Delhi High Court
Joginder Singh Dhaiya vs M.A Tarde Thr Lrs on 22 December, 2017
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ OMP 370/2014
Reserved on: 24th October, 2017
Date of decision: 22nd December, 2017
JOGINDER SINGH DHAIYA ..... Petitioner
Through: Mr.J.P.Sengh, Sr.Adv. with Mr.Aditya
Nayyar, Mr.Anish Gupta, Ms.Mansha
Mehta, Ms.Vaishali Tanwar and
Ms.Mrigna Shekhar, Advs.
Versus
M.A TARDE THR LRS ..... Respondent
Through: Mr.Vikas Mehta, Mr.C.V.Atre, Mr.Rajat
Sehgal and Mr.Mukul Atre, Advs.
CORAM:
HON'BLE MR. JUSTICE NAVIN CHAWLA
1. The petitioner, by this petition, has challenged the Award
dated 17th February, 2014 passed by the Sole Arbitrator whereby
the application for substitution of legal representative of Mr. M.A.
Tarde filed by the petitioner under Section 40 of the Arbitration
and Conciliation Act, 1996 (hereinafter referred to as the 'Act')
was dismissed as being time barred and the arbitration proceedings
were held to have abated.
2. I, at the outset, quote the relevant finding of the arbitrator in
the impugned award/order:
OMP No.370/2014 Page 1
"16. That there is no dispute regarding legal
proposition as provided in Section 19 of the Act that
arbitral tribunal shall not be bound by the code of CPC.
Provision contained in section 43 of the Act cannot be
ignored, which provides that Limitation Act, 1963 shall
apply to arbitration as it applies to proceedings in court.
Article 120 of the Limitation Act provides that LRs are
to be substituted within 90 days of death of party, as the
case may be. In this case, claimant slept over the matter
for long time and did not substitute LRs. Hon'ble High
Court of Delhi also observed in order dated 01.8.2013
that respondent is rightly aggrieved for not filing the
claim before me by the claimant.
In view of the above discussions, I am of the opinion that
the application U/s 40 of the Act is hopelessly time
barred and arbitration proceedings stand abated, when
arbitration proceedings stand abated the injunction
matter need not be heard and there is no need to enter
reference to proceed further. Signed copy of the order
be given to both the parties. File be kept in the office
and will be sent whenever it is submitted by any Hon'ble
Court."
3. The dispute between the parties arose out of Agreement to Sell
dated 12th October, 2006 between the petitioner and Late Shri M.A.
Tarde, the predecessor of the respondents.
4. The petitioner invoked the Arbitration Agreement/Clause by
notice dated 13th March, 2007 and appointed the Sole Arbitrator, who
entered upon reference and vide letter dated 9th April, 2007 called upon
the parties to appear before him.
5. The proceedings continued before the appointed Arbitrator,
however, the same are not relevant for the purpose of present
OMP No.370/2014 Page 2
adjudication and are not being referred to in detail. Suffice it to say
that it is submitted by the petitioner that he had filed a Statement of
Claim before the Arbitrator on 25th October, 2007.
6. The appointed Arbitrator recused himself from the arbitration
proceedings on 25th February, 2008. The petitioner, therefore, filed an
application under Section 14 and 15 of the Act before this Court being
OMP No. 283/08, seeking appointment of a substitute Sole Arbitrator.
An application under Section 9 of the Act, being OMP No. 381/08,
seeking an interim injunction against Mr. Tarde was also filed.
7. This Court passed an ad-interim order dated 23rd July, 2008
restraining Mr. Tarde from creating any third party interest in respect
of the land for which payment had been received from the petitioner.
This order was confirmed on 18th February, 2009.
8. This Court, by a separate order dated 18th February, 2009 passed
in OMP No. 283/2008, appointed the present Sole Arbitrator. It was
directed that "he shall enter the reference as and when claim is filed
before him and he shall endeavor to give the award as early as
possible".
