2012 (3) TMI 604 - HC - Indian Laws

Summary

Issues Involved:
1. Termination of Arbitrator's Mandate
2. Waiver of Rights and Conduct of Parties
3. Time Limit for Arbitration Proceedings

Summary:

1. Termination of Arbitrator's Mandate:
The Petitioners invoked Section 14(2) of the Arbitration and Conciliation Act, 1996, seeking a declaration that the mandate of the Arbitrator nominated by the Director (Marketing) of the Respondents stands terminated. The Court noted that the arbitration clause in the agreement mandated that arbitration proceedings should be completed within two years, with a possible extension of twelve months. The Arbitrators appointed initially abandoned or ceased to act, and the Respondents appointed a new Arbitrator after the mandate period had expired. The Court held that the mandate of the Arbitrator automatically terminated after the expiry of the prescribed period, as per the agreement and the Supreme Court's ruling in NBCC Ltd. Vs. J.G. Engineering Pvt. Ltd.

2. Waiver of Rights and Conduct of Parties:
The Respondents contended that the Petitioners had waived their rights by not objecting to the continuation of arbitration proceedings and by participating in them. However, the Court emphasized that the concept of "waiver" under the Arbitration Act applies only when there is vagueness in the contract. In this case, the agreement clearly stipulated the time frame for arbitration, and the Petitioners' participation did not constitute a waiver of the basic clause regarding the time limit.

3. Time Limit for Arbitration Proceedings:
The Court reiterated that the parties had agreed to a specific time frame for arbitration proceedings, which was binding. The arbitration clause stated that the newly appointed Arbitrator should continue from the point at which the predecessor left, indicating that the proceedings should be concluded within the prescribed period. The Court held that there is no provision under the Arbitration Act to condone the delay when the agreement between the parties mandates a specific time limit. The Court concluded that further proceedings after the expiry of the time limit were unsustainable.

Conclusion:
The Petition was allowed, and the mandate of the Arbitrator, Mr. J. Dinaker, or any other new Arbitrator nominated by the Respondents, was terminated. The Court discharged the rule and did not award any costs.