Bombay High Court
M/S. Banka (India) Ltd. vs Union Of India And Another on 28 November, 1995
Equivalent citations: AIR 1996 BOMBAY 139, 1996 (1) ARBI LR 659, (1996) 1 ALLMR 527 (BOM), (1996) 1 ARBILR 659, (1996) 3 BOM CR 191
ORDER S.M. Jhunjhunuwala, J.
1. Arbitration Petition No. 161 of 1995 has been filed by M/s. Banka (India) Ltd., for enlargement of time to enable the 2nd Respondent therein to make his award. Arbitration Petition bearing Lodging No. 246 of 1995 is filed by Union of India for removal of the 2nd Respondent as the Umpire under the provisions of Section 11 of the Arbitration Act, (for short, 'the Act'). Arbitration Petition filed by the Union of India is yet to be numbered. However, since the subject-matter of both these petitions are correlated, both the petitions have been finally heard together at the stage of admission itself and are being disposed of by this common judgment.
2. The Petitioners in Arbitration Petition No. 161 of 1995 are 1st Respondents in Arb. Petn. Lodging No. 246 of 1995 and the Petitioners in Arb. Petn. Lodging No. 246 of 1995 are 1st Respondents in Arb. Petition 161 of 1995. The 2nd Respondent in common in both the petitions. For the sake of convenience, the parties are referred in this judgment as per their description in Arbitration Petition No. 161 of 1995.
3. The 1st Respondents had invited tenders for the work of construction of a tunnel. The Petitioners had submitted their tender which was accepted by the 1st Respondents and the work was awarded to the Petitioners. A formal contract bearing No. C & S/568 dated 6th February, 1985 was entered into by and between the Petitioners and the 1st Respondents. The date of commencement of the said work as per the said Contract was 30th July, 1984 and the work was required to be completed within a period of 24 months from 30th July, 1984. Since the said work could not be completed within the stipulated period, disputes and differences arose between the Petitioners and 1st Respondents which were referred to arbitration in accordance with Clauses 63 and 64 of the General Conditions of Contract forming part of the said Contract. An Arbitration Suit No. 3266 of 1987 was filed since the General Manager of the 1st Respondents failed and neglected to appoint the arbitrators in accordance with the arbitration agreement in existence between the parties. The said suit was decreed in favour of the Petitioners and the General Manager of Western Railway, Bombay, was directed to appoint arbitrators in accordance with the arbitration agreement. Accordingly, the arbitrators were appointed who in their turn appointed an umpire. Since the time to make the award expired and the arbitrators failed to make their award, the Petitioners invoked the jurisdiction of the Umpire in accordance with the arbitration agreement which existed between the parties. Since Mr. B. R. Shetty who was then appointed as Umpire refused to act in the matter, the Petitioners filed Arbitration Petition No. 188 of 1990 for removal of Mr. Shetty as Umpire and for appointment of another person in his place under the provisions of Section 12 of the Act. By order dated 11th October, 1994, passed in the said Arbitration Petition No. 188 of 1990, Mr. Shetty was removed as Umpire and the 2nd Respondent, who was then the Chief Engineer (Tract Maintenance) of the Central Railway, was appointed as the Umpire in the matter. The 2nd Respondent was directed to make his award within two months from the date of entering upon the reference.
4. The 2nd Respondent intended to fix 13th and 14th days of February, 1995 to hold meeting before him to hear the reference. However, the said dates being inconvenient to the 1st Respondent, the 2nd Respondent fixed the meetings to hear the reference on 1st and 2nd days of March, 1995 and notice in respect thereof was served upon the 1st Respondent. The said meetings fixed on 1st and 2nd days of March, 1995 were attended by the Petitioners and the 1st Respondent and with the consent of the parties, further hearings of the reference were fixed on 23rd and 24th days of March, 1995. However, the 1st Respondents sought postponement of the hearings fixed on 23rd and 24th days of March, 1995 and acceding to the request made on behalf of the 1st Respondent, the 2nd Respondent postponed the said hearing. Further hearing of the reference were fixed on 12th and 13th days of April, 1995 and due intimations in respect thereof were given both to the Petitioners and the 1st Respondent. The meetings fixed on 12th and 13th days of April, 1995 were attended both by the Petitioners and the 1st Respondents and since the arguments advanced on behalf of the 1st Respondents were not completed, the 2nd Respondent fixed further dates of hearings on 9th and 10th May, 1995 with the consent of the parties appearing before him. The meetings fixed on 9th and 10th days of May, 1995 were attended by the Petitioners and the 1st Respondent. On 9th May, 1995, the Petitioners gave their consent for enlargement of time to enable the 2nd Respondent to make his award till 30th June, 1995. The 1st Respondent also consented to such enlargement of time. On 10th May, 1995, the 1st Respondent selected 23rd and 24th days of June, 1995 for further hearings of the reference before the 2nd Respondent. On 23rd June, 1995 though the Petitioners attended before the 2nd Respondent, the 1st Respondents failed to attend. The revised dates for holding meetings before the 2nd Respondent were fixed on 22nd July, 1995 and 24th July, 1995. Since the time to make the award expired on 30th June, 1995, the Petitioners gave their consent for enlargement of time for making award up to 30th September, 1995. Though the 1st Respondent had agreed for further hearings of the reference on 22nd and 24th days of July, 1995, the 1st Respondent failed to attend the hearings fixed on those days. According to the Petitioners, the 2nd Respondent could not complete the proceedings of the reference before him within the extended period since the delay was caused by the 1st Respondent. The 1st Respondent declined to consent for further enlargement of time beyond 30th June, 1995 and have contended that since the 2nd Respondent retired from the Railway services, the 2nd Respondent could not continue to act as umpire. The 1st respondent have sought removal of the 2nd respondent as umpire solely on the ground that since he has ceased to be in services of Railway, he cannot act as an umpire.
