Gujarat High Court
Narmada Clean-Tech vs Indian Council Of Arbitration on 19 August, 2020
Author: Vikram Nath
Bench: Vikram Nath, J.B.Pardiwala
C/LPA/308/2020 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/LETTERS PATENT APPEAL NO. 308 of 2020
In R/SPECIAL CIVIL APPLICATION NO. 18097 of 2017
With
CIVIL APPLICATION (FOR STAY) NO. 1 of 2020
In R/LETTERS PATENT APPEAL NO. 308 of 2020
FOR APPROVAL AND SIGNATURE:
HONOURABLE THE CHIEF JUSTICE MR. VIKRAM NATH
and
HONOURABLE MR. JUSTICE J.B.PARDIWALA
==========================================================
1 Whether Reporters of Local Papers may be allowed Yes
to see the judgment ?
2 To be referred to the Reporter or not ? Yes
3 Whether their Lordships wish to see the fair copyNo
of the judgment ?
4 Whether this case involves a substantial questionNo
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
==========================================================
NARMADA CLEAN-TECH & 1 other(s)
Versus
INDIAN COUNCIL OF ARBITRATION & 2 other(s)
==========================================================
Appearance:
MR KAMAL TRIVEDI, SENIOR ADVOCATE ASSISTED BY MR ABHISHEK
M MEHTA(3469) for the Appellant(s) No. 1,2
DS AFF.NOT FILED (N)(11) for the Respondent(s) No. 1,2
MR PARAS SUKHWANI FOR MR.CHIRAG K SUKHWANI(6603) for the
Respondent(s) No. 3
==========================================================
CORAM:HONOURABLE THE CHIEF JUSTICE MR. VIKRAM NATH
and
HONOURABLE MR. JUSTICE J.B.PARDIWALA
Date : 19/08/2020
ORAL JUDGMENT
(PER : HONOURABLE THE CHIEF JUSTICE MR. VIKRAM NATH) Page 1 of 33 Downloaded on : Sun Feb 21 17:05:12 IST 2021 C/LPA/308/2020 JUDGMENT
1. This appeal under Clause 15 of the Letters Patent Act has been preferred by the original writ petitioners - Narmada Clean-Tech, a company registered under the provisions of the Companies Act, 1956, assailing the correctness of the judgment and order dated 18.05.2020 passed by the learned Single Judge in Special Civil Application No.18097 of 2017 - Narmada Clean-Tech vs. Indian Council of Arbitration and two others, whereby the learned Single Judge dismissed the writ petition holding it to be not maintainable only on the ground that the order passed during the course of arbitration proceedings cannot be challenged under Articles 226 and/or 227 of the Constitution of India.
2. Earlier vide judgment and order dated 30.07.2020, the Division Bench had held that the writ petition would be maintainable against the order impugned passed by the Arbitral Tribunal. At that stage, we could have remitted the matter to the learned Single Judge for its decision on merits, but instead it was provided that Page 2 of 33 Downloaded on : Sun Feb 21 17:05:12 IST 2021 C/LPA/308/2020 JUDGMENT the matter may be argued on merits and the Division Bench itself will examine the same. Learned counsel for the parties had not raised any objection to the Division Bench hearing the matter on merits.
3. Accordingly, we heard Shri Kamal Trivedi, learned Senior Advocate assisted by Shri Abhishek Mehta, learned counsel for the appellants and Shri Chirag K. Sukhwani, learned counsel for the respondent No.3, the claimant before the Tribunal, the contesting party and have perused the material on record.
4. The appellant company had appointed the respondent No.3 as its Contractor after following the due tender process and had accepted its bid for executing works contract pertaining to laying of HDPE and GRP pipeline for 3 phases including construction of man- holes, pipe culverts, canal and road crushing etc. as part of augmentation of effluent disposal system at Ankleshvar, GIDC Estate. Pursuant to the said acceptance, a Contract Agreement was executed on Page 3 of 33 Downloaded on : Sun Feb 21 17:05:12 IST 2021 C/LPA/308/2020 JUDGMENT 20.08.2008 between the parties. As per the terms of the agreement, there was a provision for arbitration which could be referred to as per rules of the Indian Council of Arbitration (respondent No.1). There was an earlier litigation also with which we are not concerned, however, while mentioning the chronology of events at a later stage, reference to the said petition would also be made.
