Vipul Premises Llp vs Ravi Kumar Setia S/O Shri ...
2022 Latest Caselaw 5785 Raj/2

      HIGH COURT OF JUDICATURE FOR RAJASTHAN
                  BENCH AT JAIPUR

              S.B. Arbitration Application No. 2/2020

1.    Vipul    Premises      Llp,     (Llpin      Aac-1608)      Through    It
      Designated     Partner        Mr.   Naresh        Kumar   Arora   (Dpin
      00013435) Having Registered Office Situated At Plot No.
      A, Shipra Path, Mansarovar, Jaipur 302020, Rajasthan
2.    Naresh Kumar Arora S/o Shri Bihari Lal Arora, Aged About
      60 Years, R/o C-242, Krishna Marg, Malviya Nagar, Jaipur-
      302017, Rajasthan, India.
3.    Suneet Bagai S/o Shri Ashwini Kumar Bagai, Aged About
      58 Years, R/o S-21, Bhawani Sngh Road, C-Scheme,
      Jaipur-302001, Rajasthan, India.
4.    Shakeel Khan S/o Shri Shabbir Khan, Aged About 38
      Years, R/o 10 Rajhans Colony Near 12 Mori, Brahampuri,
      Jaipur-302002, Rajasthan, India.
5.    Shabbir Khan S/o Shri Nasib Khan, Aged About 63 Years,
      R/o 10, Rajhans Colony, Narsingh Marg, Brahampuri,
      Jaipur-302002, Rajasthan, India.
6.    Manohar Lal Chugh S/o Shri Bihari Lal Chugh, Aged About
      65 Years, Residing At C-260, Malviya Nagar, Jaipur,
      Rajasthan 302017.
7.    Ramesh Kumar Chhabra S/o Shri Sant Lal Chhabra, Aged
      About 61 Years, Residing At 4C/161, Near Stadium
      Chitrakut, Vaishali Nagar, Jaipur, Rajasthan 302021
8.    Chiranji Singh Dhamija S/o Shri Mehar Chand, Aged
      About 51 Years, Residing At 10/995, Malviya Nagar,
      Jaipur, Rajasthan- 302017
9.    Nazima Khan, D/o Shri Ikram Khan, Aged About 57 Years,
      Residing At 10, Rajhans Colony, Near 12 Mori, Brahmpuri,
      Jaipur- 302002
10.   Nazia Khan, D/o Shri Shabbir Khan, Aged About 36 Years,
      Residing At 10, Rajhans Colony, Near 12 Mori, Brahmpuri,
      Jaipur 302002
11.   Misbah Khan, D/o Shri Shabbir Khan, Aged About 30
      Years, Residing At 10, Rajhans Colony, Near 12 Mori,
      Brahmpuri, Jaipur 302002
                                                                ----Applicants
                                  Versus


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1.      Ravi Kumar Setia S/o Shri Girdharilal Setia, Aged About
        64 Years, Residing At 506, Ram Gali No. 6, Raja Park,
        Jaipur-302004, Rajasthan.
2.      Mohinder Kumar Setia S/o Shri Girdharilal Setia, Aged
        About 60 Years, Residing At C-5, Jh 18, Jawahar Nagar,
        Jaipur-302004, Rajasthan.
3.      Rajendra Kumar Setia S/o Shri Arjun Das Setia, Aged
        About 49 Years, Residing At 2 Cha 12, Jawahar Nagar,
        Jaipur-302004, Rajasthan.
4.      Sanjay Agarwal, S/o Shri Chirinjee Lal Agarwal, Aged
        About 48 Years, Residing At D-111, Yasoda Path, Shyam
        Nagar, Jaipur, Rajasthan 302017
                                                                     ----Respondents

For Applicant(s)            :     Mr. Gunjan Pathak with
                                  Ms. Ishita Rawat
For Respondent(s)           :     Mr. Suresh Kumar Sahni with
                                  Mr. Ram Mohan Sharma
                                  Mr. Pankaj Gupta



           HON'BLE MR. JUSTICE PANKAJ BHANDARI

                                       Order

RESERVED ON                               ::                           28/07/2022
PRONOUNCED ON                             ::                           24/08/2022

1.   The      applicants/claimants             have          filed   this     arbitration

application    under     Section       29-A(4)          of     the   Arbitration     and

Conciliation Act, 1996 for extension of the mandate of the sole

arbitrator, Mr. Arif Mohammed Madani, Retired RHJS, for passing

the arbitral award.

2. It is pleaded in the arbitration application that Mr. Arif

Mohammed Madani, Retired RHJS, was appointed as an arbitrator

on 08.05.2018. The claim petition was filed by the applicants on

26.11.2018. It is also pleaded that the arbitrator was appointed at

the behest of the non-applicants. However, the non-applicants

(3 of 8) [ARBAP-2/2020]

took maximum adjournments with ulterior motive to stall the

arbitration proceedings.

