Madras High Court
M/S. Satyam Caterers Private Limited vs The Assistant Commercial Manager on 9 August, 2018
Author: Abdul Quddhose
Bench: Abdul Quddhose
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 09.08.2018
CORAM
THE HONOURABLE MR. JUSTICE ABDUL QUDDHOSE
O.P.No.592 of 2018
M/s. Satyam Caterers Private Limited,
4th Floor, 118/7, Masjid Raod,
Jangpura, Bhopal, New Delhi 110 014
represented by its Authorised Signatory. .. Petitioner
Vs
1.The Assistant Commercial Manager
(PS and CATG)
Southern Railway, Government of India,
Commercial Branch, Headquarters Office,
Park Town, Chennai 600 003.
2. K. Manoj,
Sole Arbitrator,
Additional Divisional Railway Manager-III/MAS,
(previously Chief Claims Officer). .. Respondents
Petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 praying to set aside the Award daed 16.5.2018 passed by the 2nd respondent made in LoA Nos.C.86/PC/12615-16/MAS-NDLS GT Express/2014, dated 20/06/2014, C.86/Pc/12621-22/MAS-NDLS Tamil Nadu Express/2014, dated 07/08/2014, C.86/PC/12625-26/TVC-NDLS Kerala Express/2014, 07/08/2014, C.86/PC/16351-52/NCJ-CSTM 09/05/2014 and to direct the 1st respondent to pay the costs.
For Petitioner : Mr.K.V.Sajeevkumar for
Mr.T.N.C.Kaushik
For Respondents : Mr. M.T.Arunan for R1
: Arbitrator for R2
O R D E R
The instant petition has been filed under section 34 of the Arbitration and Conciliation Act challenging the Arbitral Award dated 16.5.2018 passed against the petitioner.
2. The breif facts leading to the filing of the instant petition are as follows;
2.1 The petitioner was appointed as a catering contractor by the 1st respondent under four different Contracts dated 20.6.2014, 7.8.2014, 7.8.2014 and 9.5.2014 under LoA Nos.C.86/PC/12615-16/MAS-NDLS GT Express/2014, C.86/Pc/12621-22/MAS-NDLS Tamil Nadu Express/2014, C.86/PC/12625-26/TVC-NDLS Kerala Express/2014, C.86/PC/16351-52/NCJ-CSTM respectively.
2.2 Under the Contracts, there arose disputes between the parties and the petitioner made a claim against the 1st respondent and the said claim was referred to arbitration in accordance with the arbitration clause. Since there was no consensus between the parties on the appointment of the Arbitrator, the petitioner approached this Court under section 11 of the Arbitration and Conciliation Act and this Court, by its order dated 16.2.2016 made in O.P.Nos.1128 to 1137 of 2014, directed the petitioner to approach the 1st respondent who shall nominate the Arbitrator and the nominated arbitrator shall decide the dispute between the parties .
2.3 As directed by this Court, by its order dated 16.2.2016 in OP.Nos.1128 to 1137 of 2016, the 1st respondent nominated the 2nd respondent as the sole Arbitrator to decide the dispute on merits. The 2nd respondent acted upon the reference and after issuing notice to the parties to the dispute, has passed an arbtiral award dated 16.5.2018, rejecting the claim of the petitioner.
2.4 Aggrieved by the arbitral award dated 16.5.2018, the instant petition has been filed.
3.Heard Mr.K.V.Sajeev Kumar for Mr.T.N.C.Kaushik, learned counsel for the petitioner and Mr. M.T.Arunan, learned counsel for the 1st respondent.
4.According to the learned counsel for petitioner, the primary ground for challenge in the instant petition is that the Award has been passed beyond the stipulated period as contemplated under section 29A of the Arbitration and Conciliation Act and therefore, the Award per se is illegal and therefore the Award has to be set aside.
5.The learned counsel for the petitioner drew the attention of this Court to the proceedings of the Arbitrator, the details of which are disclosed in the counter affidavit filed by the 1st respondent before this Court. The dates of proceedings and the details of proceedings are mentioned in paragraph 7 of the counter affidavit filed by the 1st respondent is also not disputed by the learned counsel for the petitioner. As seen from the details of the proceedings, the arbitration proceedings commenced as per Section 21 of the Arbtiration and Conciliation Act on 1.7.2016 As per section 21A of the Arbitration and Conciliation Act one year period expired on 15.9.2017. By consent of parties to the dispute, as permitted under section 29A of the Act, the period was extended up to 31.12.2017 for completion of arbtiration proceedings.
