Gujarat High Court
Shankar Shabanna Kurbur vs S. K. Corporation on 18 August, 2023
Author: Biren Vaishnav
Bench: Biren Vaishnav
NEUTRAL CITATION
C/SCA/566/2022 JUDGMENT DATED: 18/08/2023
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 566 of 2022
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BIREN VAISHNAV
and
HONOURABLE MR. JUSTICE DEVAN M. DESAI
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1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy
of the judgment ?
4 Whether this case involves a substantial question
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
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SHANKAR SHABANNA KURBUR
Versus
S. K. CORPORATION
==========================================================
Appearance:
MR AB MUNSHI(1238) for the Petitioner(s) No. 1
MR NM KAPADIA(394) for the Respondent(s) No. 1,2,3,4,5,6,7,8,9
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CORAM:HONOURABLE MR. JUSTICE BIREN VAISHNAV
and
HONOURABLE MR. JUSTICE DEVAN M. DESAI
Date : 18/08/2023
ORAL JUDGMENT
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NEUTRAL CITATION C/SCA/566/2022 JUDGMENT DATED: 18/08/2023 undefined (PER : HONOURABLE MR. JUSTICE BIREN VAISHNAV) [1] Heard learned Senior Counsel Mr.Percy Kavina appearing with Mr.A.B.Munshi, learned advocate for the petitioner and learned advocate Mr.N.M.Kapadia for the respondents. [2] Rule returnable forthwith. Learned advocate Mr.N.M.Kapadia waives service of notice of rule for and on behalf of respondents. With consent of learned advocates appearing for the respective parties, the matter is taken up for final hearing. [3] The petitioner, who was the original claimant, has filed this petition for a direction to quash and set aside the judgment and order dated th 01.10.2021 passed by the Commercial Court, 11 Additional District Judge, District & Sessions Court, Surat below Exhibit-16 in Commercial CMA No.1 of 2019.
[4] The facts in brief are as under:- Page 2 of 30 Downloaded on : Sun Sep 17 01:33:01 IST 2023
NEUTRAL CITATION C/SCA/566/2022 JUDGMENT DATED: 18/08/2023 undefined 4.1 It is the case of the petitioner that the petitioner and the respondents are partners of a partnership firm namely "S.K. Corporation". The firm was mainly engaged in the development of land, construction and development of societies and apartments.
4.2 It appears that pursuant to an Arbitration Clause in the partnership deed, as disputes arose inter-se between the partners, an Arbitrator was appointed pursuant to some proceedings under Section 11 of the Arbitration and Conciliation Act, by this Court. The petitioner-claimant filed a Statement of Claim. The Aribtral Tribunal (Coram: Hon'ble Mr.Justice Mr.A.L.Dave, Retired Judge of this High Court) was appointed as an Arbitrator. An th application for interim relief was filed on 7 July, 2018. On that date, the Tribunal passed an order directing the respondents to maintain status quo in respect of the properties in question till further orders.Page 3 of 30 Downloaded on : Sun Sep 17 01:33:01 IST 2023
NEUTRAL CITATION C/SCA/566/2022 JUDGMENT DATED: 18/08/2023 undefined 4.3 On 17.07.2018, the respondent Corporation and its partners filed an application for modification / vacation of interim relief. The Tribunal, after hearing the parties, partly allowed the application modifying the order to the extent that the respondents would maintain status-quo in respect of the title of 33 flats.
4.4 It appears that the petitioner-claimant also filed an application for cancellation of Agreement to Sale made in favour of third parties and for amendment of Statement of Claim. That application, by an order dated 11.03.2019, was ordered accordingly as effected in the order so passed. 4.5 An application was filed for deleting a few lines seeking amendment of para-10 of the application for modification / vacation for interim th relief by the respondents. On that very date i.e. 11 March, 2019, Arbitral Tribunal rejected the application seeking modification of the application. Page 4 of 30 Downloaded on : Sun Sep 17 01:33:01 IST 2023
NEUTRAL CITATION C/SCA/566/2022 JUDGMENT DATED: 18/08/2023 undefined 4.6 The respondents, aggrieved by the order th dated 11 March, 2019 passed by the learned Arbitral Tribunal, challenged the same before the Commercial Court. The Commercial Court, vide order dated 01.10.2023, allowed the application and th quashed the order dated 11 March, 2019. Hence, the present petition.