3. In the reply to the said application, it is pleaded by the non-

claimants/respondents that the time for concluding the arbitration

proceedings has lapsed and the non-applicants do not have faith

in the arbitrator. They have requested the Court to appoint a

Retired High Court Judge as an arbitrator in the matter to resolve

the dispute. A separate application has been filed by respondent

No.4 stating therein that he had retired from the partnership and

is now not a necessary party to the arbitration proceedings and his

name should be deleted.

4. It is contended by the counsel for the applicants that the

time for passing the award should be extended as the matter is at

final stage. Counsel for the applicants has placed reliance on DDA

Versus Tara Chand Sumit Construction Company: 2020 0

Supreme (Del) 1340; NCC Ltd. Versus Union of India: 2018

SCC OnLine Del 12699; Orissa Concrete And Allied Industries

Ltd. Versus Union of India & Anr.: O.M.P. (Misc.) (Comm.)

10/2018 decided by the High Court of Delhi on 05.03.2018 and

Ssangyong Engineering & Construction Co. Ltd. Versus National

Highways Authority of India (NHAI): 2018 SCC OnLine Del

10184.

5. Counsel for the non-applicants has stated that they have lost

faith in the arbitrator and since the proceedings has lapsed, the

mandate automatically ceases and a fresh arbitrator can be

appointed to which they have no objection.

6. This Court vide order dated 16.12.2021 rejected the

application filed by non-applicant No.4 on the ground that the

present application is only for extension of time for passing the

(4 of 8) [ARBAP-2/2020]

arbitral award. It is contended by the counsel for the non-

applicant that on 16.12.2021, this Court was dictating the order

and as agreed by the parties was appointing a Retired High Court

Judge as an arbitrator and during the dictation, the applicants

objected to the appointment of an arbitrator on the ground that

they have already paid the entire arbitral fees. A suggestion was

given by the Court that the Court can request the arbitrator to

charge less fees as the matter is at the stage of final argument,

but the counsel for the applicants has refused for the same.

7. I have considered the contentions and have carefully perused

the material on record.

8. It would be appropriate to quote Section 29A of the

Arbitration Act, which reads as under:

"29A. Time limit for arbitral award--[(1)The award in matters other than international commercial arbitration shall be made by the arbitral tribunal within a period of twelve months from the date of completion of pleadings under sub-section (4) of section 23:

Provided that the award in the matter of international commercial arbitration may be made as expeditiously as possible and endeavor may be made to dispose of the matter within a period of twelve months from the date of completion of pleadings under sub-section (4) of section 23.] (2) If the award is made within a period of six months from the date the arbitral tribunal enters upon the reference, the arbitral tribunal shall be entitled to receive such amount of additional fees as the parties may agree.

(3) The parties may, by consent, extend the period specified in sub-section (1) for making award for a further period not exceeding six months. (4) If the award is not made within the period specified in sub-section (1) or the extended period specified under sub-section (3), the mandate of the arbitrator(s) shall terminate unless the Court has, either prior to or after the expiry of the period so specified, extended the period:

(5 of 8) [ARBAP-2/2020]

Provided that while extending the period under this sub-section, if the Court finds that the proceedings have been delayed for the reasons attributable to the arbitral tribunal, then, it may order reduction of fees of arbitrator(s) by not exceeding five per cent. for each month of such delay.

[Provided further that where an application under sub-section (5) is pending, the mandate of the arbitrator shall continue till the disposal of the said application: Provided also that the arbitrator shall be given an opportunity of being heard before the fees is reduced.] (5) The extension of period referred to in sub-section (4) may be on the application of any of the parties and may be granted only for sufficient cause and on such terms and conditions as may be imposed by the Court. (6) While extending the period referred to in sub- section (4), it shall be open to the Court to substitute one or all of the arbitrators and if one or all of the arbitrators are substituted, the arbitral proceedings shall continue from the stage already reached and on the basis of the evidence and material already on record, and the arbitrator(s)appointed under this section shall be deemed to have received the said evidence and material.

(7) In the event of arbitrator(s) being appointed under this section, the arbitral tribunal thus reconstituted shall be deemed to be in continuation of the previously appointed arbitral tribunal. (8) It shall be open to the Court to impose actual or exemplary costs upon any of the parties under this section.

(9) An application filed under sub-section (5) shall be disposed of by the Court as expeditiously as possible and endeavour shall be made to dispose of the matter within a period of sixty days from the date of service of notice on the opposite party."

9. As per Section 29A of the Act, the Arbitral Tribunal has to

make an award within a period of 12 months from the date of

completion of proceedings under sub-section (4) of Section 23 of

the Act. Sub-section (4) of Section 23 of the Act reads as under:-

"23. Statements of claim and defence.-- (1)....