9. It is the case of the petitioner that he tried to obtain the original
Statement of Claim and the documents filed before the previous
arbitrator, however, in spite of efforts, he could not obtain the same. It
seems that the claim petition was filed before the present arbitrator
only on 1st August, 2013 i.e. after more than four years of the
OMP No.370/2014 Page 3
appointment of the arbitrator and after the Legal Heirs of Mr. Tarde
had raised a grievance against the same before this court.
10. In May, 2013 the Legal Representatives of Mr. Tarde filed an
application, being IA No. 7927/13 in OMP No. 381/2008, before this
Court submitting therein that Mr. Tarde had expired on 17 th June, 2010
and as the petitioner had taken no steps to file his claim, a request had
been sent to the arbitrator for closing the arbitration proceedings. In
the application, a prayer was made that the interim order dated 18 th
February, 2009 be vacated.
11. It is only after issuance of notice in the said application by this
Court, the petitioner finally filed an application IA No. 13415/2013 in
OMP No. 381/2008 under Section 40 of the Act read with Order XXII
Rule 4 of the Code of Civil Procedure 1908 seeking substitution of
Legal Representatives of Mr. Tarde before the Arbitrator. It was
alleged in the application that as the claimant was ignorant of the
details of the legal representatives of the original respondent, the
application for substitution of legal representatives could not be filed
earlier.
12. The respondents i.e. the legal heirs of Mr. Tarde filed their reply
to the above referred application inter alia contending that the
petitioner was aware of the death of Mr. Tarde in 2010 itself as this
had been stated in the reply filed before Punjab & Haryana High Court
in a Criminal Petition filed by the petitioner. It was further stated that
the application for substitution of legal heirs can be filed only within
OMP No.370/2014 Page 4
90 days from the date of knowledge of death and, therefore, the
application filed by the petitioner is time barred.
13. The above application, however, was withdrawn by the
petitioner on 21st November, 2013. The following order was passed by
this Court on 21st November, 2013 on the above mentioned application
seeking impleadment of the legal heirs of Mr. Tarde.
"1. This is an application filed by the petitioner to bring
on record the legal heirs of Mr M.A. Tarde. Mr Sengh,
learned senior counsel for the petitioner, on instructions
states that since an identical application has been filed
before the learned arbitrator, he does not wish to press
the captioned application.
2. I may only note that the legal heirs of Mr Tarde have
filed a reply to the captioned application in which they
have specifically taken the defence that the petitioner
had knowledge of the death of Mr M.A. Tarde, as far
back as on 09.09.2010. Therefore, according to the legal
heirs of Mr.M.A.Tarde, the proceedings taken out,
whether in this court or before the arbitrator to implead
them as parties, ought to fail. A similar defence has been
taken by the legal heirs of Mr M.A. Tarde in the
application for impleadment filed by the petitioner, before
the arbitrator.
3. In the aforesaid circumstances, I do not propose to
comment on the merits of the stand taken by the parties
before me either way, as the counsel for the petitioner has
taken a decision to withdraw the captioned application.
The learned arbitrator will, however, decide this issue
before proceeding further in the main action pending
before him in respect of the application filed by the
petitioner for impleadment of the legal heirs
OMP No.370/2014 Page 5
4. The application is dismissed as withdrawn."
14. As stated above, the arbitrator upon hearing of the application
under Section 40 of the Act has, vide his impugned Award dated 17th
February, 2014, dismissed the application on the ground that the same
is hopelessly time barred and has held that the arbitration proceedings
have abated.
