2021 (9) TMI 1568 - HC - Indian Laws

Termination of the arbitral tribunal s mandate due to expiry of the prescribed time limit - Authority of the Exchange to constitute a new tribunal after the termination of the previous tribunal s mandate - whether the mandate of the first tribunal appointed on 17th June 2020 survives or it stood terminated? - HELD THAT - There is no dispute between the parties that the mandate of the first tribunal stood terminated upon expiry of timelines on 31st December 2020. Thereupon given the facts of the case the Bye-Laws would once again come into play and these Bye-Laws and Business Rules it is not disputed are binding on both parties. By virtue of these Bye-Laws the Exchange was entitled to appoint a tribunal again. Section 14 or 15 therefore would not prevent in any manner the Exchange from appointing a new tribunal which it has done in the usual course. It must be noted that the Exchange was conscious of the fact that substantial time had been lost and had therefore offered Combined Arbitration Proceedings to which the petitioner was not agreeable. The Exchange therefore constituted a tribunal once again. The Arbitration and Conciliation Act will continue to govern the procedural parts of the reference and in my view the petition before this court seeking reliefs of declaring the tribunal constituted by the Exchange to be de jure and de facto unable to continue with the arbitral proceedings is completely misconceived. The tribunal is ready and willing to proceed with the arbitration and has so indicated in the minutes of the hearing held on 1st March 2021. The decisions in Jayesh H. Pandya 2019 (8) TMI 1308 - SUPREME COURT and Bharat Oman Refineries Ltd. 2012 (5) TMI 782 - BOMBAY HIGH COURT do not come to the assistance of the petitioner in the facts of the present case. The tribunal is constituted legitimately under the provisions of the Bye-Laws of the Exchange and it is willing to act. The contention of the petitioner that the tribunal is unable to act being de jure is de facto unable to continue the proceedings cannot be accepted - The provisions of Bye-Law 15.32 does not in any manner suggest that there is only one attempt at arbitration and that if that attempt fails no tribunal could be constituted. The petitioner is not entitled to declarations sought of and in these circumstances the petition fails. The interim order restraining the progress of arbitral proceedings stands vacated - Arbitration Petition is dismissed.

Summary

Issues Involved:

1. Termination of the arbitral tribunal's mandate due to expiry of the prescribed time limit.
2. Authority of the Exchange to constitute a new tribunal after the termination of the previous tribunal's mandate.
3. Applicability of Sections 14 and 15 of the Arbitration and Conciliation Act, 1996.
4. Petitioner's contention that arbitration proceedings should be terminated and the respondent should pursue claims through other legal remedies.

Detailed Analysis:

1. Termination of the Arbitral Tribunal's Mandate:

The petitioner argued that the tribunal's mandate terminated as the arbitration proceedings did not conclude within the four-month period stipulated by Bye-Law 15.32. The tribunal was constituted on 17th June 2020, and the period expired on 16th October 2020. Despite procedural orders and attempts to proceed, the proceedings were not concluded in time. The petitioner contended that the tribunal became de jure and de facto unable to act, and thus, the arbitration agreement was exhausted.

2. Authority of the Exchange to Constitute a New Tribunal:

The Exchange, after acknowledging the termination of the initial tribunal's mandate, proposed the formation of a "Combined Arbitration Proceedings" or a new independent panel. The petitioner objected, asserting that no tribunal could now be constituted under the Bye-Laws and that the respondent should seek alternative legal remedies. The respondent countered that the Exchange was entitled to reconstitute a tribunal as per Bye-Law 15.14, which allows filling vacancies in the arbitrator's office.

3. Applicability of Sections 14 and 15 of the Arbitration and Conciliation Act, 1996:

The petitioner invoked Sections 14 and 15, arguing that the tribunal's inability to conclude proceedings within the prescribed time rendered it functus officio. However, the court found that these sections did not prevent the Exchange from appointing a new tribunal. Section 14 pertains to the failure or impossibility of the tribunal to act, while Section 15 addresses the termination of the mandate and substitution of arbitrators. The court noted that the Bye-Laws and Business Rules, which are binding on both parties, allow for the appointment of a new tribunal.

4. Petitioner's Contention on Termination of Arbitration Proceedings:

The petitioner argued that the respondent should pursue claims through a suit or other legal remedies, as the arbitration provisions were no longer applicable. The court disagreed, stating that the Bye-Laws and Business Rules remained binding, and the Exchange was within its rights to appoint a new tribunal. The court emphasized that the Arbitration and Conciliation Act governs procedural aspects and that the petitioner's attempt to avoid arbitration was unfounded.

Conclusion:

The court concluded that the petition was misconceived. The Exchange legitimately constituted a new tribunal under the Bye-Laws, and the tribunal was ready to proceed with the arbitration. The court dismissed the petition, vacated the interim order restraining the arbitral proceedings, and clarified that the four-month period to conclude arbitration would commence from the date of the order's upload. No order as to costs was made.