Kerala High Court
Union Of India vs Advanced Polymer Technology on 3 December, 2018
Author: P.V.Asha
Bench: P.V.Asha
O.P(ICA).No.5/2018 1
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE SMT. JUSTICE P.V.ASHA
MONDAY ,THE 03RD DAY OF DECEMBER 2018 / 12TH AGRAHAYANA, 1940
OP(ICA).No. 5 of 2018
PETITIONER/S:
UNION OF INDIA
REPRESENTED BY THE EXECUTIVE ENGINEER, CENTAL PUBLIC
WORKS DEPARTMENT, (MINISTRY OF URBAN DEVELOPMENT,
GOVERNMENT OF INDIA) TRIVANDRUM CENTRAL DIVISION, CGO
COMPLEX, POONKULAM, THIRUVANANTHAPURAM - 605 522.
605522
BY ADVS.
ASSISTANT SOLICITOR GENERAL
SMT.C.G.PREETHA, CGC
RESPONDENT/S:
1 ADVANCED POLYMER TECHNOLOGY
109 CONICA LANE, P.O.BOX-160, HARMONY, PA 16037 USA,
REPRESENTED BY ITS POWER OF ATTORNEY HOLDER, RAJIV
KUMAR, RESIDENT OF S-282, 2ND FLOOR, GREATER KAILASH,
PART-I, NEW DELHI-110 048.
2 SHRI HARIHARAN N,
LEARNED SOLE ARBITRATOR,
COUNCIL MEMBER (SOUTH),
24/278-1, HARSHA TSGRA 108,
SASTHA KOVIL ROAD, THYKAUD,
THIRUVANANTHAPURAM-695014.
BY ADVS.
SRI.M.RAMESH CHANDER (SR.)
SRI.S.JUSTUS
SRI.BALU TOM
SMT.K.A.SANJEETHA
THIS ORIGINAL PETITION INTERNATIONAL COMMERCI HAVING BEEN FINALLY
HEARD ON 03.12.2018, THE COURT ON THE SAME DAY PASSED THE
FOLLOWING:
O.P(ICA).No.5/2018 2
P.V.ASHA, J.
--------------------------
O.P(ICA) No.5 of 2018
-------------------------------------------
Dated this the 3rd day of December, 2018
JUDGMENT
This application is filed under Section 29A of the Arbitration and Conciliation Act, 1996 (`the Act' for short) for extension of the period for passing arbitral award in Arbitration Case No.1 of 2017 between the petitioner and the 1st respondent.
2. The Central Public Works Department of the Government of India, who is the petitioner, invited tenders for the work of providing and laying Synthetic Athletic Surface at Sports Authority of India Sports Center at Thiruvananthapuram. The tender negotiated by the 1st respondent was accepted and the work was awarded to the 1st respondent - M/s Advanced Polymer Technology, Harmony, USA, as per Ext.P1 letter dated 17.08.2007, with a tender amount of Rs.2,79,01,267/- (Two Crores Seventy nine Lakhs One Thousand Two Hundred and Sixty Seven only). Based on Ext.P1 letter the petitioner and the respondent entered into Ext.P2 agreement; when certain disputes arose between the parties, the 2nd respondent was appointed as the sole Arbitrator to resolve the disputes, in terms of the provisions contained in clause 25 of Ext.P2 agreement. It is stated that the Arbitral Tribunal received the notice of appointment on 8.2.2017. Accordingly, the award was to be passed within a period of 12 months, i.e by 08.02.2018. With the consent of parties, the period for passing the arbitral award was extended by 6 months and thus the award was to be passed on or before 08.08.2018. On 29.06.2018, the 2 nd respondent- O.P(ICA).No.5/2018 3 the Arbitrator, as per Ext.P10 procedural order, ordered either parties to apply and obtain extension of time under Section 29A of the Arbitration and Conciliation Act, 1996 ('the Act' for short). The petitioner has filed this original petition in the above circumstances.
3. According to the petitioner, the proceedings got delayed for reasons beyond the control of the parties, but for sufficient cause. It is stated that the claim statement, the statement of defence and the rejoinder have been filed by the 2 nd day of the sitting. It is also the case of the petitioner that the delay is attributable to the 1 st respondent with its Headquarters in USA and its representative in New Delhi. According to the petitioner, a joint inspection was proposed by the 2 nd respondent on 11.08.2017. But the 1st respondent did not accept the proposal.
4. The 1st respondent has filed objections stating that the delay is attributable to the Arbitrator - the 2nd respondent and the matter got delayed solely due to the inertia on the part of the 2nd respondent. The 1st respondent has stated that the Arbitrator has not considered the request for adducing oral evidence; though 37 sittings were held, there was no pointed reference or arguments relating to the claim or counter claim and there was no effective adjudication. According to first respondent, the petitioner also contributed for the delay by filing petition like Annexure-R1(a) for appointment of expert committee mentioning the names of persons who are not experts, which the 1st respondent objected; however the 2nd respondent did not pass any orders on that application. It is stated that the 2nd respondent himself made a local inspection and did not make available any report based on that inspection. 1st respondent, claims that O.P(ICA).No.5/2018 4 the representative of the 1st respondent was present in all the sittings except one.