15. The learned senior counsel for the petitioner has contended that
provisions of Order XXII Rule 4 CPC do not apply to the arbitration
proceedings; as far as the arbitration proceedings are concerned, they
are only governed by Section 40 of the Act, which does not provide for
any period of limitation for making an application seeking substitution
of the legal heirs of the deceased parties. He further contends that in
any case, the period of limitation for moving such application shall be
governed by Article 137 of the Schedule to the Limitation Act, 1963
and not by Article 120 of the same and therefore, the period of
limitation for filing such an application seeking substitution of legal
heirs is three years from the death of Mr. Tarde. He further submits
that the impugned award is liable to be set aside as the arbitrator has
committed a misconduct by not considering the judgments relied upon
before him and merely brushing them aside by stating that the relied
upon judgments are not directly relevant to decide the issue involved in
the case.
16. On the other hand, the counsel for the respondent has raised a
preliminary objection on the very maintainability of the petition by
OMP No.370/2014 Page 6
contending that the Award dated 17th February, 2014 passed by the
arbitrator is not an 'Award' and therefore, the present petition under
Section 34 of the Act is not maintainable. On merits he contends that
Section 43 of the Act makes the Limitation Act, 1963 applicable to the
arbitration proceedings and in terms of Sub-Section 3 of Section 40
provision of Order XXII Rule 4 would be applicable and the
application for substitution, having not been filed within a period of 90
days, the proceedings have rightly been held to have abated. In the
alternative, he contends that even if it is held that Code of Civil
Procedure 1908 (hereinafter referred to as CPC) does not apply, the
principles thereof would definitely apply to determine the reasonable
period within which such application could have been filed and the
effect of non-filing of such application would be abatement of
proceedings.
17. I have considered the rival submissions of the parties. Before I
proceed to answer the same, I may first reproduce the relevant
provisions of the Act namely Sections 14, 15, 32, 40 and 43, which
read as under:-
"14. Failure or impossibility to act.--
(1) The mandate of an arbitrator shall terminate and
he shall be substituted by another arbitrator, if]--
(a) he becomes de jure or de facto unable to
perform his functions or for other reasons fails to
act without undue delay; and
(b) he withdraws from his office or the parties
agree to the termination of his mandate.
OMP No.370/2014 Page 7
(2) If a controversy remains concerning any of the
grounds referred to in clause (a) of sub-section (1),
a party may, unless otherwise agreed by the parties,
apply to the Court to decide on the termination of
the mandate.
(3) If, under this section or sub-section (3) of section
13, an arbitrator withdraws from his office or a
party agrees to the termination of the mandate of an
arbitrator, it shall not imply acceptance of the
validity of any ground referred to in this section or
sub-section (3) of section 12.
15. Termination of mandate and substitution of
arbitrator.--
(1) In addition to the circumstances referred to in
section 13 or section 14, the mandate of an
arbitrator shall terminate-- (a) where he
withdraws from office for any reason; or
(b) by or pursuant to agreement of the parties.
(2) 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.
(3) Unless otherwise agreed by the parties, where
an arbitrator is replaced under sub-section (2), any
hearings previously held may be repeated at the
discretion of the arbitral tribunal.
(4) Unless otherwise agreed by the parties, an
order or ruling of the arbitral tribunal made prior
to the replacement of an arbitrator under this
section shall not be invalid solely because there has
been a change in the composition of the arbitral
tribunal.
xxxx xxxx
OMP No.370/2014 Page 8
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.
xxxx xxxxx
40. Arbitration agreement not to be discharged by
death of party thereto.--
(1) An arbitration agreement shall not be
discharged by the death of any party thereto either
as respects the deceased or as respects any other
party, but shall in such event be enforceable by or
against the legal representative of the deceased.
OMP No.370/2014 Page 9
(2) The mandate of an arbitrator shall not be
terminated by the death of any party by whom he
was appointed.
(3) Nothing in this section shall affect the operation
of any law by virtue of which any right of action is
extinguished by the death of a person.
xxx xxxx
43. Limitations.-- (1) The Limitation Act, 1963 (36
of 1963), shall apply to arbitrations as it applies to
proceedings in court.
(2) For the purposes of this section and the
Limitation Act, 1963 (36 of 1963), an arbitration
shall be deemed to have commenced on the date
referred to in section 21.
