2008 (3) TMI 742 - HC - Indian Laws

Summary

Issues Involved:
1. Termination of Arbitrator's mandate u/s 14 of the Arbitration and Conciliation Act, 1996.
2. Validity of the arbitration agreement and jurisdiction of the Arbitrator.
3. Waiver of the right to object to the continuation of arbitral proceedings.

Summary:

1. Termination of Arbitrator's mandate u/s 14 of the Arbitration and Conciliation Act, 1996:
The petitioners sought relief u/s 14 of the Arbitration and Conciliation Act, 1996, requesting the court to declare that Mr. S.N. Variava had become de jure unable to perform his functions and that his mandate as an Arbitrator had terminated. The petitioners argued that the Arbitrator's mandate had expired as no award was made within the stipulated period of four months from the date of service of the arbitration agreement.

2. Validity of the arbitration agreement and jurisdiction of the Arbitrator:
The petitioners and the second respondent were partners in Hetali Construction Company, and the first respondent, a company, invoked arbitration based on an agreement dated 28th April 2000. The first respondent filed an application u/s 11 of the Act, leading to the appointment of Mr. Justice V.D. Tulzapurkar as the sole Arbitrator. The petitioners challenged this appointment through a Writ Petition under Article 226 of the Constitution, which was dismissed by the Division Bench, directing the petitioners to raise all contentious issues before the Arbitral Tribunal. The Supreme Court later appointed Mr. Justice S.N. Variava as the sole Arbitrator after the demise of Mr. Justice V.D. Tulzapurkar.

3. Waiver of the right to object to the continuation of arbitral proceedings:
The petitioners did not object to the time schedule fixed by the new Arbitrator, Mr. Justice S.N. Variava, during the initial meetings. The learned Arbitrator noted that the petitioners had waived their right to enforce the four-month time limit by not raising their objections at the earliest opportunity. Section 4 of the Act, which deals with the waiver of the right to object, was cited to support this conclusion. The court emphasized that parties must act with honesty, fairness, and transparency, and the petitioners' conduct indicated a waiver of their right to object to the continuation of the arbitral proceedings beyond the stipulated time.

Conclusion:
The court dismissed the petition, holding that the petitioners had waived their right to object to the continuation of the arbitral proceedings by their conduct. The court emphasized the importance of promoting honesty and transparency in arbitration and upheld the Arbitrator's decision to proceed with the arbitration despite the expiration of the four-month period.