5. The Indian Council of Arbitration ("ICA" for short) vide letter dated 23.12.2013 notified the Constitution of the Arbitral Tribunal by appointing the respondent No.2 as the Arbitral Tribunal. The first meeting of the Tribunal was scheduled for 30.01.2014. While notifying the Arbitral Tribunal, the ICA forwarded only a Statement of Claim submitted by the respondent No.3 - claimant along with supporting documents.
6. The present appellants who were the respondents before the Arbitral Tribunal intimated the Tribunal vide their communication dated 31.12.2013 that they Page 4 of 33 Downloaded on : Sun Feb 21 17:05:12 IST 2021 C/LPA/308/2020 JUDGMENT are not willing to conduct the matter before the Arbitrator appointed by the ICA. On 30.01.2014, the first and preliminary meeting of the Arbitral Tribunal was held which the appellants did not attend. A next meeting of the Arbitral Tribunal which was fixed for 25.02.2014 was again not attended by the appellants. On the said date, the Arbitral Tribunal issued final notice to the appellants to attend the next meeting failing which the Tribunal would proceed with the reference.
7. In the meantime, the appellants approached this Court vide Special Civil Application No.3072 of 2014, challenging the appointment of the Arbitrator on certain grounds. This Court passed interim order dated 25.02.2014 staying the Arbitral proceedings. The said petition remained pending till 10.07.2015 which was dismissed by this Court and the interim order was discharged.
8. Thereafter, the third meeting of the Arbitral Tribunal was fixed for 06.08.2015. In this meeting, the niceties Page 5 of 33 Downloaded on : Sun Feb 21 17:05:12 IST 2021 C/LPA/308/2020 JUDGMENT were decided regarding procedure to be adopted, place of arbitration, schedule of filing documents etc. The appellants were granted time till 15.09.2015 to file the Statement of Defence along with counter claim, if any. On 15.09.2015, the appellants did not file any documents but sought three weeks' further extension to file the same, whereupon the time was extended by the Tribunal till 06.10.2015.
9. The fourth meeting was scheduled for 18.12.2015. In the meantime, the appellants filed its Statement of Defence and counter claim vide covering letter dated 08.10.2015. The claimant filed its reply on the Statement of Defence to which a rejoinder was filed by the appellants. Further, the claimant filed additional documents on 18.12.2015 i.e. on the date of fourth meeting. On the said date, the Arbitral Tribunal granted opportunity to the appellants to respond thereon i.e. the additional documents filed on 18.12.2015 and fixed the next meeting for 06.02.2016. On 06.02.2016, the fifth meeting of the Arbitral Page 6 of 33 Downloaded on : Sun Feb 21 17:05:12 IST 2021 C/LPA/308/2020 JUDGMENT Tribunal was held. On the said date, the appellants stated that it did not propose to file any further documents. Both the parties informed the Arbitral Tribunal that they did not wish to lead oral evidence.
10. The reference was thereafter fixed for hearing, however, the appellants moved an application dated 19.04.2016 addressed to the ICA requesting it to take appropriate steps to recuse the counsel and technical consultant of the claimant - respondent No.3 from the Arbitral proceedings as both of them were empanelled on the panel of the Arbitrators of the ICA. The Arbitral Tribunal in regard to the above had written to the ICA vide letter dated 17.12.2016.
11. The appellants thereafter moved another application dated 14.04.2017 under Section 12 read with Section 13 of the 1996 Act, requesting the Sole Arbitrator to recuse himself from the arbitration proceedings and to terminate the Arbitral proceedings. This application was rejected by the Tribunal vide order dated 02.08.2017 giving detailed reasons for the rejection. Page 7 of 33 Downloaded on : Sun Feb 21 17:05:12 IST 2021
C/LPA/308/2020 JUDGMENT The appellants thereafter vide email dated 09.08.2017 informed the Arbitral Tribunal that it wanted time to examine the legal ramification of the order dated 02.08.2017 and as such prayed for adjournment of the hearing already fixed for 12th to 14th August, 2017, not only for the above reasons but also for the reason that there had been death in the family of the learned counsel for the appellants. The Tribunal adjourned the hearing and fixed 16th and 17th September, 2017, for the submission of the appellants' arguments.