(3) Where an arbitration agreement to submit future
disputes to arbitration provides that any claim to
which the agreement applies shall be barred unless
some step to commence arbitral proceedings is
taken within a time fixed by the agreement, and a
dispute arises to which the agreement applies, the
Court, if it is of opinion that in the circumstances of
the case undue hardship would otherwise be caused,
and notwithstanding that the time so fixed has
expired, may on such terms, if any, as the justice of
the case may require, extend the time for such
period as it thinks proper
(4) Where the Court orders that an arbitral award
be set aside, the period between the commencement
of the arbitration and the date of the order of the
Court shall be excluded in computing the time
prescribed by the Limitation Act, 1963 (36 of 1963),
for the commencement of the proceedings (including
arbitration) with respect to the dispute so
submitted."
OMP No.370/2014 Page 10
18. The objection of the respondent to the maintainability of the
petition is based on the judgment of the Supreme Court in Lalitkumar V.
Sanghavi vs. Dharamdas V. Sanghavi, reported in (2014) 7 SCC 255.
19. Learned counsel for the respondent submits that the impugned
award is in nature of an order under Section 14 of the Act and therefore,
the petition under Section 34 of the Act shall not be maintainable to
challenge the same.
20. I am unable to accept the said contention. Section 14 of the Act
deals with the termination of 'Mandate of an Arbitral Tribunal',
therefore, it would be applicable in situation where the grounds are
personal to the 'Arbitrator' and not to the 'arbitration proceedings'.
21. Section 32 of the Act provides for termination of proceedings.
Under Sub-section (1) of Section 32, 'arbitral proceedings' shall
terminate by the 'final arbitral award'. Under Sub-section (2) of the
Section 32, termination of the 'arbitral proceedings' would also take
place where the complainant withdraws his claim; or where the parties
agree on the termination of the proceedings; or where the arbitral tribunal
finds that the continuation of proceedings 'has for any other reason
become unnecessary or impossible'.
22. In the case of Lalitkumar V. Sanghavi (supra), the arbitrator had
terminated the arbitration proceedings as the claimant had taken no
OMP No.370/2014 Page 11
interest in the matter. This order was interpreted by the Supreme Court
to be falling under Section 14 and 32(2)(c) of the Act and the remedy
against the same was held be in Section 14(2) of the Act.
23. In the present case, however, the Arbitrator, vide his impugned
Award, has held that the arbitration proceedings stand abated. The
abatement of the proceedings has the effect of bringing about an end to
the litigation and the claim raised therein. In fact, though it may not be
strictly applicable to the arbitration proceedings, a suit having abated,
Order XXII Rule 9 of the Code bars a fresh suit being filed on the same
cause of action. The impugned Award, therefore, has the effect of
debarring the petitioner from instituting fresh proceedings on the same
cause of action. The impugned Award would, therefore, be an 'award' in
terms of Section 2(1)(c) of the Act.
24. Section 2(1)(c) of the Act defines 'arbitral award' to include an
interim award. Section 31 of the Act provides for the form and contents
of arbitral award. In the case of Centrotrade Minerals and Metal Inc. vs.
Hindustan Copper Ltd., (2017) 2 SCC 228, Supreme Court while
holding that the 'arbitral result' would be an 'award' given by the arbitral
tribunal, observed as under:-
"9. The general principle that we have accepted is
supported by two passages in Comparative
International Commercial Arbitration. In Para 24-3
thereof reference is made to Article 31(1) of the United
Nations Commission on International Trade Law
(or UNCITRAL) Rules to suggest that while all awards
OMP No.370/2014 Page 12
are decisions of the Arbitral Tribunal, all decisions of
the Arbitral Tribunal are not awards. Similarly, while
a decision is generic, an award is a more specific
decision that affects the rights of the parties, has
important consequences and can be enforced. The
distinction between an award and a decision of an
Arbitral Tribunal is summarised in Para 24-13. It is
observed that an award:
(i) concludes the dispute as to the specific issue
determined in the award so that it has res judicata
effect between the parties; if it is a final award, it
terminates the tribunal's jurisdiction;
(ii) disposes of parties' respective claims;
(iii) may be confirmed by recognition and
enforcement;
(iv) may be challenged in the courts of the place of
arbitration.
