Bombay High Court
Kishor Jitendra Dalal vs Jaydeep Investments And Others on 10 January, 1996
Equivalent citations: AIR1996BOM254, (1996)98BOMLR82, [1997]89COMPCAS513(BOM), AIR 1996 BOMBAY 254, 1996 (2) ARBI LR 130, (1996) 2 ALLMR 191 (BOM), 1996 (2) ALL MR 191, (1997) 89 COMCAS 513, (1996) 2 ARBILR 130, (1997) 2 BANKCAS 370, (1997) 1 COMLJ 134, (1996) 3 BOM CR 204
ORDER
1. By this petition the petitioner seeks declaration that the arbitration -- proceedings in case No. 45 of 1991 pending before respondents 2 and 3,the Arbitrators, have become null and void since time for the Arbitrators to make the award has expired and the petitioner has declined to give his consent of enlargement of time for the Arbitrators to make the award.
2.The petitioner has been a member of The Stock Exchange, Bombay (for short, 'the Exchange') However, the membership of the petitioners is presently suspended by the Governing Board of the Exchange Prior of suspension of the membership of the petitioners the 1st respondents had effected transactions in shares thought the petitioners at the Exchange is accordance with Rues Bye- laws and Regulations of the Exchange. In respect of the such transactions, certain disputes and such transactions, certain disputes and differences arose by and between the 1st respondents and the petitioner which the 1st respondents referred to arbitration as per arbitration agreement in existence by and between the petitioners and the 1st Respondents. The 1st respondents had appointed the 2nd respondent as their Arbitrator and the petitioners had appointed the 3rd respondents was made some in the month of April, 1991. In the proceedings pending before them, the Arbitrators have held several meetings to hear the reference. The hearings of the reference have now practically concluded and the Arbitrators are to make the award.
3.According to the petitioners, the Arbitrators were required to make the award within four months of entering upon the reference and since the Arbitrators have not made the award within the time prescribed under Clause 3 of The First Schedule to the Act and as the petitioner has declined to give his consent of extension of time for the Arbitrators to make the award, the Arbitrators have become fonts officio and as such, are not now entitled to make the award and the proceedings before them become null and void.
4. Earlier and even on 7th April, 1994, the petitioner himself had requested the Arbitrators to make the Award. On 3rd August, 1994, the petitioner had submitted before the Arbitrators that since the petitioner was not giving his consent for enlargement of time for the Arbitrators to make the award and reason of Section 28 of the Act the proceedings before the Arbitrators and become null and void and the Arbitrators ceased to have jurisdiction to make the award.
5. IN support of his submission that the Arbitrators have ceased to have jurisdiction to make the award since the petitioners has declined to give his consent for enlargement of time of the Arbitrators to make the award, the petitioner has put reliance on Section 28 and 46 of the Act as also on the case of Hari Krishna Wattal v. Vaikunth Nath Pandya, .
6. Though the notice the of the petition has been served upon all the respondents 2, 3 and 4 are not appearing to oppose admission of the petitioner Mr. Purohit, the learned Advocate appears for the 1strespondentsto oppose admission of the petitioners Mr. Purohit submits that the Rules Bye-laws and Regulations of the Exchange are statutory and the reason bye laws 254 of 261 of the Bye- laws of the Exchange the Governing Board of the President of the Exchange has the power to extend the time for the Arbitrators to make the award and for the purpose, it is not necessary to have the consent of either party of the reference Mr. Purohit further submits that the reason of Section 47 of the Act the provisions of contained in the statutory Bye laws of the Exchange enabling the Governing Board or the President of the Exchange to extend time for the Arbitrators or the Umpire, as the case may be though inconsistent with provisions of Section 28 of the Act contemplates mutual consent of the parties to enable of the Arbitrator to enlarge the time to make the ward in view of Bye-laws 254 and 261 of the Bye laws of the Exchange, such consent was not condition precedent for the Governing Board or the Presidents of the Exchange to enlarge the time for the Arbitrators to make the award. Mr. Purohit has stated that in fact the time to make the ward has been enlarged form time to time by the Governing Board or the President of the Exchange and the Arbitrators have neither become functus officio nor ceased to have jurisdictions to arbitrate nor the proceedings before the have become null and void.
7. It s not disputed by the petitioners that the Rules and Bye-laws of the Exchange was Statutory Rules and Bye- laws. The Exchanges is duly recognised under the provisions of The Securities Contracts (Regulation) Act, 1956. Bye-laws 254 and 261 which are relevant for consideration read as follows:
"254. The arbitrators shall make their award within four months after entering on the reference of after having called upon to act by notice in writing form ay party or within such extended time as the arbitrators may fix with the consent of the parties of the reference of the Governing Board or the Presidents may allow.
261. The Governing Board or the President may if deemed fit whether the time of the for making the ward expired or not any whether the award the been made or not extended form time to time for making the award by the period not exceeding one month at a time form the due of extended due date of the award."
Under these Bye-laws, the Arbitrators are to make their award within four months after entering on the reference or after having been called upon to act by notice in writing from any party or within such extended time as the Arbitrators may fix with the consent of the parties to the reference or the Governing Board or the President may allow. Further, the Governing Board or the President may, if deemed fit, whether the time for making the award has expired or not and whether the award has been made or not extend from time to them for making the award by the period not exceeding one month at a time from the due date of the award. Under Bye-laws 254 and 261, the Governing Board or the President of the Exchange has power to extend the time for the Arbitrators to make the award despite there being no consent of a party to the reference for such enlargement of time.