12. On 16.09.2017, the appellants instead of proceeding to commence their defence arguments moved another application under Rule 63 of the ICA Rules praying that the Tribunal may not proceed any further and close the Arbitral proceedings as the mandate of the Arbitral Tribunal stands terminated, not only in view of the ICA Rules but also under the provisions of the 1996 Act. It was further prayed that the proceedings may be adjourned and may not be proceeded with any further.
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13. The claimant - respondent No.3 was granted time to respond to the said application and thereafter the matter was fixed for 01.10.2017. On 01.10.2017, the Arbitral Tribunal held that it had the mandate to continue with the Arbitral proceedings and the application filed by the respondents - appellants on 16.09.2017 stands rejected and a detailed reasoned order in the matter would be issued along with the award for the dispute. The Tribunal required the counsel for the respondents to commence its defence arguments and submissions, to which the counsel for the respondents objected to such oral order and insisted that a written order may be provided on the very same day. The Arbitral Tribunal recorded that it had some difficulty on account of want of facilities of typing and printing. The Arbitral Tribunal required the respondents - appellants to give in writing their objections recording the demand of the written order and the objection to the claimant proceeding further in the matter, but the counsel for the respondents - Page 9 of 33 Downloaded on : Sun Feb 21 17:05:12 IST 2021
C/LPA/308/2020 JUDGMENT appellants insisted on its earlier stand whereupon the Arbitral Tribunal required him to dictate his objections. Interestingly, the Arbitral Tribunal recorded the proceedings as it transpired and fixed 03.10.2017 as the next date on which the matter was to be taken up at 11.00 a.m. It would be interesting to peruse the proceedings of 01.10.2017 as recorded by the Arbitral Tribunal, which reflects the conduct of the appellants. The same is reproduced below :
"Proceedings of Arbitral Tribunal Before the Arbitral Tribunal of Shri A. B. Desai, Sole Arbitrator Case No.AC - 1903 In the matter of adjudication of disputes between M/s. N.D.Patel Construction, Bharuch ...Claimant and M/s. Narmada Clean Tech Limited, Ankleshwar ...Respondent For the disputes arising out of work of "Laying of HDPE and GRP Pipeline for three phases including construction of Manholes, Pipe Culverts, Canal and Road Crossing, Connecting Large Scale Industries as a part of Augmentation of existing Effluent Disposal System at Ankleshwar GIDC Estate.
16th Meeting held on 01.10.2017 Place : Hotel Express, Vadodara Time : 11:30 hrs. Page 10 of 33 Downloaded on : Sun Feb 21 17:05:12 IST 2021 C/LPA/308/2020 JUDGMENT Present : Claimant : (i) Shri Mukesh Thakkar Counsel (ii) Shri N.D.Patel Claimant (iii) Shri Upendra Shah Tech. Advisor Respondent : (i) Shri Abhishek Mehta Advocate (ii) Shri Tushar A. Bhatt Sr. Officer (P&A) 1.0 The Arbitral Tribunal welcomed the persons present.
2.0 The respondent has, vide letter dated 23.08.2017 filed its response on the Application of the respondent filed by it on 16.09.2017 for Termination of arbitral proceedings.
3.0 During the arbitral proceedings today the respondent, vide letter dated 01.10.2017, filed its response on the claimant's response dated 23.09.2017.
4.0 The AT directed the counsel for the respondent to make oral submissions if any on the matter of said application. The counsel for the respondent commenced its oral submissions, covering its response on the submissions made by the claimant vide letter dated 23.09.2017 and concluded its case. Thereupon the AT directed the counsel of the claimant to make oral submissions if any. The counsel for the claimant submitted that the he had nothing to submit orally than that stated vide letter dated 23.09.2017.
5.0 There upon the AT pronounced its order, orally, as under :
ORDER The AT has the mandate to continue with the arbitral Page 11 of 33 Downloaded on : Sun Feb 21 17:05:12 IST 2021 C/LPA/308/2020 JUDGMENT proceedings. The Application filed by the respondent on 16.09.2017 stands rejected. The detailed reasoned Order in the matter shall be issued along with the Award for this dispute.
The AT also stated that this oral Order shall be followed in writing vide proceedings of meeting to be issued for the meeting of today.
