2003 (8) TMI 382 - HC - Companies Law

Summary

Issues Involved:
1. Power of arbitrator/arbitral tribunal to terminate proceedings under Section 25 of the Arbitration & Conciliation Act, 1996.
2. Validity of the arbitrator's extension of time for filing the statement of facts.
3. Maintainability of the writ petition under Article 226/227 of the Constitution of India.
4. Interpretation of Section 25 of the Arbitration Act.
5. Whether Section 25(a) of the Arbitration Act is mandatory or directory.

Detailed Analysis:

1. Power of Arbitrator/Arbitral Tribunal to Terminate Proceedings:
The primary issue is whether the arbitrator can extend the time for a party to file a statement of facts or must terminate the proceedings if the claimant fails to submit within the stipulated time under Section 25 of the Arbitration & Conciliation Act, 1996.

2. Validity of the Arbitrator's Extension of Time:
The arbitrator granted an additional 21 days to the second respondent to file the statement of facts suo motu, citing "the interest of justice and fair play." The petitioner challenged this extension as illegal and contrary to the provisions of the Arbitration Act, arguing that the arbitrator must terminate the proceedings if the statement of facts is not filed within the stipulated time.

3. Maintainability of the Writ Petition:
The court held that the petitioner did not raise the plea under Section 16(2) or 16(3) of the Arbitration Act, which specifically provides for such a procedure. Therefore, the writ petition was not maintainable as the petitioner did not avail the effective alternative remedy provided by the Arbitration Act itself. The court referenced the Supreme Court ruling in Whirlpool Corpn. v. Registrar of Trade Marks, emphasizing that the High Court should not exercise its jurisdiction if an effective and efficacious remedy is available.

4. Interpretation of Section 25 of the Arbitration Act:
Section 25(a) states that the arbitral tribunal shall terminate the proceedings if the claimant fails to communicate the statement of claim. However, this must be read in conjunction with Section 23(1), which allows the arbitral tribunal to determine the time period for submitting the statement of facts. The court emphasized that the arbitrator has the power to extend the time for filing the statement of facts if sufficient cause is shown, aligning with the principles of fairness and natural justice.

5. Whether Section 25(a) is Mandatory or Directory:
The court concluded that Section 25(a) is directory, not mandatory. The use of "shall" in Section 25(a) should be interpreted as "may" to avoid defeating the principles of fairness and the objectives of the Arbitration Act. The court cited the Supreme Court judgment in Mohan Singh v. International Airport Authority of India, which held that the word "shall" is not always decisive and must be interpreted in the context of the statute's intention and the consequences of its construction.

Conclusion:
The court dismissed the writ petition, holding that the arbitrator acted within his powers by extending the time for filing the statement of facts. The interpretation of Section 25(a) as directory ensures that the arbitral tribunal can act fairly and provide each party with a reasonable opportunity to present their case. The petitioner was also directed to bear the costs of Rs. 5,000.