10. In International Arbitration, a similar distinction is
drawn between an award and decisions such as
procedural orders and directions. It is observed that
an award has finality attached to a decision on a
substantive issue. Para 9.08 in this context reads as
follows:
"9.08. The term "award" should generally be
reserved for decisions that finally determine
the substantive issues with which they deal.
This involves distinguishing between awards,
which are concerned with substantive issues,
and procedural orders and directions, which
are concerned with the conduct of the
arbitration. Procedural orders and directions
help to move the arbitration forward; they
deal with such matters as the exchange of
written evidence, the production of
documents, and the arrangements for the
conduct of the hearing. They do not have the
status of awards and they may perhaps be
OMP No.370/2014 Page 13
called into question after the final award has
been made (for example as evidence of 'bias',
or 'lack of due process')."
11. In International Commercial Arbitration, the
general characteristics of an award are stated. In Para
1353 it is stated as follows:
"1353.--An arbitral award can be defined as
a final decision by the arbitrators on all or
part of the dispute submitted to them,
whether it concerns the merits of the dispute,
jurisdiction, or a procedural issue leading
them to end the proceedings."
This is subsequently elucidated through four
aspects of an award, namely:
(i) an award is made by the arbitrators;
(ii) an award resolves a dispute;
(iii) an award is a binding decision; and
(iv) an award may be partial."
(Emphasis supplied)
25. From the above, it would be apparent that the distinction between
an 'order' and an 'award' lies in the fact whether the decision of the
arbitral tribunal affects the rights of the parties, concluding the dispute as
to the specific issue, and has finality attached to the same.
26. In the present case, the impugned Award has resulted in
termination of the arbitration proceedings and would bar the petitioner
from re-agitating the same in any other proceedings. The said award,
therefore, has finality attached to it and determines a vital right of the
parties.
OMP No.370/2014 Page 14
27. Similar reliance on the judgment of the Bombay High Court in
Anuptech Equipments Private Ltd. vs. Ganpati Co-op. Housing Society
Ltd., Mumbai & Ors. AIR 1999 Bom 219, is unfounded as the Bombay
High Court was dealing with a case where the proceedings had been
terminated under Section 25(a) of the Act. The same was held not to be
an 'award'.
28. In the present case, the arbitration proceedings, as noted above,
have not been terminated only because of non-filing of Statement of
Claim but because, according to the Arbitral Tribunal, the proceedings
have abated. This, as discussed above, has legal consequences on the
parties. To my opinion, therefore, the aforesaid judgment would not be
applicable to the facts of the present case.
29. I have no hesitation in holding that the impugned award would
therefore, be an 'award' as defined in Section 2(1)(c) of the Act that can
be challenged in the present proceedings under Section 34 of the Act.
30. On merits, the learned senior counsel for the petitioner contends
that the Arbitrator has simply brushed aside all the judgments cited
before him with the following vague observations, which amount to
denial of principles of natural justice and also makes the Award in
conflict with the public policy of India:-
"The judgment relied on by both the parties are not
directly relevant to decide the issue involved in the case.
No such judgment has been brought to my notice as to
OMP No.370/2014 Page 15
what will be fate of arbitration proceedings, if LRs are
not substituted within three months."
31. I am unable to accept the said argument. The Arbitrator is not
expected to analyze each and every judgment cited before him and
express his agreement or disagreement with the same by giving cogent
reasons for the same. The reasons under Section 31(3) of the Act are the
reasons upon which the award is based. What, therefore, has to be
challenged before this Court under Section 34 of the Act, are the reasons
that the arbitrator gives for the award and not how he follows or
distinguishes a particular judgment. If the eventual reasons for the
Award cannot be challenged under any of the grounds mentioned in
Section 34 of the Act, merely because the Arbitrator did not in detail,
deal with the judgments cited before him, the award cannot be set aside.