6.0 The AT directed the counsel of the claimant to commence its defence arguments / submissions. 7.0 The counsel for the respondent objected to such oral Order, which was to be followed by the written Order víde the record of the proceedings to be issued. It may be mentioned here that for want of facilities of typing and printing at the venue of the meeting, the copies of the proceedings for the 15 meeting held so far, have been issued by the Sole Arbitrator by e-mail from his residence after the completion of the arbitral meeting for the day. The counsel of the respondent insisted for written order immediately in the meeting. Further it was also insisted by him that the reasoned Order shall be given before he (i.e. the counsel for the respondent) proceeds further In the matter. The AT requested him to give his objection / demand in writing so that his objection / demand can be faithfully recorded in the record of proceeding to be issued for today. The counsel of the respondent refused to give the same in writing. The AT thereupon requested the counsel of the respondent to dictate his objection / demand to the AT to enable the Sole Arbitrator to faithfully record the same in the proceedings of the meeting to be issued. The dictation given by the counsel of the respondent is reproduced below:
"The respondent has made oral submissions. The respondent is requesting the AT for issuance of reasoned detailed order to be passed before any further arbitral proceedings so that the reasoned Order can be challenged before the appropriate forum. The AT wants Page 12 of 33 Downloaded on : Sun Feb 21 17:05:12 IST 2021 C/LPA/308/2020 JUDGMENT to proceed without giving a reasoned Order by saying that an Order has been passed verbally to be followed by a written order according to convenience of the AT. According to the respondent it desires to know the grounds for rejection of its Application dated 16.09.2017as according to the respondent the mandate of the AT stands terminated as per Rule 63 and further procedure is required to be undertaken as per Rule 27 of the ICA. Therefore the respondent is not in a position to proceed further today. If the written Order is passed immediately and copy thereof is given to the respondent, the respondent will undertake procedure in accordance with the law."
8.0 At this stage the AT put both the parties to Notice about the provisions under Rules 46, 47. 48, 49 of ICA Rules of Arbitration and Para 19 of the ̇Guidelines for Arbitrators and Parties.' under Rules of ICA. 9.0 In view of the above circumstances, the matter was adjourned for the day and the ̇AT decided to have the next meeting on 03.10.2017.
10.0 Accordingly the next meeting shall be held at 1100 hrs on 03.10.2017. The party making the arrangement for the meeting will intimate all concerned about venue of the said meeting well before the date of the next meeting.
(A.B. Desai) Sole Arbitrator"
14. Aggrieved by the said order passed by the Arbitral Tribunal on 01.10.2017, the respondents - appellants approached the High Court by way of Special Civil Application No.18097 of 2017 in which an interim order was passed on 02.10.2017 considering the Page 13 of 33 Downloaded on : Sun Feb 21 17:05:12 IST 2021 C/LPA/308/2020 JUDGMENT urgency in the matter as the next date fixed before the Arbitral Tribunal was 03.10.2017. The said interim order dated 02.10.2017 is reproduced below :
"1. The matter was mentioned before the Hon'ble Chief Justice and the same was permitted to circulated at residence considering the urgency and hence, the matter was taken up.
2. Heard Shri Kamal B. Trivedi, learned Advocate General with Mr.Abhishek Mehta, learned advocate appearing for the petitioner.
3. It appears that the mandate of the learned Arbitrator, respondent no.2 herein has come to an end. Though an application as provided under Rule 63 was given, no order is passed and the matter is kept on 03.10.2017. As the issue goes to the very authority of the learned Arbitrator to conduct the arbitration proceeding, in view of the provisions of section 14 and 15 of the Arbitration & Conciliation Act,1996 read with Rule 63 as well as Rule 38 read with Rule 27 of the ICA Rules of arbitration, hence, notice returnable on 09.10.2017. Ad interim relief in terms of para 10 (C).
4. The order be communicated to respondent no.2 by fax/email today. D.S. permitted today."
15. The said interim order dated 02.10.2017 continued till 18.05.2020 when the writ petition came to be dismissed by the learned Single Judge. It is against the said judgment and order of the learned Single Judge that the present Letters Patent Appeal has been Page 14 of 33 Downloaded on : Sun Feb 21 17:05:12 IST 2021 C/LPA/308/2020 JUDGMENT preferred.