5. The 1st respondent filed an I.A.No.2 of 2018 producing Annexure-R1(e) interim order passed by the 2nd respondent on 13.09.2018 against the 2nd respondent, making it liable for cost for being absent in the sittings held on 29.08.2018 and 13.09.2018. It is therefore pointed out that the 2nd respondent conducted its sitting even after the expiry of the period for passing the award and after he had already become functus officio on 08.08.2018. It is also pointed out that the 2 nd respondent while issuing the order has also justified the proceedings.
6. The Arbitrator has also filed a counter affidavit furnishing a table of events from the first sitting onwards. As per this table, delay of 20 days is attributable to the claimant; whereas the delay attributable to the 1 st respondent is 299 days and no delay is attributable to the 2nd respondent. It is further stated that out of the 55 annexures produced, 40 of them were originated or responded by the 1st respondent and only 7 were of the petitioner and the remaining 8 were from other agencies. It is stated that further documents were produced by the respondents on 06.03.2018 only. It is also stated that a joint inspection was carried out in presence of technical experts of the petitioner and the 1st respondent.
7. According to the 1 st respondent, its absence was only once. But according to the petitioner and the 2nd respondent, though representative of the 1st respondent was present, the representation was not effective and time was being sought at the instance of the 1st respondent either for technical assistance or otherwise.
8. Smt. C.G.Preetha, the learned Central Government Counsel relying on the O.P(ICA).No.5/2018 5 judgments in P.S.Abdulla v. Director, Forest Research Institute [1982 KLT 631], Haryana State Electricity Board v. M/s.Universal Fasteners Pvt. Ltd. & anr. [2010 (15) SCC 764] and Aravali Power Company Pvt. Ltd. v. M/s.Era Infra Engineering Ltd. [2017 (15) SCC 32] argued that the extension of time to the same Arbitrator would only be in public interest because of the technical nature of the issue involved and that the expenditure being incurred from public exchequer.
9. At the same time the learned Senior Counsel Sri. Ramesh Chander, duly instructed by Adv.K.A.Sanjeetha appearing for the 1st respondent, referring to Ext.R1(e) proceedings pointed out that, being an international arbitration, a retired Judge of this Court has to be appointed in the matter, under Section 29A of the Act.
10. In this context it is necessary to have a look at the judgments relied on by the learned Central Government Counsel appearing for the petitioner. In the judgment in P.S.Abdulla's case (supra), this Court was considering a case where an order was passed by the subordinate court, rejecting an application for extension of time filed under Section 28 of the Arbitration Act, 1940. The Arbitrator was to pass the award within a period of 4 months. The application filed by the contractor was objected by the respondent Institute and it was rejected on the ground that it was filed beyond time. After referring to several authors on the Law of Arbitration, various decisions under the Common Law Procedure Act, 1854, etc., this Court found that the power for enlargement of time could be exercised even on the basis of motion made after the expiry of the period fixed for making the award. It was found that enlargement of time for making the award is lawful for good cause. In para 13 of the O.P(ICA).No.5/2018 6 judgment it was observed as follows:
"13. xxxxx xxxxx xxxxx xxxxx One of the basic ideas in discountenancing delay in arbitration proceedings is the possibility of the long lapse of time resulting in loss of the valuable evidence of the parties. When such is not the case, a greater latitude has to be given by the court in the extension of time for making an award."
11. In the judgment in Haryana State Electricity Board v. M/s.Universal Fasteners Pvt. Ltd. & anr. [2010 (15) SCC 764] it was held that the court can exercise the power to enlarge or extend the time in making the award after considering the conduct of the parties and the circumstances arising in it. In that case the trial court had granted time for making the award, but the High Court reversed it on the ground that the award was made after the expiry of the time limit and therefore the Arbitrator misconducted himself.
12. In the judgment in Aravali Power Company Ltd. v. M/s.Era Infra Engineering Ltd. [2017 (15) SCC 32], the objections raised by the respondent against Arbitrator, subsequent to the amendment Act, 2015 was considered. Seeing that the objections if any against the Arbitrator could have been raised within the prescribed time in accordance with the procedure and seeing that the respondent had participated in the proceedings and even sought extension of time to file the statement of claim, the Apex Court held that the High Court was in error in interfering with the proceedings. It was directed that the Arbitrator shall be allowed to be proceeded.