32. Learned senior counsel for the petitioner further contended that
under Section 43 of the Act, unlike Order XXII Rule 4(3) of the Code,
there is no provision providing for abatement of proceedings in case the
application for substitution is not made within the time limited by law.
He further contends that even if arbitral proceeding can abate, the time
prescribed for filing an application seeking substitution of the legal heirs
would be governed by Article 137 of the Schedule of the Limitation Act
and not by Article 120 of the same.
33. Learned senior counsel for the petitioner relies upon the judgment
of the Supreme Court in Ravi Prakash Goel vs. Chandra Prakash Goel
OMP No.370/2014 Page 16
& Anr. (2008) 13 SCC 667 and in particular, paragraph 18 of the same,
to submit that in the Arbitration Act, 1940, an analogous provision to
Section 43 of the Act was contained in Section 40 and while interpreting
the same, Supreme Court had held that the arbitration agreement is not
discharged by the death of any party thereto and would be enforceable by
or against the legal representatives of the deceased. Paragraph 18 of the
judgment is reproduced hereinbelow:-
"18. It is clear from Section 40 of the Arbitration Act that
an arbitration agreement is not discharged by the death of
any party thereto and on such death it is enforceable by or
against the legal representatives of the deceased, nor is the
authority of the arbitrator revoked by the death of the
party appointing him, subject to the operation of any law
by virtue of which the death of a person extinguishes the
right of action of that person."
34. The above said judgment would have no application to the facts of
the present case. In the case of Ravi Prakash Goel (supra), there was
neither a plea of abatement nor plea of limitation raised before the
Supreme Court. It was a case where the legal heir of a party to the
arbitration agreement had sought to invoke the arbitration agreement; it
was held to be maintainable relying upon Section 40 of the Arbitration
Act, 1940.
35. Learned senior counsel for the petitioner placed strong reliance on
the judgment of the Gauhati High Court in Lilawati Gupta & Ors. vs.
Union of India & Anr. (2004) 2 Arb. LR 649. In the said case, the
Gauhati High Court had held that provisions of the Code would apply to
OMP No.370/2014 Page 17
the proceedings before the Court under the Arbitration Act, 1940. It then
proceeded to conclude that the application for substitution of legal heirs
in a suit pending before the Court for setting aside the award would be in
nature of a miscellaneous application under Section 141 of the Code.
Considering the same to be a miscellaneous application, it was held that
Article 137 of the Schedule to the Limitation Act would apply to such
application. As far as Article 120 of the Schedule to the Limitation Act is
concerned, it was held that as the said Article uses the words 'plaintiff -
appellant' or 'defendant-respondent', the same would apply only to suits
and appeals and not to such miscellaneous applications.
36. In my view, the above judgment rightly holds that provisions of
Order XXII would be applicable even to the arbitration proceedings,
however, its reasoning for not applying Article 120 of the Schedule to the
Limitation Act fails to consider the effect of Section 37(1) of the
Arbitration Act, 1940.
37. Section 37(1) of the Arbitration Act, 1940 provides as under:-
"37. Limitations -
(1) All the provisions of the Indian Limitation Act, 1908,
(9 of 1908) shall apply to arbitrations as they apply to
proceedings in Court."
38. Similar provision is contained in Section 43(1) of the Act. Once
the Limitation Act is held to be applicable to the arbitration, it would
have to apply with full rigour, however, with necessary changes in the
nomenclature contained therein.
OMP No.370/2014 Page 18
39. In Union of India vs. Jain Associates 2001 (3) SCC 277, the
Supreme Court had rejected the plea that Order IX of the Code would not
apply to arbitration proceedings merely because the parties are not
described as plaintiff or defendant. The Supreme Court held that even if
the nomenclature of plaintiff or defendant is required to be taken into
consideration, the party who seeks decree in terms of an award can be
held to be plaintiff and the party who objects to such award can be treated
as defendant.