[5] Learned Senior Counsel Mr.Percy Kavina appearing for the petitioner would make the following submissions:-
5.1 Mr.Kavina, learned Senior Counsel, would th invite the Court's attention to the Minutes of 10 Arbitral Sitting held on 25.02.2019. Taking us to the Minutes of the Meetings of the Sitting, Mr.Kavina, learned Senior Counsel, would submit that, on that date, the parties were heard on the question of modification / vacation of interim relief and also were heard on the application tendered by the petitioner for amendment. The matter was finally concluded and kept for orders.
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NEUTRAL CITATION C/SCA/566/2022 JUDGMENT DATED: 18/08/2023 undefined 5.2 Mr.Kavina, learned Senior Counsel, would further submit that as soon as the Arbitral Tribunal th pronounced an order on 11 March, 2019, after conducting hearing which was concluded on 25.02.2019, and on the Minutes being drawn on 13.03.2019, the respondents moved an application on 15.03.2019. Inviting the attention of the Court to the th order below the application dated 15 March, 2019, Mr.Kavina, learned Senior Counsel, would submit that what is evident from reading the contents of the order is that the Sole Arbitrator in accordance with Section 29(A) of the Arbitration Act, received notice th on 20 February, 2018 and issued notice to the th concerned parties on 26 February, 2018 fixing th preliminary meeting on 12 March, 2018. The Tribunal, noting the relevant dates and pained by the conduct of the respondents, passed an order that the Sole Arbitraor is not willing and not available to continue as arbitrator in the matter. 5.3 Mr. Kavina, learned Senior Counsel, Page 6 of 30 Downloaded on : Sun Sep 17 01:33:01 IST 2023 NEUTRAL CITATION C/SCA/566/2022 JUDGMENT DATED: 18/08/2023 undefined therefore, inviting the Court's attention to the relevant dates would indicate that even taking 26.02.2018 being the date on which the Arbitrator entered upon the reference would be the date on which the Arbitrator's mandate would cease prior thereto. On 25.02.2019, the matter was heard and reserved for orders. The mandate of the Arbitrator on that date had not ceased. Passing of an order on th 11 March, 2019, therefore, could not have been taken as a ground for setting aside the order as an order passed without jurisdiction as it is held by the Commercial Court in its impugned order. 5.4 Mr.Kavina, learned Senior Counsel, would invite the Court's attention to the relevant dates th again in the order below the application of 15 March, 2019, which indicates that on every occasion, the respondents, who participated before the Sole Arbitrator, sought for time by filing adjournment th pursis, had participated in the hearing on 25 th February, 2019 and tendered an application on 15 of March, at 1.45 p.m. indicating that they do not Page 7 of 30 Downloaded on : Sun Sep 17 01:33:01 IST 2023 NEUTRAL CITATION C/SCA/566/2022 JUDGMENT DATED: 18/08/2023 undefined agree to the arbitration proceedings being continued as the mandate of the Arbitrator had expired. According to Mr.Kavina, learned Senior Counsel, the conduct of the parties, especially the respondents would indicate that having so participated in the proceedings, an implied consent needs to be taken note of and the Commercial Court, therefore, could not have set aside the order observing that such an order could not have been passed as the mandate of the Arbitrabtor had expired.
5.5 Mr.Kavina, learned Senior Counsel, would further submit that on that very date, an application for amendment of Statement of Claim was considered by the Tribunal, in which, the Tribunal partly allowed the application for amending para-10 at the hands of the very respondents, while the prayers for modification of the interim order was rejected by the Tribunal, which order, the respondents did not challenge. He would, therefore, submit that if the order of the Tribunal is allowed to stand, the effect thereof, would be that even the earlier orders of Page 8 of 30 Downloaded on : Sun Sep 17 01:33:01 IST 2023 NEUTRAL CITATION C/SCA/566/2022 JUDGMENT DATED: 18/08/2023 undefined rejecting the application for modification of para-10 in the application of the respondents would stand concluded without it being challenged. [6] Learned counsel Mr.N.M.Kapadia for the respondents would make the following submissions:- 6.1 Drawing the Court's attention to the relevant part of the order impugned in this petition, Mr.Kapadia, learned counsel, would submit that it is apparent on reading the order that the order was passed on consensus. Mr.Kapadia, learned counsel, would submit that specific attention of the Court was drawn to para-6 of the order, wherein, the Court recorded the consensus of the learned advocate for the petitioner herein that he had fairly conceded to the fact that the order under challenge was without jurisdiction. He would, therefore, submit that once consensus has been recorded, it is not open for the petitioner to challenge the order. 6.2 Mr.Kapadia, learned counsel, would further Page 9 of 30 Downloaded on : Sun Sep 17 01:33:01 IST 2023 NEUTRAL CITATION C/SCA/566/2022 JUDGMENT DATED: 18/08/2023 undefined submit that the order really does not help the petitioner herein inasmuch as, the Commercial Court, by the order under challenge has left it open for the new Arbitrator to decide the application which the parties may file afresh. Mr.Kapadia, learned advocate would further submit that the order under challenge is of October, 2021 and the petition is filed in January, 2022, that too after filing of a reply to fresh application made by the petitioner, which response has already been filed by the petitioner. The challenge to this order is, therefore an after thought.