13. The order of the Bombay High Court in Banka (India) Ltd. (M/s.) v. Union of India and anr. [AIR 1996 Bom. 139] was on an application filed for enlargement of time for making the award. The question whether the Arbitrator could continue O.P(ICA).No.5/2018 7 after the period stipulated for making the award was considered and it was held that the power under subsection 1 of Section 28 is very wide and it confers full discretion on the court to enlarge time for making the award at any time. Section 28 of the Arbitration Act, 1940, empowered the court to enlarge time for making award whether the time for making award expired or not and whether award was made or not.
14. In the present case the time for passing the award was to expire on 08.02.2018; parties had agreed for extension by 6 months and the petitioner approached this court before expiry of the extended period fixed for passing the award i.e, before 08.08.2018. Section 29A of the Act read 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 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 O.P(ICA).No.5/2018 8 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.]"
Thus enlargement of time can be granted either before or after the expiry of the period for passing the award.
15. On consideration of the pleadings and contentions, it is seen that there had been a total of 37 sittings as on 29.6.2018, starting with the first sitting on 29.3.2017. Both parties did not raise any objection against the Arbitrator till 08.08.2018. It is seen that the proceeding have progressed to a considerable extent. The matter involves claims and counter claims with the support of a series of documents.
16. Though the respondent raised objections against the continuance of the Arbitrator and against the conduct of the proceedings, it has never objected to the proceedings of the Arbitrator resorting to the provisions under the Act. It is only before this Court, that the 1st respondent chose to raise objections against the 2 nd respondent. Therefore, though the learned Senior Counsel submitted, on behalf of the 1st respondent that a retired High Court Judge has to be appointed as Arbitrator, I find that at the fag end of the proceedings a change is not necessary. If both parties co-operate, it would be possible for the 2nd respondent to pass the award without much delay and at any rate within a further period of four months.
17. However, in this case it is seen that the Arbitrator continued his sittings even after the expiry of the period on 08.08.2018 and passed interim orders. In the absence of any order granting enlargement of time, the Arbitrator did not have any O.P(ICA).No.5/2018 9 authority to hold sittings or pass orders. Therefore, when he became functus officio on expiry of the extended period, sittings held after 08.08.2018 till enlargement of time is granted cannot have any validity.
18. In the circumstances of the case I find that a period of four months can be granted for passing the award . The Arbitrator shall complete the proceedings and make the award within the said period. The parties shall also co-operate.
The Original Petition is disposed of accordingly.
Sd/-
(P.V.ASHA, JUDGE) rtr/ O.P(ICA).No.5/2018 10 APPENDIX PETITIONER'S/S EXHIBITS:
EXHIBIT P1 TRUE COPY OF THE LETTER NO.23(136)
(3)/TKM/07/1678 DATED 17.8.2007 OF THE
PETITIONER.
EXHIBIT P2 TRUE COPY OF THE AGREEMENT NO.19/TCD/2007-
08.
EXHIBIT P3 TRUE COPY OF THE LETTER
NO.55(48)/CE(SZ)V/17/17-206 DATED 7.2.2017
OF THE PETITIONER.
EXHIBIT P4 TRUE COPY OF THE LETTER NO.55(48)/CE(SZ)
V/2017/410-12(H) DATED 14.3.2017 OF THE
PETITIONER.
EXHIBIT P5 TRUE COPY OF THE STATEMENT OF FACTS ALONG
WITH EXHIBITS THEREIN, FILED BY THE
PETITIONERS.
EXHIBIT P6 TRUE COPY OF THE STATEMENT OF DEFENSE ALONG
WITH COUNTER CLAIMS, FILED ON 30.7.2017 BY
THE 1ST RESPONDENT.
EXHIBIT P7 TRUE COPY OF THE REJOINDER STATEMENT DATED
9.10.2017 FILED BY THE PETITIONER.
EXHIBIT P8 TRUE COPY OF THE REJOINDER TO THE REPLY
FILED BY THE RESPONDENT.
EXHIBIT P9 TRUE COPY OF THE PROCEEDINGS OF THE 2ND
RESPONDENT.
EXHIBIT P10 TRUE COPY OF THE PROCEDURAL ORDER DATED
29.8.2018 OF THE 2ND RESPONDENT.
RESPONDENTS' EXHIBITS
ANNEXURE R1(a) PHOTOSTAT COPY OF THE APPLICATION FILED BY THE
PETITIONER DT.17.11.2017.
ANNEXURE R1(b) PHOTOSTAT COPY OF THE APPLICATION DATED 24.8.2018.
ANNEXURE R1(c) PHOTOSTAT COPY OF THE ORDER IN ARBITRATION CASE NO.1/17
DATED 3.9.2018.
ANNEXURE R1(d) PHOTOSTAT COPY OF THE REPLY DATED 4.9.2018.
ANNEXURE R1(e) PHOSTAT COPY OF THE INTERIM ORDER 3/2018 DATED 13.9.2018
IN ARB.1/2018 OF THE ARBITRATION TRIBUNAL,
THIRUVANANTHAPURAM.
O.P(ICA).No.5/2018 11