that

the proceedings before the arbitrator continued from January, 2006

and were adjourned from time to time as the fixation of fees by the

Court was awaited. He submits that the learned arbitrator did not

require the petitioner to file his statement of claim at any stage of the

proceedings till the date that he passed the order on 18th October,

2006.

10. Though the objection of the respondent is that the claims would

be barred by limitation as of now, that may not be an accurate

statement. The arbitration proceedings stood commenced when the

agreement was invoked. The Court while allowing the applications

under Section 11 of the Act did not go into the aspect of limitation vis-

à-vis the claims of the petitioner. In my view, that is not the issue.

The issue of limitation is with regard to the filing of the present

applications after the termination of the mandate by the arbitrator

upon his withdrawing from arbitration. As the aspect of limitation

can be examined by the court suo moto, I proceed to examine the

same.

11. Mr. Singla submits that even after the passing of the order dated

18th October, 2006, the mandate of the arbitration did not stand

terminated, as it would be for this Court to make an order declaring

that the mandate stands terminated.

12. I cannot agree with this submissions in the light of the plain

reading of the Section 14(1)(b) of the Act. It provides that the

mandate of the arbitrator shall terminate if he withdraws from his

office. The order dated 18th October, 2006 is a clear withdrawal from

his office by the learned arbitrator. It is only when a controversy

remain between the parties, concerning any of the grounds referred to

in clause (a) of sub-section (1) of Section 14 (which deals with the de

jure and de facto inability to perform his functions by the arbitrator, or

where the arbitrator is alleged to have failed to act without undue

delay) that the parties can approach the court to decide whether or not

the termination of mandate has taken place. The parties are not

expected to approach the court to seek an order for termination of the

mandate of the arbitrator, even in cases where arbitrator has

withdrawn from his office. Section 14(2) has no application to a case

falling under Section 14(1)(b).

13. The period within which a party must approach the competent

court to seek the appointment of an arbitrator is three years in terms

of entry No.137 of the schedule to the Limitation Act. The right to

apply to the court to seek the appointment of substitute arbitrator

accrued upon the passing of the order dated 8th October, 2006.

Therefore the petitioner should have approached the court for

appointment of substitute arbitrator by 17th October, 2009.

14. Reliance placed by Mr. Singla on Section 15(2) of the Act is again

misplaced. All that the said provision provides is that where the

mandate of an arbitrator terminates, a substitute arbitrator shall be

appointed according to the rules that were applicable to the

appointment of the arbitrator being replaced. However, this does not

mean that the process for appointment of substituted arbitrator can be

delayed by a party indefinitely. The said process has to be initiated

within the period of limitation prescribed by law.

15. The Supreme Court in J.C. Budhiraja vs. Chairman, Orissa

Mining Corporation Ltd., (2008) 2 SCC 444, has dealt with the

aforesaid aspect. Para 25 of the said decision reads as follows:-

"25. The learned Counsel for the appellant submitted that the limitation would begun to run from the date on which a difference arose between the parties, and in this case the difference arose only when OMC refused to comply with the notice dated 4.6.1980 seeking reference to arbitration. We are afraid, the contention is without merit. The appellant is obviously confusing the limitation for a petition under Section 8(2) of the Arbitration Act, 1940 with the limitation for the claim itself. The limitation for a suit is calculated as on the date of filing of the suit. In the case of arbitration, limitation for the claim is to be calculated on the date on which the arbitration is deemed to have commenced."

16. Reliance placed by Mr. Singla on the decision of this Court in

Satender Kumar vs. Municipal Corporation of Delhi and Anr.,

MANU/DE/0385/2010, is of no way applicable, as the said case deals

with the aspect, whether or not, the claims were barred by limitation.

That is not the issue arising before me.

17. In my view, the present applications are clearly barred by

limitation, and the same are accordingly dismissed.

VIPIN SANGHI, J

APRIL 18, 2011 Bisht