40. Similarly, once the Limitation Act is held applicable and it is
further accepted, as was accepted before the Gauhati High Court, that
provision of Order XXII would apply, by necessary implication, in
Article 120 of the Schedule to the Limitation Act, the words 'deceased
plaintiff' would be read as the 'deceased claimant' and 'deceased
defendant' would be the 'deceased respondent/opposite party'.
41. Article 120 of the Schedule to the Limitation Act deals specifically
with the application for substitution of legal representatives. In presence
of a specific provision, reliance on the general residuary provisions
contained in Article 137 of the Schedule to the Limitation Act cannot be
maintained.
42. Learned senior counsel for the petitioner further placed reliance on
the judgment of the Calcutta High Court in Ramnibas Jhunjhunwalla vs.
Benarashi L. Jhunjhunwalla, 1966 SCC Online Cal 22 wherein it was
held that Order XXII of the Code would not be applicable to an award.
OMP No.370/2014 Page 19
The said judgment was rendered in the context where the award had
already been made by the arbitrator and had been filed in Court.
Therefore, relying upon Rule 6 of Order XXII, it was held that once the
hearing is closed, the question of abatement would not arise.
43. In the present case, the arbitration proceedings were still pending
before the Arbitrator. It is correct that in the above said judgment an
observation was made that the essential features of an arbitration
proceedings are much different from a suit because of which Order XXII
of the Code cannot be applied without violence to the provisions of Order
XXII itself to the arbitration proceedings, the same in my opinion, was
not the ratio of the case.
44. Similarly, in the case of Santosh Kumar Patsaria vs. Radha
Krishna Patsaria & Ors. 91 CWN 237, the Court was dealing with an
application under Section 14(2) of the Arbitration Act, 1940 and the
objections filed to the award under Sections 30 and 33 of the Act. The
same would, therefore, equally not apply to the facts of the present case.
45. Section 40(3) of the Act saves the operation of any law by virtue of
which any right of action is extinguished by the death of a person.
Abatement is one such consequence. Though it is correct that in terms
of Section 19 of the Act, the Arbitral Tribunal shall not be bound by the
CPC, once Section 43 of the Act makes the Limitation Act applicable, in
my opinion, an application for substitution has to be filed in terms of
Article 120 of the Schedule to the Limitation Act, 1963 i.e. 'within 90
OMP No.370/2014 Page 20
days of the date of death of the defendant/respondent'. No award can be
made against a dead person. Therefore, the application for bringing on
record the legal representatives of the deceased party is a legal necessity.
The effect of not filing the application within the time prescribed would
necessarily result in abatement.
46. In interpreting the provisions of the Act, it is to be remembered
that the purpose and object of the Act is to achieve expeditious and
effective disposal of the arbitration matters. The general principle on
which the Act is founded is to ensure a fair resolution of dispute by an
impartial tribunal without unnecessary delay or expense. The Act intends
to provide a speedy method of resolution of dispute between the parties.
47. In the case of Union of India vs. Singh Builders Syndicate (2009)
4 SCC 523, it was emphasized that the object of the alternative dispute
resolution process of arbitration is to have expeditious and effective
disposal of disputes through a private forum of the parties' choice.