16. The submission of Shri Kamal Trivedi, learned Senior Advocate relying upon Rule 63 of the ICA Rules of Arbitration, according to which the maximum permissible period for giving the award having expired, the Arbitral Tribunal had lost its mandate and could not have proceeded any further. According to Shri Trivedi, the Arbitral Tribunal entered into reference on 02.01.2014 as stated in paragraph 4.8(iii)(a) of the writ petition. As such, the maximum period of 2 years plus additional 1 year which could have been granted by the Registrar of ICA had expired on 01.01.2017 and therefore, the Arbitral Tribunal had no mandate at all to continue with the Arbitral proceedings after the said date. The decision of the Arbitral Tribunal dated 01.10.2017 was patently illegal and contrary to the Rules and as such, deserves to be quashed. Shri Trivedi further submitted that the Arbitral Tribunal itself was not sure of the date of entering reference as vide letter dated 25.09.2017 it had requested the Page 15 of 33 Downloaded on : Sun Feb 21 17:05:12 IST 2021 C/LPA/308/2020 JUDGMENT Registrar, ICA to declare 06.02.2016 as the date of entering reference so that it can proceed further. A copy of the letter dated 25.09.2017 is on record at page 157 of the paper-book. In the said letter, the Arbitral Tribunal had recorded the facts in detail chronologically to which the parties have no objection as being the correct facts. As such, we have taken the chronology of events recorded in this judgment from the said communication.
17. Shri Trivedi further submitted that the ICA never accepted the request made by the Arbitral Tribunal vide letter dated 25.09.2017 and as such the Arbitral Tribunal had no mandate to continue any further as its mandate had come to an end upon completion of 3 years on 1st January, 2017. Lastly, Shri Trivedi submitted that the Arbitral Tribunal committed another serious error by not giving the reasons and rejecting the application of the appellants dated 16.09.2017 under Rule 63 of the ICA Rules and having further observed that the reasoned order would be Page 16 of 33 Downloaded on : Sun Feb 21 17:05:12 IST 2021 C/LPA/308/2020 JUDGMENT given along with the award.
18. Lastly Shri Trivedi learned Senior Counsel submitted that the Arbitral Tribunal never communicated the date of entering reference as required under Rule 38 and therefore, 02.01.2014 should be taken as the date of entering reference. The subsequent date i.e. 06.02.2016 for which the Arbitral Tribunal had requested the Registrar, ICA to be so determined, had also not been communicated to the parties as such the same could not be treated as the date of entering reference.
19. Shri Trivedi has placed reliance upon the following judgments in support of his submissions :-
1. Jagatsingh and Sons vs. Garrison Engineer, reported in AIR 1991 JK 43.
2. Ramnath Agarwala vs. Goenka and Co., reported in AIR 1973 Cal. 253.
3. Babubhai Vanmalidas Mehta vs. Prabhod Pranshankar Joshi, reported in AIR 1956 Bom.
146.
4. M/s. Indian Farmers Fertilizer Co-operative Limited vs. M/s. Bhadra Products, reported in (2018) 2 SCC 534.Page 17 of 33 Downloaded on : Sun Feb 21 17:05:12 IST 2021
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20. In response, Shri Sukhwani submitted that it is apparent from the facts recorded in the communication dated 25.09.2017 that the time period prescribed had not expired. Rule 38 of the ICA Rules is very clear that the date of entering reference would be from the date when the pleadings are complete, which according to him came to be completed on 06.02.2016 when the appellants submitted that they had nothing further to file.
21. Shri Sukhwani also referred to Section 29A of the 1996 Act which also provides that the date of entering reference by the Tribunal would be the date on which the pleadings are complete. Shri Sukhwani thus submitted that the decision of the Arbitral Tribunal to reject the application of the appellants dated 16.09.2017 and to hold that it had the mandate to continue was the correct decision.
22. Shri Sukhwani also submitted that the appellants Page 18 of 33 Downloaded on : Sun Feb 21 17:05:12 IST 2021 C/LPA/308/2020 JUDGMENT having throughout made attempts to delay the proceedings by seeking repeated adjournments, raising technical pleas and objections, filing petition before this Court in which interim orders were passed because of which the Tribunal could not proceed, as such cannot claim any benefit for the said periods which needs to be excluded specially the period during which there was an interim order operating against the Arbitral Tribunal to proceed.