6.3 Mr.Kapadia, learned counsel, also would invite the Court's attention to the application filed under Section 16 of the Arbitration Act by the petitioner, wherein, in paras 11 & 12, it is expressly conceded by the petitioner that the original claimant has accepted the order passed by the Commercial Court.
6.4 Inviting the Court's attention to the Page 10 of 30 Downloaded on : Sun Sep 17 01:33:01 IST 2023 NEUTRAL CITATION C/SCA/566/2022 JUDGMENT DATED: 18/08/2023 undefined Affidavit-in-reply filed to the petition, Mr.Kapadia, learned advocate, would submit that apart from there being unreasonable delay in filing the petition, the jurisdiction of this Court in exercise of powers under Article 227 of the Constitution of India, is limited especially when it is the case of challenge to an order passed under the proceedings arising out of an Arbitration and Conciliation Act. This Court, in the case of Deep Industries Limited vs. Oil and Natural Gas Corporation Limited and Another reported in (2020) 15 SCC 706 has held that the Court should be circumspect in interfering with such orders. Mr.Kapadia, learned advocate, would invite the Court's attention to paras 11 and 15 to 18 of the judgment indicating that the judicial intervention in such matters is extremely restricted. 6.5 Mr.Kapadia, learned advocate, would further submit that now, the process of appointing new Arbitrator is in place, and once a new Arbitrator takes over, the proceedings be carried forward and the application filed for modification in the reply of Page 11 of 30 Downloaded on : Sun Sep 17 01:33:01 IST 2023 NEUTRAL CITATION C/SCA/566/2022 JUDGMENT DATED: 18/08/2023 undefined the petitioner can be considered by the authorities. Mr.Kapadia, learned advocate, would submit that the conduct of the parties is not relevant, in light of the Mandate under Section 29A of the Arbitration Act. Admittedly, when the Mandate of the Arbitrator had expired, mere participation in such proceeding would not obliviate the natural consequences of law. [7] Having considered the submissions made by the learned advocates for the respective parties, certain dates have to be kept in mind so as to test the arguments made by the learned counsels for the respective parties.
[8] What is evident on reading the order dated th 19 March, 2019, by which unfortunately, the sole Arbitrator had to recuse from the arbitral proceedings on an application filed by the respondents speaks volumes of the conduct of the respondents. What is evident is that the High Court vide its order dated th 9 of February, 2018 had requested the Arbitrator (Coram: Hon'ble Mr. Justice A.L.Dave, Retired Judge Page 12 of 30 Downloaded on : Sun Sep 17 01:33:01 IST 2023 NEUTRAL CITATION C/SCA/566/2022 JUDGMENT DATED: 18/08/2023 undefined of this Court) to act as a Sole Arbitrator to resolve the disputes between the present parties. On a consent given by the Arbitrator, an order was passed th by this Court on 16 February, 2018 appointing Hon'ble Mr. Justice A.L.Dave as a Sole Arbitrator.
th He was so informed vide notice dated 20 of February, 2018. The Tribunal issued notice to the th concerned parties on 26 February, 2018 fixing th preliminary / first meeting on 12 March, 2018. [9] At this point, it will be relevant to reproduce the provisions of Section 29A of the Arbitration and Conciliation Act:-
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.
