2012 (5) TMI 782 - HC - Indian Laws

Summary

Issues Involved:
1. Validity of the Arbitrator's Award due to delay in pronouncement.
2. Applicability of waiver principles u/s 4 of the Arbitration and Conciliation Act, 1996.
3. Interpretation of arbitration agreement clauses regarding time limits.
4. Jurisdiction of the Arbitrator post stipulated time.

Summary:

1. Validity of the Arbitrator's Award due to delay in pronouncement:
The appeal challenges the order dated 2nd September 2011, where the learned single Judge set aside the Arbitrator's Award dated 17th August 2006 on the grounds that it was not made within the stipulated time allowed by the arbitration agreement. The agreement between the appellant and the respondent contained a clause that the award should be made within two years or an extended period not exceeding twelve months. The Arbitrator declared the award after the conclusion of arguments on 21st April 2004, but the award was published on 17th August 2006, which was beyond the stipulated time.

2. Applicability of waiver principles u/s 4 of the Arbitration and Conciliation Act, 1996:
Mr. Bharucha, representing the appellant, argued that the respondent had participated in the arbitration proceedings without objecting to the delay, thus waiving their right to challenge the award u/s 4 of the Act. He contended that the respondent's conduct implied consent to extend the time limit. However, the respondent's counsel, Mr. Seervai, argued that the Arbitrator's mandate terminates automatically when the time limit expires, and jurisdiction is governed by statute, not by the conduct of the parties.

3. Interpretation of arbitration agreement clauses regarding time limits:
The arbitration clause in the agreement specified that the award should be published within two years or an extended period of twelve months. The court examined whether the time limit could be extended by the conduct of the parties. The Division Bench in the case of Snehdeep held that conduct implying consent could extend the time limit. However, the Supreme Court's judgment in NBCC Ltd. vs. J.G. Engineering Pvt. Ltd. emphasized that the Arbitrator's mandate terminates if the award is not made within the agreed time unless both parties consent to an extension.

4. Jurisdiction of the Arbitrator post stipulated time:
The court concluded that the Arbitrator's jurisdiction depends on the arbitration agreement. If the agreement provides a specific time limit that is not extendable, the Arbitrator becomes functus officio after that period. The court held that the Arbitrator had no authority to proceed after the stipulated time without a new agreement in writing by both parties. The respondent's participation after the conclusion of arguments did not constitute a waiver, as there was no effective participation required post-arguments. The award was set aside due to undue delay and lack of jurisdiction.

Conclusion:
The court upheld the learned single Judge's decision to set aside the Arbitrator's Award due to undue delay and lack of jurisdiction post the stipulated time. The appeal was dismissed, emphasizing that the arbitration proceedings should adhere to the agreed terms and time limits in the arbitration agreement.