6.According to the learned counsel for the petitioner, the last date of hearing of the arbitral proceedings intimated to the petitioner was on 29.12.2017 and thereafter, no notice was recieved from the Arbitrator about the next date of hearing. But all of a sudden, after a period of more than four months, the petitioner was shocked to receive the Arbtiral Award dated 16.5.2018 intimating the petitioner that the claim made by the petitioner before the Arbitrator has been rejected.
7. Learned counsel for the petitioner also drew the attention of this Court to the proceedings of the Arbtirator dated 29.12.2017, wherein, the Arbitrator himself has held that the proceedings are closed considering the fact that the tenure of the arbitration ends on 31.12.2017 and that no direction has been recieved from the competent authority extending the said tenure.
8.Despite the finding of the Arbitrator, according to the learned counsel for the petitioner, the Award ought not to have been passed on 16.5.2018 against the petitioner in violation of section 29A(4) of the Arbitration and Conciliation Act.
9.Per contra, learned counsel for the 1st respondent submitted that 35 hearings took place in the arbitration and despite sufficient opportunity being given to the petitioner, the petitioner has chosen not to make use of the opportunities .
10.He drew the attention of this Court to the various proceedings of the Arbtirator which is extracted in the counter affidavit filed by the 1st respondent which will reveal that it was only the petitioner who is seeking adjourments quite frequently before the Arbitrator. Having failed to make use of the several opportunities given by the Arbitrator, the learned counsel for the 1st respondent submits that the submission made by the learned counsel for the petitioner has to be rejected by this Court.
11. This Court, after having considered the materials available on record, the arbtiral Award and after hearing the submissions of the respective counsels observes the following;
(a) It is an undisputed fact that the arbitrator has not completed the arbitration within a period of one year from the date of commencement of the arbitration or within the extended period of six months from 1.7.2017 which expired on 31.12.2017.
(b) Even in the last proceeding of the arbitrator dated 29.12.2017, the arbitrator has clearly held that the proceedings are closed, since the tenure of the arbitration will end on 31.12.2017. Despite such a finding, the arbitrator has gone aheead and passed an arbitral award dated 16.5.2018 dismissing the claim of the petitioner.
Section 29A of the Arbitration and Conciliation Act reads as follows;
'29-A. 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:
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 arbtirtors 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.'
(c) As seen from Section 29-A(1) of the Act, the Award will have to be passed within a period of 12 months from the date the Arbtiral Tribunal enters upon the reference. Under section 29A(3) of the Act, by consent, the arbitral tribunal shall extend the period specified in sub section (1) for passing the Award for a further period not exceeding six months.
11. Under section 29A(4) of the Act, 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 priod, 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, if may order reduction of fees of arbitrator(s) by not exceeding five per cent, for each month of such delay.
12.So it is evidently clear as seen from Section 29A (1)(2) and (4) of the Act, the Arbitration proceedings will have to be completed within one year from the date of commencement of the arbtiration with a grace period of six months thereafter that too, with the consent of the parties to dispute. In all, the maximum time, the arbitral tribunal can take for completion of the arbitral proceedings is only 18 months. If exension is required beyond the period of 18 months, the parties will have to approach this Court for extension . In the case on hand, the arbitral proceedings commenced on 16.5.2016 and one year period expired on 1.7.2017 and by consent, the period was also extended up to 31.12.2017. But the arbitral award was passed on 16.5.2018 beyond the period stipulated under secion 29(A) of the Arbitration and Conciliation Act without the permission of Court.
13. Therefore, it is very clear that the Award passed by the Arbtirator on 16.5.2018 is patently illegal as it violates the provisions of section 29A of the Arbtiration and Conciliation Act. In the result, the Award dated 16.5.2018 passed agianst the petitioner by the second respondent is set aside and the petition is allowed No costs. Consequently connected A.No.5080 of 2018 is closed.
09.08.2018 msr/nl Speaking Order/non-speaking order Index:yes/No ABDUL QUDDHOSE, J.
msr O.P.No.592 of 2018 09.08.2018