Explanation.- For the purpose of this sub- section, an arbitral tribunal shall be deemed to have entered upon the reference on the date on which the arbitrator or all the arbitrators, as Page 13 of 30 Downloaded on : Sun Sep 17 01:33:01 IST 2023 NEUTRAL CITATION C/SCA/566/2022 JUDGMENT DATED: 18/08/2023 undefined the case may be, have received notice, in writing, of their appointment." [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 Page 14 of 30 Downloaded on : Sun Sep 17 01:33:01 IST 2023 NEUTRAL CITATION C/SCA/566/2022 JUDGMENT DATED: 18/08/2023 undefined 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.Page 15 of 30 Downloaded on : Sun Sep 17 01:33:01 IST 2023
NEUTRAL CITATION C/SCA/566/2022 JUDGMENT DATED: 18/08/2023 undefined (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. [10] Reading the provisions of Section 29A in light of the explanation, it is evident that an Arbitral Tribunal shall be deemed to have entered upon the reference on the date on which the Arbitrator has received notice. Taking the date of th 26 February, 2018, even as per the case of the respondents, the mandate of the Tribunal would th expire on 26 February, 2019.
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NEUTRAL CITATION C/SCA/566/2022 JUDGMENT DATED: 18/08/2023 undefined [11] However, certain facts noticed by perusal of th the order dated 19 March, 2019, Minutes of the th Arbitral Sitting of 25 February, 2019 notified on th 30 March, 2019 and reading the three orders of th even date i.e. 11 March, 2019, one is modifying interim relief, which is the subject matter in this petition, an order on application for amendment of the Statement of Claim and the application of the respondents for modifying paragraph-10 of the application for modification / vacation of interim relief, it is apparent that the respondents in the entire process of the arbitral proceedings consciously and responsibly participated.
[12] In the first instance, perusal of the Minutes
th th
of 10 Arbitral Sitting held on 25 February, 2019
would indicate that as a precursor to this
th
application, on 12 March, 2018, an application for
adjournment was made by the respondents and the th matter was posted for hearing on 26 March, 2018.
th On 26 March, 2018, the parties remained present, Page 17 of 30 Downloaded on : Sun Sep 17 01:33:01 IST 2023 NEUTRAL CITATION C/SCA/566/2022 JUDGMENT DATED: 18/08/2023 undefined preliminary meeting was held and it was decided th that the next sitting would be held on 7 July, 2018.
th On an application filed for interim relief on 7 July 2018, as is evident from the Minutes of the Meeting th of 25 February, 2019, "parties have been heard on the question of modification/vacation of interim relief including amendment in para-3 of the application seeking amendment of the application for vacating interim relief. Parties have also been heard on the application tendered by the claimant permitting amendment of the claim petition, hearing on the above aspects is finally concluded and the matter is kept for orders." Obviously therefore, as is recorded th in the Minutes that on 13 March, 2019, the hearing on these applications were concluded on 25.02.2019. The orders were pronounced on 11.03.2019, i.e. one application for modification which is the subject matter of challenge in this petition, and on an application for amendment of Statement of Claim and on an application by the respondents praying for modifying para-10 of the application for modification/vacation of interim relief, where the Page 18 of 30 Downloaded on : Sun Sep 17 01:33:01 IST 2023 NEUTRAL CITATION C/SCA/566/2022 JUDGMENT DATED: 18/08/2023 undefined Court passed certain remarks against the respondents observing the conduct of the respondents.
th [13] In the order below application dated 17 July, 2018 and thereafter seeking amendment of the application, whereby the respondents wanted to delete th para-10, the Tribunal on 11 March, 2019 observed that there were on record two applications seeking th the same reliefs on and after 14 February, 2019.
th The respondents gave purshis dated 25 February, 2019, stating that they would not press the earlier application seeking amendment in respect of paras 5, 9 and 10 of the application. However, they would press the second application seeking amendment of para-10. The Tribunal, reading the applications found that, the para pressing the amendment indicated that what was pleaded as a mistake would change the whole meaning of the sentence and it is difficult to be accepted as a mistake. It changes the entire stand of the parties. Accordingly, the application for modifying the relief in the application for vacating stay was rejected.
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NEUTRAL CITATION C/SCA/566/2022 JUDGMENT DATED: 18/08/2023 undefined [14] All these factors would go to show that uptil and until the Minutes of the Meeting passed on th 13 March, 2019, it did not occur to the respondents to press the mandate of Section 29A. But as soon as, it was found that the order modifying the relief th was unpalatable, as observed in the order dated 19 March, 2019, the respondents had made an th application on 15 March, 2019 before the Arbitral Tribunal seeking that the mandate of Tribunal has expired, and therefore, the clients i.e. the respondents are not agreeable to hearing which was scheduled on th 16 March, 2019.
th [15] Para-1 of the order dated 19 March, 2019 when read would indicate and for the benefit of this order, it is quoted as under:-
"1. This application is tendered on 15.03.2019 in this matter by Dr.B.D.Jain, learned advocate for the respondents; stating that since one year has passed from the date of Arbitral Tribunal holding its first meeting on 26.02.2018 and Page 20 of 30 Downloaded on : Sun Sep 17 01:33:01 IST 2023 NEUTRAL CITATION C/SCA/566/2022 JUDGMENT DATED: 18/08/2023 undefined since his clients are not agreeable for further extension of time, hearing of 16.03.2019 may kindly be cancelled."
