1999 (11) TMI 797 - HC - Companies Law

Issues Involved:
1. Validity of the award made beyond the time fixed by the Arbitration Act, 1940.
2. Alleged misconduct by Arbitrators due to differing minutes of arbitration proceedings.
3. Justification of the Arbitrators in awarding the claim based on an inference against the respondent.
4. Maintainability of arbitration petition under section 28 of the Arbitration Act, 1940.

Issue-wise Detailed Analysis:

1. Validity of the award made beyond the time fixed by the Arbitration Act, 1940:
The respondent challenged the award dated 31-7-1995, arguing it was made beyond the time fixed by the Arbitration Act, 1940. The claimant sought an extension of time for making and filing the award under section 28 of the Act. The respondent contended that the provisions of the Bombay Stock Exchange Bye-laws, which allow the Board and its Chairman to extend the time for making the award without the parties' consent, override the Court's power under section 28 due to section 46 of the Act. However, the Court found no inconsistency between the powers conferred on the Court by section 28(1) and the powers conferred on the Board by the Bye-laws. The Court's power to grant an extension is judicial and unlimited, while the Board's power is administrative and limited to one month at a time. Therefore, the Court rejected the preliminary objection and held that it had the power to extend the time for making the award.

2. Alleged misconduct by Arbitrators due to differing minutes of arbitration proceedings:
The respondent alleged misconduct by the Arbitrators, claiming they prepared two different minutes of the arbitration proceedings dated 4-2-1995. The first set of minutes, received on 31-3-1995, did not include the operative part of the award, while the second set, received on 16-10-1995, did. The respondent argued this was an attempt by the Arbitrators to show the award was made on 4-2-1995 to avoid the limitation issue. The claimant's counsel argued that the operative part written in the notes dated 4-2-1995 was a mistake and did not amount to misconduct. The Court found that the date of the award was clearly mentioned as 31-7-1995, and there was no attempt to ante-date the award. The Court concluded that the mistake did not vitiate the award and rejected the misconduct allegation.

3. Justification of the Arbitrators in awarding the claim based on an inference against the respondent:
The respondent argued that the Arbitrators unjustifiably drew an adverse inference against him for not responding to the claimant's communication of March 1992. The claimant's counsel contended that the inference was drawn not only from the lack of response to the March communication but also from the respondent's silence to subsequent reminders. The Court found that the respondent's failure to respond to multiple reminders, including a lawyer's letter dated 23-9-1992 demanding a specific amount, justified the Arbitrators' inference. The Court held that the inference drawn by the Arbitrators could not be termed as an error of law apparent on the face of the award.

4. Maintainability of arbitration petition under section 28 of the Arbitration Act, 1940:
The respondent opposed the maintainability of the arbitration petition under section 28, arguing that the Bye-laws of the Bombay Stock Exchange have an overriding effect due to section 46 of the Act. The Court analyzed the provisions of section 28 and the relevant Bye-laws and concluded that there was no inconsistency between the two. The Court's power to extend time for making the award is judicial and distinct from the administrative power of the Board. The Court found that the claimant could not be penalized for the Arbitrators' failure to seek an extension from the Board and granted the arbitration petition for extension of time.

Conclusion:
The Court dismissed the respondent's arbitration petition No. 236 of 1996 challenging the award and granted the claimant's arbitration petition No. 5 of 1997 for extension of time. The Court passed a decree in terms of the award No. 78 of 1996, as the only objection raised was in the dismissed arbitration petition.

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