23. Mr. Sukhwani further submitted that if the period prescribed under Rule 63 is to be followed from 06.02.2016 excluding the period during which there was interim order passed by the learned Single Judge, the period has not expired and the mandate still continues for the Arbitral Tribunal to proceed. Shri Sukhwani thus submitted that the Letters Patent Appeal deserves to be dismissed even on merits as there is no infirmity in the decision of the Arbitral Tribunal dated 01.10.2017.
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24. It was further submitted that the appellants never allowed the Arbitral Tribunal to record reasons but insisted for an order which the Tribunal accepted and even incorporated the dictation of the learned counsel for the appellants and now the appellants are raising a plea that the order of the Tribunal is non-speaking.
25. Further submission of Mr. Sukhwani is that the Tribunal in its communication dated 25.09.2017 to the Registrar, ICA, had mentioned the detailed facts and had requested for declaration of date of entering reference as 06.02.2016. Only if the appellants had allowed time to the Arbitral Tribunal on 01.10.2017, it could have recorded reasons and provided it to the appellants but at their instance they obtained a non- speaking order on 01.10.2017 and on the very next day i.e. 02.10.2017 an interim order was passed by this Court staying further proceedings before the Arbitral Tribunal.
26. Shri Sukhwani lastly submitted that after 18.05.2020, when the writ petition was dismissed and the interim Page 20 of 33 Downloaded on : Sun Feb 21 17:05:12 IST 2021 C/LPA/308/2020 JUDGMENT order was discharged, the appellants are seeking time before the Arbitral Tribunal. He thus submitted that appropriate directions may be issued to the Tribunal to proceed and deliver the award within the stipulated time which is still there in abundance, after affording opportunity of hearing to the parties concerned.
27. Having considered the submissions of the learned counsel for the parties and having perused the material on record as also the statutory provisions, in our considered opinion, the moot and the only question which requires consideration is as to what is the relevant date for entering into the reference by the Arbitral Tribunal.
28. Let us first examine the legal provisions. It is admitted to the parties that the procedure as laid down in the Rules of Arbitration of the Indian Council of Arbitration (hereinafter referred to as "the ICA Rules") is the relevant rules applicable to be followed for deciding the reference which includes the appointment of arbitrator, reference to the arbitrator entering upon Page 21 of 33 Downloaded on : Sun Feb 21 17:05:12 IST 2021 C/LPA/308/2020 JUDGMENT the reference, the time period prescribed in completing the pleadings, the time limit prescribed for giving award by the Arbitral Tribunal and other related issues.
29. Rule 38 of the ICA Rules mandates that the Registrar shall forward the copies of all papers relating to arbitration to the arbitrator / arbitrators constituting the Arbitral Tribunal with request to proceed with the arbitration. It further mentions that the Arbitral Tribunal shall be deemed to have entered on the reference on the day on which the pleadings have been completed by way of dispatch by the parties and thereafter the parties would be intimated about the date on which the Arbitral Tribunal is deemed to have entered on the reference. It is further provided in the same rule regarding the failure or default on the part of the claimant and the respondent and the consequences which may follow. Rule 38 of the ICA Rules is reproduced below :
"Rule 38 - The Registrar shall send copies of all Page 22 of 33 Downloaded on : Sun Feb 21 17:05:12 IST 2021 C/LPA/308/2020 JUDGMENT papers relating to arbitration such as claim statement, defence statement, counterclaims, reply, statements, or other documents received from the parties to the dispute to the Arbitrator/Arbitrators constituting the Arbitral Tribunal under Rule 22 with a request to proceed with the arbitration and the arbitral tribunal shall be deemed to have entered on the reference on the day on which applications, defence statement, counter-claims, replies, documents, etc. have been dispatched to the Arbitrator/Arbitrators. Intimation shall be given to the Parties of the day on which the Arbitral Tribunal is deemed to have entered on the reference.