5. In the facts, the questions which arise for consideration are as follows :
(i) Whether on the 2nd respondent ceasing to be in services of Railway is not entitled to act as umpire in the reference;
(ii) Whether the petitioners have made out case for exercise of discretion by this court in favour of enlargement of time for making the award by the umpire.
6. Mr. Thakkar, the learned counsel appearing for the petitioners, has submitted that by the Order passed on 11th October, 1994 in Arbitration Petition No. 188 of 1990, this court had appointed the 2nd respondent as umpire in place of said Mr. Shetty and that the appointment of the 2nd respondent was by his name and not by the office then held by him. Mr. Thakkar has further submitted that since the appointment of the 2nd respondents umpire was made by this court in exercise of powers under Section 12 of the Act, the question of he being appointed in accordance with the arbitration agreement between the parties did not arise at all. Mr. Thakkar has also submitted that in the facts of the case, this court should exercise its discretion in favour of enlargement of time for the umpire to make the award and the question of removal of the 2nd respondent as umpire does not arise.
7. Ms. Bharucha, learned counsel appearing for the 1st respondent, has submitted that despite the said order dated 11th October, 1994 passed by this court the 2nd respondent was appointed as umpire in accordance with the arbitration agreement between the parties as he then was in Railway services and since the 2nd respondent has ceased to be in Railway services, the 2nd respondent is not entitled to act as umpire and is liable to be removed as umpire. She has further submitted that in the facts of the case, the question of enlargement of time to enable the 2nd respondent to make the award does not arise.
8. Under Section 28 of the Act, the discretion of the court is not limited by referring to any of the grounds therein and this power of extension of time can be exercised not only before the expiry of the statutory period of four months but also thereafter and again not only before the making of the award but also after making of the award. The provision of law contained in Section 12 of the Act has not been subjected to any agreement to the contrary between the parties, as a result of which it is clear that even if the arbitration agreement provides for the filling up of the vacancy by a named person even in the case of a vacancy caused by the removal of the arbitrator or umpire, as the case may be, under the orders of the court, the same would be invalid being in contravention of Section 12 of the Act which gives power to the court alone to fill up the vacancy on the removal of the arbitrator or umpire, as the case may be, by court. By the said order passed on 11th October, 1994 in Arbitration Petition No. 188 of 1990 the 2nd respondent was appointed as umpire not by reason of the office he was then holding but by his name. At the time when the 2nd respondent was appointed as umpire by this court, the 2nd respondent was in service of Western Railway and not Central Railway and if his appointment was to be in accordance with the arbitration agreement between the parties, he could not have been appointed as umpire. However, the 2nd respondent as umpire is to exercise the same authority as if he was originally appointed by the petitioners and the 1st respondent. On the 2nd respondent ceasing to be in services of the Central Railway, his appointment as umpire has not stood terminated or come to an end. The 2nd respondent has not ceased to be an umpire.
9. Sub-section (1) of Section 28 of the Act is very wide and confers full discretion on the court to enlarge time for making the award at any time. Needless to say that the discretion under sub-section (1) of Section 28 should, however, be exercised judiciously. On the basis of the aforesaid dates, not the petitioners but the 1st respondent have been guilty of a condemnable delay. The courts have always favoured enlargement of time for making the award when one of the parties to arbitration expressed disinclination or even opposed extension where the party seeking such extension has not been guilty of delay. The umpire has used all reasonable despatch in expediting hearings and making the award. Taking the totality of circumstances into consideration and more particularly the conduct of the 1st respondent, it is just and proper that the discretion is exercised to enlarge the time for making of an award by the 2nd respondent.
10. In the result, the Arbitration Petition No. 161 of 1995 is made absolute in terms of prayer (a) and time to make the award is enlarged till 31st day of March, 1996. The Arbitration Petition Lodging No. 246 of 1995 is dismissed. There shall, however, be no order as to costs of either of the Petitions.
11. The Umpire is directed to act on the ordinary copy of the minutes of this Order authenticated by the Chamber Registrar of this Court.
12. Issuance of certified copy of the minutes of the Order is expedited.
13. Order accordingly.