[16] Reading para 1 of the order dated 19.03.2019 thereof indicates that the application was th tendered on 15 March, 2019 stating that since one year has passed from the date of the Arbitral Tribunal holding its first meeting on 26.02.2018 and since the respondents are not agreeable for further th extension of time, hearing on 16 March, 2019 be cancelled. Apparently, the respondents had played smart with the Arbitral Tribunal by making an application to see that the Arbitral Tribunal does not proceed further on the purported ground of the mandate having expired. The Tribunal had in great pain recorded the order observing the conduct of the respondents and showed its unwillingness to continue. The relevant portion of the order reads as under:-
"4. If the overall journey of this proceedings is seen, even the preliminary sitting was held after one adjournment sought on behalf of the respondents. Out of the sittings held, the Page 21 of 30 Downloaded on : Sun Sep 17 01:33:01 IST 2023 NEUTRAL CITATION C/SCA/566/2022 JUDGMENT DATED: 18/08/2023 undefined respondents have sought time on seven occasions. On one occasion, both the sides sought time and on one occasion sitting was adjourned before it could be held by the Tribunal on its motion due to ailment. Thus, major cause for delay is attributable to respondents.
5. However, the fact remains that one year has lapsed and, therefore, the mandate of the Arbitrator gets terminated unless the parties agree to extend the time as contemplated in Section 29-A(4) of the Arbitration and Conciliation Act, 1996. Here, the respondents are not agreeable to extension of time and, therefore, mandate of the Arbitrator having terminated, the proceedings before this Tribunal get terminated. It is up to the parties to pursue their cause as may be available under law.
6. The parties are hereby informed that the Arbitrator is not willing and not available to continue as Arbitrator in this matter in the backdrop of above factual developments."
[17] The question is whether is it open for the respondents now or the learned Commercial Court in the impugned order to negate an order passed by the Page 22 of 30 Downloaded on : Sun Sep 17 01:33:01 IST 2023 NEUTRAL CITATION C/SCA/566/2022 JUDGMENT DATED: 18/08/2023 undefined th Tribunal on 11 March, 2019 pursuant to hearing th held on 25 February, 2019, even otherwise a date prior to the Mandate having expired in the perception of the respondents.
[18] The conduct of the respondents is eloquent enough to indicate that they had implied consented to the Tribunal hearing the proceedings, and therefore, their conduct to set aside the order would be contrary to the provisions of Section 29A when read in context of Sub-section-3. Conscious of the fact that there has to be a consent of the parties for further extension of six months, the conduct of the respondents indicate an implied consent. [19] The Hon'ble Supreme Court in the case of Inder Sain Mittal Vs. Housing Board, Haryana and others reported in AIR (2002) SC 1157, in para-13 observed as under:-
"13. In the case on hand, it cannot be said that continuance of the proceedings and rendering of awards therein by the arbitrator Page 23 of 30 Downloaded on : Sun Sep 17 01:33:01 IST 2023 NEUTRAL CITATION C/SCA/566/2022 JUDGMENT DATED: 18/08/2023 undefined after his transfer was in disregard of any provision of law much-less mandatory one but, at the highest, in breach of agreement. Therefore, by their conduct by participating in the arbitration proceedings without any protest the parties would be deemed to have waived their right to challenge validity of the proceedings and the awards, consequently, the objections taken to this effect did not merit any consideration and the High Court was not justified in allowing the same and setting aside the award.