If the Claimant does not file all the requisite documents, papers, etc. or does not deposit the appropriate fees as per the Rules after having been given due opportunity for the purpose by the Registrar or the arbitral tribunal, the Registrar or the arbitral tribunal may dismiss/close the case on file for lack of pursual by the Claimant. Similarly, if the Respondent fails to produce any requisite documents, papers including the statement of defence or information or fails to deposit administrative fees, or arbitrators fees etc. after having been given due opportunity for the purpose by the Registrar or the arbitral tribunal, the Registrar or the arbitral tribunal may proceed further with the arbitration proceedings as per the Rules, notwithstanding such failure or refusal by the Respondent."
30. Rule 63 of the ICA Rules provides for the time limit within which the Arbitral Tribunal shall make an award. According to it, the award should be made as expeditiously as possible by the Arbitral Tribunal, Page 23 of 33 Downloaded on : Sun Feb 21 17:05:12 IST 2021 C/LPA/308/2020 JUDGMENT preferably within 6 months from the date of the reference subject to a maximum limit of 2 years from the date on which Arbitral Tribunal entered into reference in terms of Rule 38 of the ICA Rules. It further relaxes the above period only in case of extreme necessity. The Arbitral Tribunal may request the Registrar to extend the time to make the award and thereafter the Registrar in consultation with the Chairman of the Arbitration Committee extend such time for a period which may not go beyond 1 year only if the request is found to be reasonable and necessary. Meaning to say that the Arbitral Tribunal from the date of entering reference would have a maximum period of 3 years to make the award, 2 years normally and 1 year in case of extreme necessity and that too this extension of 1 year to be granted by the Arbitration Committee if it finds the request to be reasonable and necessary. Rule 63 of the ICA Rules is reproduced below :
"Rule 63 - The arbitral tribunal shall make the award as expeditiously as possible, preferably within six months, from the date of the reference Page 24 of 33 Downloaded on : Sun Feb 21 17:05:12 IST 2021 C/LPA/308/2020 JUDGMENT subject to a maximum limit of two years from the date on which arbitral tribunal entered into reference in terms of Rule 38. The Arbitral Tribunal only in case of extreme necessity, may request the Registrar to extend the time to make the award and the Registrar may in consultation with the Chairman of the Arbitration Committee, extend such time for a period not exceeding one year, if such request is found to be reasonable and necessary."
31. Although the date of entering reference by the Arbitral Tribunal or the period permitted for making the award under the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the 1996 Act") are almost akin although differently worded. Although the procedures and the limitations prescribed under the 1996 Act regarding the above two provisions may not be applicable here but nevertheless we are referring to the same to show the similarity.
32. Section 29A of the 1996 Act provides for the time limit for arbitral award. The Section reads as follows :
"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.Page 25 of 33 Downloaded on : Sun Feb 21 17:05:12 IST 2021
C/LPA/308/2020 JUDGMENT 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:
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.] Page 26 of 33 Downloaded on : Sun Feb 21 17:05:12 IST 2021 C/LPA/308/2020 JUDGMENT (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."
33. Sub-section (1) of Section 29A clearly mandates that the award is to be given within a period of 12 months from the date of completion of pleadings under sub- section (4) of Section 23. The remaining sub-sections Page 27 of 33 Downloaded on : Sun Feb 21 17:05:12 IST 2021 C/LPA/308/2020 JUDGMENT provide for extension of time for delivering the award by the Tribunal. We are not going into the details of the same. However, before proceeding further, we will consider the import of Section 23(4). Section 23 talks of the statement of claim and defence. The same is reproduced below :
"23. Statement of claim and defence - (1) Within the period of time agreed upon by the parties or determined by the arbitral tribunal, the claimant shall state the facts supporting his claim, the points at issue and the relief or remedy sought, and the respondent shall state his defence in respect of these particulars, unless the parties have otherwise agreed as to the required elements of those statements.
(2) The parties may submit with their statements all documents they consider to be relevant or may add a reference to the documents or other evidence they will submit.
[(2A) The respondent, in support of his case, may also submit a counterclaim or plead a set-off, which shall be adjudicated upon by the arbitral tribunal, if such counterclaim or set-off falls within the scope of the arbitration agreement.] (3) Unless otherwise agreed by the parties, either party may amend or supplement his claim or defence during the course of the arbitral proceedings, unless the arbitral tribunal considers it inappropriate to allow the amendment or supplement having regard to the delay in making it.
