2012 (5) TMI 102 - HC - Companies Law

Rejection of arbitration application - In the consent Minutes of the Order, parties have agreed to refer disputes to arbitration - Held that - There was an agreement between the parties that the award would have to be delivered within six months, a period which came to an end on 7 September 2010, the mandate of the Arbitrator stood terminated, that however, does not preclude the Applicant from seeking recourse to its remedies under Section 11 of the Arbitration and Conciliation Act, 1996 - it is not a case where parties have agreed to a situation where there would be an arbitration only before a named individual or that in his absence there would be no arbitration at all - upon the termination of the mandate of the Arbitrator, the jurisdiction of the Court to make a fresh appointment can be invoked - in favour of assessee.

Summary

Issues:
- Interpretation of consent minutes for arbitration in a winding-up petition
- Termination of arbitrator's mandate due to failure to deliver award within agreed timeframe
- Jurisdiction of the court to appoint a fresh arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996

Analysis:
1. The case involves interpreting the consent minutes where parties agreed to refer disputes to arbitration in a winding-up petition. The court noted that the parties agreed to appoint a sole arbitrator who would adjudicate their claims and pass an award within six months. However, the award was not delivered within the agreed timeframe, leading to a dispute regarding the termination of the arbitrator's mandate.

2. The court considered the termination of the arbitrator's mandate due to the failure to deliver the award within the stipulated six months. Referring to Section 15(1)(b) of the Arbitration and Conciliation Act, 1996, the court emphasized that the mandate of an arbitrator can terminate by agreement of the parties. As the parties did not consent to extending the time for the award, the mandate of the earlier sole arbitrator was deemed to have ended.

3. Regarding the jurisdiction of the court to appoint a fresh arbitrator under Section 11, the court held that the termination of the earlier arbitrator's mandate did not preclude the applicant from seeking recourse under this section. The court emphasized that the parties' agreement to refer disputes to arbitration was distinct from the specific mandate given to the arbitrator. Therefore, the court exercised its jurisdiction under Section 11 and appointed a new sole arbitrator, concluding that the arbitration application should be allowed.

4. In the final decision, the court appointed a new sole arbitrator and directed the Registrar to provide the necessary information to the arbitrator. The court disposed of the arbitration application with no order as to costs, emphasizing the importance of upholding the arbitration process despite the termination of the earlier arbitrator's mandate due to the failure to deliver the award within the agreed timeframe.