8. Section 28 of the Act reads as under:
Section 28(1) The Court may, if it thinks fit, whether the time for making the award has expired or not and whether the award has been made or not, enlarge from time to time the time for making the award.
(2) Any provision in an arbitration agreement whereby the arbitrators or umpire may, except with the consent of all the parties to the agreement, enlarge the time for making the award, shall be void and of no effect."
There is no doubt that as per sub-section (2) of Section 28, the Arbitrators can enlarge the time for making the award upon the consent of all the parties to the agreement. Therefore, if one of the parties to the agreement. Therefore, if one of the parties to the agreement decline to give consent for enlargement of time for making the award, the Arbitrators under sub-section (2) of Section 28 cannot enlarge the time to make the award. This position in law has been reiterated by the Supreme Court in the case of Hari Krishna Wattal v. Vaikunth Nath Pandy (supra) on which reliance has been placed by the petitioner. In that case, the Supreme Court has observed:
"There is no doubt that the Arbitrator is expected to make his award within four months of his entering on the reference or on his being called upon to act or within such extended time as the Court may allow. Reading Clause 3 of the Schedule along with Section 28 one finds that the power to enlarge the time is vested in the Court 2 and Section 28(1) exclude by necessary implication the power of the Arbitrator. Clause 2 and Section 28(1) exclude by necessary implication the power of the Arbitrator to enlarge the time. This is emphasized by Section 28(2) which provides that even when such a provision giving the Arbitrator power to enlarge the time is contained in the agreement, that provision shall be void and of no effect. The head note of Section 28 brings out the force of this position in law by providing that the power is of the Court only to enlarge time for making the award.
Sub-section (2) of Section 28, however, indicates one exception to the above rule that the Arbitrator cannot enlarge the time, and that is when the parties agree to such an enlargement. The occasion for the Arbitrator to enlarge the time occurs only after he is called upon to proceed with the arbitration or he enters upon the reference. Hence, it is clear that if the parties agree to the enlargement of time after the Arbitrator has entered on the reference, the Arbitrator has the power to enlarge it in accordance with the mutual agreement or consent of the parties. That such a consent must be a post-reference consent is also clear from Section 28(2) which renders null and void a provision in the original agreement to that effect. In a sense where a provision is made in the original agreement that the Arbitrator may enlarge the time, such a provision always implies mutual consent for enlargement but such mutual consent initially expressed in the original agreement does not save the provision from being void. It is, therefore, clear that the Arbitrator gets the jurisdictions to enlarge the time for making the award only in a case where after entering on the arbitration the parties to the arbitration agreement consent to such enlargement of time."
However, the question which still requires consideration to where in view of Rules and bye-laws of the Exchange being Statutory, sub-section (2) of the Section 28 of the Act would apply to the facts of the present case. Section 46 of the Act reads us under:
Section 46. The provisions of the Act, except sub-section (1) the Section 6 and Sections 7, 12, 36 and 37, shall apply to every arbitration under any other enactment for the time being in force, as if the arbitration were pursuant to an arbitration agreement and as if that other enactment were an arbitration were pursuant to an arbitration agreement and as if that other enactment were an arbitration agreement, except in so far as this Act is inconsistent with that other enactment or with any rules made thereunder."
As per Section 46, Sections 6(1), 7, 12, 36 and 37 of the Act will not apply to statutory arbitrations so also, if there is anything in the Act which is inconsistent with the enactment under which arbitration is taking place or with any Rules or bye-laws framed under that enactment, the provisions of that enactment and the Rules and bye-laws thereunder shall prevail. Therefore, since provision has been made under Bye-laws 254 and 261 of the bye-laws of the Exchange empowering the Governing Board or the President of the Exchange to enlarge time for the Arbitrators to make the award despite there being no consent of the party or parties to the agreement which provision though inconsistent with sub-section (2) of Section 28 of the Act shall prevail and in that view of the matter, the Governing Board or the President of the Exchange has the power to enlarge the time for the Arbitrators to make the award. In exercise of such powers from time to time, the time for making the award by the Arbitrators has in fact been enlarged by the Governing Board or the President of Exchange. Even otherwise also if the time to make the award is not yet enlarged by the Governing Board or the President of the Exchange, under Bye-laws 254 read with bye-law of the bye-laws of the Exchange, the Governing Board or the President of the Exchange can still enlarge the time for the arbitrators to make the award. In the circumstances, the Arbitrators have neither become functus officio nor have ceased to have the jurisdiction to arbitrate in the matter. The proceedings before the Arbitrators have not become null and void.
9. Mr. Purohit informs this Court that the proceedings before the Arbitrators have been completed and the Arbitrators have just to make their award. The petitioner, as averred in the petition, also desires that the award be made at the earliest since restoration of his membership is dependent upon completion of pending arbitration proceedings against him. That being the position, it is in the interest of the petitioner that the arbitration proceedings instituted by the 1st Respondents against the petitioner are completed at the earliest.
10. Since I find no merit in the petition the petition is dismissed at the stage of its admission itself with no order as to costs. However, the Respondents 2 and 3 are directed to make their award at the earliest and in any event by 31st March, 1996. The learned Advocates for the 1st Respondents are to intimate this Order in writing to Respondents 2, 3 and 4 within two weeks from today.
11.Petition dismissed.