[(4) The statement of claim and defence under this Page 28 of 33 Downloaded on : Sun Feb 21 17:05:12 IST 2021 C/LPA/308/2020 JUDGMENT 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.]"
34. In sub-section (4), it is provided that the statement of claim and defence would be completed within a period of 6 months from the date the arbitrator or all the arbitrators as the case may be received notice in writing of their appointment.
35. In the report / communication of the Arbitral Tribunal to the Registrar, ICA dated 25.09.2017, the facts as stated therein are not disputed. One small issue raised by the appellants is that whether the last date for completion of the pleadings would be 18.12.2015 or it would be 06.02.2016. Whatever may be the case, in our considered opinion, the fact remains that the period prescribed under Rule 63 of the ICA Rules has not expired.
36. The order of the Arbitral Tribunal dated 01.10.2017 was stayed by this Court vide order dated 02.10.2017 Page 29 of 33 Downloaded on : Sun Feb 21 17:05:12 IST 2021 C/LPA/308/2020 JUDGMENT i.e. the very next date. The Tribunal therefore could not proceed any further. The writ petition challenging the reference proceedings and the order of the Arbitral Tribunal dated 01.10.2017 came to be dismissed vide order dated 18.05.2020. Therefore, this period obviously i.e. from 02.10.2017 till 18.05.2020 cannot be counted as the period allowed to the Arbitral Tribunal to deliver the award. If this period is excluded, the period on which the pleadings were complete whether it is 06.02.2016 or 18.12.2015, the period of 2 years would not have expired and then there is a further relaxation of an additional 1 year. The Registrar, ICA did not communicate any decision of the Chairman, Arbitration Committee on the request made by the Arbitral Tribunal on 25.09.2017. By the said letter, the Arbitral Tribunal had requested for 06.02.2016 to be declared as the date of entering reference.
37. Taking into consideration the two periods during which there was an interim order passed by the High Page 30 of 33 Downloaded on : Sun Feb 21 17:05:12 IST 2021 C/LPA/308/2020 JUDGMENT Court which were granted on the petitions and Civil Applications filed by the appellant, no benefits can be extended to the appellant. The said period during which there was an interim order operating passed by this Court, cannot be counted as a part of the period provided under the ICA Rules. The Arbitral Tribunal still has sufficient time to proceed with the matter and deliver the award within time as prescribed under the ICA Rules.
38. Now coming to the 4 judgments relied upon by the learned counsel for the appellant.
39. At the outset, it may be stated that none of the judgments relate to the provisions contained in the Indian Council of Arbitration Rules. However, still we may refer in brief to the same.
40. The first three judgments, i.e. Jagatsingh and Sons (supra), Ramnath Agarwala (supra)and Babubhai Vanmalidas Mehta (supra) although deal with the Page 31 of 33 Downloaded on : Sun Feb 21 17:05:12 IST 2021 C/LPA/308/2020 JUDGMENT issue relating to as to when arbitrator is deemed to have entered the reference, but the said judgments would be of no application to the present case. None of these judgments deal with the ICA Rules. Admittedly in the present case, the Arbitral Tribunal is to be proceeded in accordance with the ICA Rules. Rule 38 and Rule 63 of the ICA Rules have been reproduced and duly discussed in the earlier part of this judgment. These provisions provide in no uncertain terms that the date of entering the reference would be the date of completion of pleadings.
41. The 4th judgment in the case of Indian Farmers Fertilizer Cooperative Limited (supra) also does not deal with the provisions of the ICA Rules and as such, the same would have no application to the facts of the present case.
42. For the reasons recorded above, we do not find any error in the order passed by the Tribunal which was impugned before the learned Single Judge and now Page 32 of 33 Downloaded on : Sun Feb 21 17:05:12 IST 2021 C/LPA/308/2020 JUDGMENT before us. We accordingly dismiss this Letters Patent Appeal and request the Arbitral Tribunal to proceed with the matter and deliver the award after affording due opportunity of hearing at the earliest so that there is no violation to the limitation provided under the ICA Rules. Consequently, the connected Civil Application also stands disposed of.
(VIKRAM NATH, CJ) (J. B. PARDIWALA, J) DRASHTI K. SHUKLA/ Page 33 of 33 Downloaded on : Sun Feb 21 17:05:12 IST 2021