48. In the 246th Report of Law Commission of India, the need for
expeditious disposal of arbitral proceedings was again emphasized in the
following words:-
"16. The Commission notes that this cultural
revolution has to come from within the arbitration
community. Arbitrators must eschew purely formal
sittings, which are meant only for compliances. The
Courts have already indicated that delay in passing an
award can lead to such an award getting set aside [see
for instance the decisions of the Delhi High Court in
OMP No.370/2014 Page 21
Oil India Ltd v Essar Oil Ltd, OMP No 416/2004 dt
17.8.2012 at paras 30-40; UOI v Niko Resources 13
Ltd, OMP No 192/2010 dt 2.7.2012 at paras 43-51;
Peak Chemical Corporation Inc v NALCO, OMP
160/2005 No dt 7.2.2012 at para 29] - and the same
should be a nudge to all arbitrators to hear and decide
matters expeditiously, and within a reasonable period
of time. Counsel for parties must similarly refrain from
seeking frivolous adjournments or insisting upon
frivolous hearings or leading long winded and
irrelevant evidence. The Commission further notes that
a conscious use of technology, like teleconferencing,
video-conferencing etc., should also be encouraged
and the same can easily replace the need for purely
formal sittings and thereby aid in a smoother and more
efficient conduct of arbitral proceedings."
49. Therefore, it cannot be accepted that a party to the arbitration can
stall the proceedings by not filing an application seeking substitution of
the legal heirs in place of the party to the agreement who has expired.
50. Though it may not be strictly applicable to the present case, the
intent of the legislature is evidenced by Section 29A of the Act inserted
through the Arbitration and Conciliation (Amendment) Act, 2015 and
which provides that the award has to be made within a period of twelve
months from the date the arbitral tribunal enters upon the reference.
51. Even in the Arbitration Act, 1940, Clause 3 of Schedule-I provided
that the arbitrator shall make the award within four months after entering
on the reference. This period, of course, could be enlarged by the Court
OMP No.370/2014 Page 22
under Section 28 of the Arbitration Act, 1940. Therefore, to contend that
a party can be granted three years' time to make an application seeking
substitution of the legal representatives of a deceased party would not
only defeat the object of the Act but would also run counter to the various
provisions of the Act.
52. At the same time, in case there is some delay in moving an
application seeking substitution of the legal heirs of a deceased party, the
arbitrator, of course, would have the power to condone the same in a
more liberal manner than even a Court, as arbitration is also envisaged to
be less formal or bogged down by the strict rules of procedure.
53. In the present case, the petitioner had not filed any application for
seeking condonation of delay in filing of the application to bring on
record the legal representative of the deceased case Mr. Tarde. The
death of Mr.Tarde had taken place on 17.6.2010. The application
seeking substitution of his legal heirs, having been filed beyond the
period of limitation and without any application seeking condonation of
delay, the said application was, therefore, rightfully dismissed by the
learned Arbitrator.
54. Learned senior counsel for the petitioner submits that such
application seeking substitution of legal representatives of Mr. Tarde
could not be filed earlier as the petitioner was not aware of the legal heirs
of Mr.Tarde. However, in my opinion, the same would not be a
'sufficient cause' for not filing of the said application as it has not been
OMP No.370/2014 Page 23
shown on record if any steps were being taken by the petitioner for
finding out the names of the legal heirs of Mr.Tarde. As noted above, it
is only when the legal representatives of Mr.Tarde filed an application
seeking vacation of the interim order passed in favour of the petitioner,
that the petitioner woke up and filed the application seeking substitution
of the legal heirs of Mr.Tarde.
55. The conduct of the arbitral proceedings also shows that once the
petitioner obtained the interim order from this Court, he abandoned the
proceedings and did not file the Statement of Claim till 01.8.2013, i.e.
more than 4 years of the appointment of the Arbitrator. The plea of the
petitioner that delay in filing the Statement of Claim was because the
original Statement of Claim filed before the earlier Arbitrator had not
been received, to say the least, is totally unacceptable. Nothing
prevented the petitioner from filing a photocopy of the said Statement of
Claim and/or seeking exemption from the Arbitrator from filing original
documents.
56. In view of the above discussion, I find no merit in the objections
raised by the petitioner to the Arbitral Award. The same are accordingly
dismissed with costs of Rs.25,000/- to be paid to the respondent.
NAVIN CHAWLA, J
DECEMBER 22, 2017
Sd
OMP No.370/2014 Page 24
