2024 (4) TMI 870 - HC - Indian Laws

Arbitral Proceedings - Computation of one-year period for completing the proceedings - Rejection of request of the petitioner to extend the time and proceeded to post the proceedings for issues - exclusion of days during which the proceedings were stayed, for calculation of timeline of twelve months for completion of proceedings - HELD THAT - From the order sheet of the Arbitral proceedings, it is seen that the petitioner who is respondent before the Arbitral Tribunal, took more than three to four adjournments to file its objection statement and also to file counterclaim. Thereafter, it took several adjournments and also sought extension of time to file surrejoinder. Admittedly, the Arbitral Tribunal entered reference on 17.11.2022, since then, the petitioner has filed six writ petitions challenging different interlocutory orders passed by the Arbitral Tribunal. It is deemed appropriate to dismiss the present writ petition with costs of Rs. 25,000/-, payable to the Karnataka State Legal Services Authority . The above cost shall be paid within two weeks from today and shall produce receipt for having paid before the Arbitral Tribunal - the question of maintainability of writ petition raised by respondents need no perusal. There is no merit in the writ petition - Petition dismissed.

Issues Involved:
1. Validity of the Arbitral Tribunal's mandate.
2. Applicability of Section 29A of the Arbitration and Conciliation Act, 1996.
3. Impact of stay orders on the timeline for arbitral proceedings.
4. Maintainability of the writ petition challenging interim orders of the Arbitral Tribunal.

Summary:

1. Validity of the Arbitral Tribunal's mandate:
The petitioner questioned the Arbitral Tribunal's order dated 16.03.2024 and sought a declaration that the mandate of the Arbitral Tribunal had terminated on 25.02.2024. The petitioner argued that the Tribunal's mandate expired as the one-year period to pass the award commenced on 25.02.2023, the date on which the respondents filed objections to the counterclaim and rejoinder.

2. Applicability of Section 29A of the Arbitration and Conciliation Act, 1996:
The Court examined Sections 23 and 29A of the Arbitration and Conciliation Act, 1996. It was noted that pleadings, as defined u/s 23(4), include the statement of claim, objections, counterclaim, and objections to the counterclaim. The Court observed that since the petitioner filed a surrejoinder on 20.05.2023 with the liberty granted by the Court, the period of twelve months for passing the award would commence from that date. The Tribunal was justified in observing that the arbitral proceedings commenced on 20.05.2023.

3. Impact of stay orders on the timeline for arbitral proceedings:
The Court acknowledged that the arbitral proceedings were stayed from 20.12.2023 to 06.03.2024 due to a writ petition challenging NCLT proceedings. It was held that the period during which the proceedings were stayed should be excluded from calculating the twelve-month period for making the award u/s 29A(1).

4. Maintainability of the writ petition challenging interim orders of the Arbitral Tribunal:
The Court noted that no writ petition would be maintainable challenging interim orders of the Arbitral Tribunal, and such orders could only be challenged in Section 34 proceedings. The Court referred to the decision of the Hon'ble Apex Court in SBP & CO., VS. PATEL ENGINEERING LTD., AND ANOTHER (2005) 8 SCC 618.

Conclusion:
The Court dismissed the writ petition, affirming that the Arbitral Tribunal was justified in its observations regarding the commencement of arbitral proceedings and the exclusion of the stay period. The petitioner was ordered to pay costs of Rs. 25,000/- to the Karnataka State Legal Services Authority within two weeks and produce the receipt before the Arbitral Tribunal. The issue of maintainability of the writ petition was not addressed due to the conclusion reached.

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