Calcutta High Court
Ram Chandra Rungta vs Ram Swarup Rungta & Ors on 2 December, 2014
Equivalent citations: AIR 2015 CALCUTTA 24, (2015) 3 ARBILR 467, (2015) 1 CAL HN 17, (2014) 4 CALLT 586
Author: I.P. Mukerji
Bench: I.P. Mukerji
A.P. No. 662 of 2010
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
Original Side
Ram Chandra Rungta
Vs.
Ram Swarup Rungta & Ors.
Appearance:
Mr. Pratap Chatterjee, Sr. Advocate
Mr. Samrat Sen; Advocate
Mr. Paritosh Sinha, Advocate;
Mr. K.K. Pandey, Advocate;
Mr. Sourav Gupta; Advocate
..Advocate for petitioner
Mr. Chayan Gupta;
Ms. Nairita Dutta Chowdhury, Advocate;
.. Advocate for Respondent No. 1to 4
Heard On:- 21.11.2014
Judgement On: - 02.12.2014
I.P. MUKERJI, J.
The Arbitration and Conciliation Act, 1996 contains some very remarkable provisions, like sections 14 and 15. In this case, only section 14 has been invoked by the petitioner. It stipulates the circumstances in which an arbitrator's mandate is terminated. 'De facto' he becomes incapable of acting or 'de jure' he is unable to act. Or he unduly delays matters.
There is another provision in the Act which is relevant in this case. It is Section 15. It inter alia supports the contention that if an arbitrator is required to make an award within a particular time, his mandate is terminated by efflux of that time. That section has not been invoked in the cause title of this application, though, there are enough averments in the petition to show that a case under this section has also been made out.
On 9th May, 2006 an agreement was made between the petitioner and the first, second, third and fourth respondents. They are members of one family. They had several disputes amongst themselves relating to ownership and control of companies, joint family businesses, partition of joint family properties and so on. They appointed the fifth respondent as the arbitrator to resolve them. The arbitrator was named in this agreement.
Clause 15 of it stated that the arbitrator would make his award within a period of four months from the date of service of a copy of this agreement upon him. The arbitrator would have the power to extend the time from time to time with the consent of all the parties. That time expired on 8th September, 2006.
There is absolutely no dispute that this period of four months has long expired. Except a few sittings, nothing has happened before the arbitrator.
Mr. Sen, learned Advocate for the petitioner submits that his client, not having extended the time period of four months, the authority of the arbitrator has been terminated by efflux of time. This court should make this declaration. He submits that this authority expired after 8th September, 2006.
Mr. Chayan Gupta, learned Advocate appearing for the above respondents has made submissions with great candour. He has taken just one point. It is waiver. He argued that in December 2006 several sittings were held by the arbitrator. These sittings were held after the expiry of time for making the award provided in the agreement. Therefore, the petitioner can be said to have waived his above right under the agreement.
. The provision regarding waiver is contained in section 4 of the said Act. It is in the following terms:
"Waiver of right to object. - A party who knows that-
(a) any provision of this Part from which the parties may derogate, or
(b) any requirement under the arbitration agreement, has not been complied with and yet proceeds with the arbitration without stating his objection to such non-compliance without undue delay or, if a time limit is provided to stating that objection, within that period of time, shall be deemed to have waived his right to so object."
Now, the facts need to be analysed.
They are very important for adjudication of this matter.
It appears from the documents appended to the affidavit-in-opposition affirmed by Ram Swarup Rungta on 16th December, 2010 that after execution of the above agreement a series of meetings was held by the parties and the arbitrator on 4th, 5th and 6th December 2006. It was after the expiry of the time stipulated by the agreement for making and publishing the award. These meetings were nothing of the kind held by specialist arbitrators to resolve legal disputes between the parties. Business affairs were discussed. The parties put forward the facts and figures regarding their businesses. It appears that a general and informal discussion was held between the parties and the named arbitrator.
Mr.Sen submitted that since these meetings were held after expiry of the time for the arbitrator to make and publish the award, they were of no moment or consequence. On expiry of the time the mandate of the arbitrator stood terminated. Even if it was assumed that holding of meetings by the arbitrator after the expiry of time could constitute waiver by the parties of the above stipulation regarding time, those meetings with the arbitrator could not be said to be steps taken in arbitration. They were mere discussion between the parties.
What is very important is that after the first week of December, 2006 up till May 2010 there was not a single sitting held between the arbitrator and the parties. The Arbitrator did not call any. On 17th April, 2010 the arbitrator issued a notice to the petitioner convening a meeting on 29th April at 11a.m. at his residence. Promptly by his letter dated 24th April, 2010, the petitioner replied that the meetings in 2006 were informal and that his authority to act as arbitrator long stood terminated. A meeting of the so called arbitration proceedings was held on 29th April, 2010 at the residence of the arbitrator where the absence of the petitioner and the second respondent was noted. The next meeting was fixed on 15th May, 2010. Through a lawyer's letter dated 10th May, 2010, the petitioner told the arbitrator reiterating that the arbitrator was disqualified to act as an arbitrator. On 13th May, 2010 another letter was written by the petitioner to the arbitrator asking the arbitrator to cancel the minutes of the meeting held on 29th April, 2010.
