2004 (9) TMI 677 - HC - Indian Laws

Summary

Issues Involved:
1. Termination of the Arbitrator's mandate upon expiry of the stipulated period.
2. Whether the time limit for making the Award in the Arbitration agreement is enforceable under the Arbitration and Conciliation Act, 1996.
3. Waiver of the right to object to the continuation of Arbitral proceedings after the stipulated period.

Detailed Analysis:

1. Termination of the Arbitrator's mandate upon expiry of the stipulated period:
The primary issue was whether the mandate of an Arbitrator terminates upon the expiry of the stipulated period for making the Award within the meaning of Section 14 of the Arbitration and Conciliation Act, 1996. The petitioner argued that the Arbitrator's mandate terminated on 14.11.2000 due to the expiration of the six-month period stipulated in the Divestment agreement. The court examined Section 14 of the Act, which allows for the termination of an Arbitrator's mandate if they become de jure or de facto unable to perform their functions. The court concluded that the expiry of the prescribed period for making the Award would render the Arbitrator de jure unable to continue with the proceedings, thus terminating the mandate within the meaning of Section 14.

2. Whether the time limit for making the Award in the Arbitration agreement is enforceable under the Arbitration and Conciliation Act, 1996:
The court considered whether the time limit for making the Award, as stipulated in the Arbitration agreement, was enforceable given that the 1996 Act does not prescribe any time limit for making and publishing the Award. The respondent argued that the absence of a time limit in the Act implies that any time limit in an Arbitration agreement is of no consequence. However, the court held that parties can mutually agree to a time limit for making the Award, and such a stipulation is not overridden by the provisions of the Act. The court emphasized that the Arbitration agreement is the foundation of the Arbitrator's authority, and its terms must be adhered to unless mutually modified by the parties.

3. Waiver of the right to object to the continuation of Arbitral proceedings after the stipulated period:
The court examined whether the petitioner had waived its right to object to the continuation of the Arbitral proceedings after the expiry of the six-month period. It was noted that the petitioner continued to participate in the proceedings without raising any objection until July 2003, despite the expiry of the stipulated period in November 2002. The court referred to Section 4 of the Act, which states that a party who proceeds with the Arbitration without raising an objection to a known irregularity is deemed to have waived their right to object. The court concluded that the petitioner, by participating in the proceedings without protest, had waived its right to object to the continuation of the Arbitral proceedings.

Conclusion:
The court dismissed the petition, holding that the Arbitrator's mandate did not terminate solely due to the expiry of the stipulated period, as the petitioner had waived its right to object by continuing to participate in the proceedings. The court directed the parties to appear before the Arbitrator for further proceedings and requested the Arbitrator to conclude the proceedings expeditiously.