[20] In the case of Balak Ram and others (supra), the Himachal Pradesh High Court was considering somewhat similar facts in context of conduct of the parties in participating in the proceedings despite the mandate having expired. Para-4.ii of the judgment of the Himachal Pradesh High Court, wherein Section 29A is reproduced, reads as under:-
"4(ii) I have heard learned counsel on both sides on the above issue. My observations are as under :-
4(ii) (a) Section 29A of the A&C Act as it existed in the year 2016 (brought into force with effect Page 24 of 30 Downloaded on : Sun Sep 17 01:33:01 IST 2023 NEUTRAL CITATION C/SCA/566/2022 JUDGMENT DATED: 18/08/2023 undefined from 23.10.2015 . By Act 3 of 2016-2015 Amending Act reads as under :-
"29A. Time limit for arbitral award.--
(1) The award shall be made within a period of twelve months from the date the arbitral tribunal enters upon the reference. Explanation.- For the purpose of this sub-section, an arbitral tribunal shall be deemed to have entered upon the reference on the date on which the arbitrator or all the arbitrators, as the case may be, have received notice, in writing, of their appointment. (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:Page 25 of 30 Downloaded on : Sun Sep 17 01:33:01 IST 2023
NEUTRAL CITATION C/SCA/566/2022 JUDGMENT DATED: 18/08/2023 undefined 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.
(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 Page 26 of 30 Downloaded on : Sun Sep 17 01:33:01 IST 2023 NEUTRAL CITATION C/SCA/566/2022 JUDGMENT DATED: 18/08/2023 undefined this section. 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."
As per Section 29A(1) of the Arbitration and Conciliation Act, the award has to be made within a period of 12 months from the date the Arbitral Tribunal enters upon the reference. Section 29A(3) provides for extension of the period specified in sub section (1) for a further period not exceeding six months by the consent of the parties. An arbitral award, therefore, can be made within a period of 12 months from the date the Arbitrator enters upon the reference. The parties can extend this period by consent for a further period not exceeding six months. An award made beyond 12 months under Section 29A(1) or 18 months under Section 29A(3) shall not be valid. 4(iv) In view of above discussion on facts & law, it has to be held that consent of the parties envisaged under Section 29A(3) of the 2015 Arbitration & Conciliation Act for extending the arbitral period need not necessarily be either express or in writing. There can be a deemed consent, an implied consent of the parties, which Page 27 of 30 Downloaded on : Sun Sep 17 01:33:01 IST 2023 NEUTRAL CITATION C/SCA/566/2022 JUDGMENT DATED: 18/08/2023 undefined can be gathered from their acts and conduct. Their acquiescence in proceeding with the arbitration case beyond twelve months without raising any objection to the continuation of proceeding does amount to consent. On the basis of such consent, the arbitral award if passed within a further period of six months would be a valid award. In the given facts, consent of the parties to continue the arbitral proceedings beyond the period of one year (12 months) from the date the Arbitrator entered upon the reference, is writ large. The award was passed by the Arbitrator within further period of two months. The award was thus saved by Section 29A(3) of the Act as it was passed within the period permitted under Section 29A (3) of the Act. The conclusion drawn by learned District Judge about the award being illegal having been passed beyond the mandated period, therefore, being illegal, cannot be justified. Under Section 29A(3) of the Arbitration and Conciliation Act, there is no requirement that consent of the parties has to be expressed and that too, in writing.
[21] The Court in the facts of the case found that the National Highway Authority of India had never objected to the arbitration proceedings being Page 28 of 30 Downloaded on : Sun Sep 17 01:33:01 IST 2023 NEUTRAL CITATION C/SCA/566/2022 JUDGMENT DATED: 18/08/2023 undefined continued beyond the date when according to them the mandate had expired and the Court, therefore, on the conduct of the parties held it to be a tacit consent on their part for extending the period of arbitration. Reliance was placed on the decision of the Orissa High Court in the case of M/s. Sara International Pvt. Ltd. Vs. South Eastern Railways & Another and another reported in (2020) SCC Online Ori 973 the relevant para of the judgment of the Orisa High Court is also quoted thereunder. [22] Having considered the question of law therefore, in the facts of the case, we are of the opinion that the order of the Commercial Court in th setting aside the order dated 11 March, 2019 on the ground that the mandate of the learned Arbitrator had already terminated, was nonest in the eye of law, is held to be bad.
[23] The present petition is allowed. Accordingly, the order dated 01.10.2021 passed by the Commercial th Court, 11 Additional District Judge, District and Page 29 of 30 Downloaded on : Sun Sep 17 01:33:01 IST 2023 NEUTRAL CITATION C/SCA/566/2022 JUDGMENT DATED: 18/08/2023 undefined Sessions Court, Surat below Exhibit-16 in Commercial CMA No.1 of 2019, stands quashed and set aside. Rule is made absolute to the aforesaid extent.
(BIREN VAISHNAV, J) (D. M. DESAI,J) MANOJ Page 30 of 30 Downloaded on : Sun Sep 17 01:33:01 IST 2023