By a notice dated 14th June, 2010 the arbitrator asked the appearing parties to comment on the objection of the petitioner. On that basis he would take a decision in the matter. By his letter of 13th September, 2010 the arbitrator called upon the petitioner to participate in the arbitration.
The exchange of letters continued. It appears that the arbitrator rejected all the contentions of the petitioner and proceeded to call meeting after meeting to allegedly arbitrate between the parties.
This application under section 14 of the said Act was filed by the petitioner on 19th November, 2010.
Now, the law on the subject. There is no requirement in the Arbitration and Conciliation Act, 1996 for an award to be passed within a particular time. The agreement may contain a clause containing a time period for making the award or for enlargement of time by consent of the parties. In that case time can only by enlarged by consent of the parties. In NBCC Ltd. vs. J.G. Engineering Private Ltd. reported in (2010) 2 SCC 385, the court stipulated a time period for the arbitrator to make his award. This time period was extended by consent of the parties. When this time period expired, but the award had not been published, one of the parties did not give consent to further extension of time for the publication of the award. In those circumstances Mr. Justice Tarun Chatterjee delivering the judgment of the Supreme Court held that the mandate of the arbitrator had been rightly terminated by one of the parties. The defence of waiver was not taken in that case.
Now, let us try to see what is the concept of waiver. A party to a contract may, by his conduct, indicate to the other party that he will not insist or strictly insist on the performance of a term of the contract. That term might be rendered inoperative. Sometimes waiver is looked upon as forbearance by a party to enforce a term of the contract. It is also possible, while waiving the original time schedule, the parties understand, that the contract should be performed within reasonable time. If there is breach, even of that condition, the other party might treat himself as discharged from the contract (See Professor Anson's Law of Contract 28th Edition pg 523 to 527) Denning LJ pronounced the following dicta in Charles Richards Ltd. vs. Oppenhiem reported in 1950 (1) All ER 420:
"If the defendant as he did led the plaintiffs to believe that he would not insist on the stipulation as to time and that if they carried out the work he would accept it and they did it he could not afterwards set up the stipulation in regard to time against them. Whether it be called waiver or forbearance on his part or an agreed variation or substituted performance does not matter. It is a kind of estoppel by his conduct he made a promise not to insist on his strict legal rights. That promise was intended to be binding intended to be acted upon and was in fact acted upon. He cannot afterwards go back on it. .........It would be most unreasonable if having been lenient and having waived the initial expressed time he should thereby have prevented himself from ever insisting on reasonably quick delivery."
Now, let us assume that the parties had waived the time stipulation when they sat before the Arbitrator on 4th, 5th and 6th December, 2006. We are assuming that those sittings were to arbitrate. According to the above dicta of Denning LJ. after waiver of the original time stipulation, the Arbitrator was required to act and make and publish the award within reasonable time. There is no evidence on record to suggest that the petitioner delayed the proceedings or expressed an unwillingness to participate before the arbitrator. The Arbitrator did nothing. Not a meeting was convened. Not even a letter or a notice was issued. Then after four years, in 2010 there was a flurry of activity on the part of the arbitrator to revive the proceedings. I am firmly of the opinion that well before those four years expired, that reasonable time expired. The mandate of arbitrator stood terminated. The court never terminates the mandate of an arbitrator. It stands terminated on the happening of an event or event. The court only declares it.
The cases cited by Mr. Chayan Gupta, learned Advocate being Jayesh H. Panda and Anr. Vs. Subhtex India Ltd. and Ors. reported in 2008 (5) Mh.LJ 749 and Shyam Telecom Ltd. Arm Ltd. reported in 2004 (3) AEBLR 146 do not, in my opinion apply to the facts of the case. In both these cases the arbitration was continuing. The parties were regularly appearing before the respective arbitrators, applied for extension of time to file their pleadings for adjournment etc. In both the cases it was held that a clear intention had been evinced by the parties that they had waived their right to insist on the time limit contained in the respective arbitration agreements for making and publishing the award. Hence, the Bombay and Delhi High Courts, in the special facts of those cases held that there was waiver of the stipulation in the arbitration agreement for publication of the award within a specific period of time, by the parties. There was no further delay. The award was published within reasonable time.
Once the effect of an assumed waiver was over in this case, the mandate of the arbitrator stood terminated.
For all those reasons this application succeeds. I hereby declare that the mandate of the fifth respondent to act as arbitrator in terms of the agreement dated 9th May, 2006 stands terminated. Order also in terms of prayer (d) of the application. The proceedings before the arbitrator are quashed.
Certified photocopy of this judgment/order, if applied for, be supplied to the parties subject to compliance with all requisite formalities.
(I.P. MUKERJI, J.)