(2)......

                                           (6 of 8)                      [ARBAP-2/2020]

      (3).....

(4) The statement of claim and defence under this section shall be completed within a period of six months from the date the arbitrator or all the arbitrators, as the case may be, received notice, in writing of their appointment."

10. On perusal of aforesaid Section 23(4) of the Act, it is clear

that the statement of claim and defence under this Section shall

be completed within a period of six months from the date the

arbitrator or all the arbitrators, as the case may be, received

notice, in writing of their appointment. In the present case in

hand, the arbitrator has received information regarding his

appointment on 08.05.2018 and was required to ensure that the

pleadings are completed by 08.11.2018. Hhowever, in the present

case, the claimant filed claim on 26.11.2018 i.e. after the expiry

of the period provided under Section 29A of the Act and after the

time prescribed for completion of the pleadings under Section

23(4) of the Act. The arbitrator as per Section 29A of the Act is

required to complete the proceedings within a period of twelve

months and the parties may, by consent, extend the period

specified in sub-section (1) for making award for a further period

not exceeding six months. Thus, it is only with the consent of the

parties that the period of twelve months can be extended for a

further period of 6 months.

11. From perusal of the order-sheet dated 02.12.2019

(Annexure-5), it is evident that the non-applicants did not agree

for extension of time and the arbitrator mentioned in the order-

sheet dated 02.12.2019 that the parties are free to approach the

Court for extension of time. From the perusal of the file, it is

further evident that it is not just the non-applicants, who have

sought time, but the applicants have also on different occasions

sought time during the arbitration proceedings.

(7 of 8) [ARBAP-2/2020]

12. It is evident that the counter-claim was also filed in the

present case on 21.06.2019 and time was sought by the

applicants for filing objections to the counter-claim on 26.07.2019.

Further time was sought by the applicants for filing reply to the

counter-claim on 06.08.2019 and finally the reply to the counter-

claim was filed on 04.10.2019, meaning thereby that the

pleadings in this case were completed on 04.10.2019 and it took

about 1 year and 5 months to complete the pleadings. Arbitrator

in his order-sheet dated 26.07.2019 has mentioned that 21

meetings have been held and 24 meetings are yet to take place.

He has also charged expenses for 45 hearings. From perusal of

the order dated 02.12.2019 passed by the arbitrator, it is evident

that the arbitrator has mentioned that initially he would be

passing an interim award and thereafter if required, he would take

additional evidence and then a final award would be passed. It is

thus evident that the arbitrator has failed to pass the award within

the time prescribed.

13. In the judgments referred to by the counsel for the

applicant, the Court has extended the time. This Court is of the

clear view that Section 29A of the Act gives power to the Courts to

extend the time, however, while extending the period referred to

in sub-section (4) of Section 23 of the Act, it shall be open to the

Court to substitute one or all the arbitrators. Thus, the Courts

have unfettered powers to substitute an arbitrator while extending

the period under Section 29A of the Act.

14. From the observations made herein-above, it is evident that

the arbitrator has failed to conclude the arbitration proceedings

within the time specified and even the pleadings were not

completed within 6 months as provided under Section 23(4) of the

(8 of 8) [ARBAP-2/2020]

Act and the counter-claim was filed and reply to the counter-claim

was filed after almost 1 year and 5 months of the appointment of

the arbitrator. Thus, this Court while allowing the application for

extension of time terminates the mandate of the present arbitrator

- Mr. Arif Mohammed Madani, Retired RHJS and appoint Mr.

Dinesh Chandra Somani, Retired High Court Judge, HE-404,

Pratap Apartment, HIG-Block, Sector-29, Pratap Nagar, Sanganer,

Jaipur, as sole arbitrator.

15. This Court, in the facts and circumstances of the case and

taking note of the fact that the matter is at the final stage,

quantifies the fees at Rs.10 lakhs and the same would be

recovered by the arbitrator from the parties. The application for

extension of time is allowed. Mandate of Mr. Arif Mohammed

Madani, Retired RHJS is terminated and Mr. Dinesh Chandra

Somani, Retired High Court Judge, is appointed as sole arbitrator.

The arbitrator would proceed from the stage the proceedings were

pending before the earlier arbitrator and complete the same within

nine months of receipt of the file from the earlier arbitrator.

16. The appointment of the sole arbitrator is subject to the

declarations being made under Section 12 of the Arbitration and

Conciliation Act, 1996 with respect to the independence and

impartiality, and the ability to devote sufficient time to complete

the arbitration within nine months.

17. All the pending application(s) also stand dismissed.

(PANKAJ BHANDARI),J SUNIL SOLANKI /PS

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