9911796707
TMI Blog2010 (1) TMI 1140X X X X Extracts X X X X X X X X Extracts X X X X ..... was accepted by the appellant. On 30th of March, 1993, the appellant entered into a contract with the respondent for construction of the aforesaid work at the Bhubaneshwar Airport for a total consideration of Rs. 5,71,13,541.33/-. The date of commencement of the work was fixed on 1st of March, 1993 and the stipulated date of completion was 31st of October, 1994. However, on 20th of March, 1996, the appellant terminated the contract of the respondent alleging that the respondent had failed to fulfill its part of the obligations required under the contract. On 20th of May, 1996, the respondent invoked the arbitration clause and sought for an appointment of an arbitrator for adjudication of the disputes between the parties. On 9th of August, 1996, the Chairman-cum-Managing Director of the appellant appointed a sole arbitrator to adjudicate upon the claims and counter claims of the parties. The appellant filed its counter claim on 30th of April, 1997 before the sole arbitrator. The respondent submitted its rejoinder and objections to the counter claims on 12th of May, 2001, after about 4 years from the date of reply by the appellant. During this period, the appellant had virtually cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement of time for the conclusion of the arbitration proceeding or to pass the award after the expiry of the period. On 22nd of December, 2005, the High Court, vide an interim order, restrained the arbitrator from making an award and at the same time, had refused to accept the award produced by the arbitrator before it which were well beyond the period fixed by the High Court. On 23rd of March, 2006, the High Court, by its impugned order, terminated the mandate of the arbitrator on the ground of delay in making the award. The appellant then challenged the above mentioned order of the Calcutta High Court before this Court vide SLP No.19471 of 2007 on 12th of September, 2007. At the same time, the High Court by the impugned order dated 21st of September, 2007 passed in AP No. 361/2005 appointed Mr. Justice Chittatosh Mookherji (As His Lordship then was) as the sole arbitrator to adjudicate the disputes between the parties. The appellant, feeling aggrieved by this order as well has filed a special leave petition which came to be registered as SLP No. 22243 of 2008, which after hearing the learned counsel for the parties and on grant of leave, was heard in presence of the learned couns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time for making and publishing the award by mutual consent of the parties. From a perusal of the documents before us, we notice that the parties mutually agreed to extend the time till 31st August, 2005 for making and publishing the award, which were further extended by the parties till 30th of September, 2005 on account of the arbitrator having failed to conclude the proceedings within the previous date fixed by the parties. But the arbitrator having failed to do so by 30th of September, 2005, the respondent moved the High Court to terminate the mandate of the arbitrator as he had failed to conclude the proceedings within the time limit fixed by the parties. The High Court accordingly terminated the mandate of the arbitrator on account of his failure to publish the award within the time fixed by the parties. We are of the opinion that the High Court was perfectly justified in doing so on an application filed by the respondent before it. Quite interestingly, it has come to our notice that the arbitrator in question had appeared before the High Court and submitted that the award was ready but the same could not be published on account of the interim order passed by the same re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt had thus correctly fixed the time for the arbitration to be concluded within a period of six months from the appointment of the fourth arbitrator Shri A.K. Gupta considering the time that had been spent for the arbitration process prior to Mr. Gupta's appointment. That apart, even assuming that the arbitration process involved highly technical and complex issues, which was time consuming, even then, it was open for the arbitrator or for the parties to approach the Court for extension of time to conclude the arbitration proceeding which was not done by either by the arbitrator or by any of the parties. As had been correctly noted by the High Court in its impugned judgment, there was no cogent reason for the delay in making and publishing the award by the arbitrator. He already had the relevant materials at his disposal and could base his findings on the observations made by the three arbitrators who were appointed prior to him. The Arbitrator was bound to make and publish his award, within the time mutually agreed to by the parties, unless the parties consented to further enlargement of time. Therefore, the condition precedent for enlargement of time would depend only on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration agreement prescribed any time for making and publishing the award. 6. The learned counsel appearing on behalf of the appellant had drawn our attention to a decision of this Court in Jatinder Nath Vs. M/s Chopra Land Developers Pvt. Ltd. & Anr. [AIR 2007 SC 1401] to satisfy us that the award which was passed after four months of entering upon reference does not ipso facto become nonest and the Court has power to extend time and give life to the vitiated award. So far as this decision is concerned, we may keep it on record that this decision was rendered under the Arbitration Act of 1940 and not under the present act with which we are only concerned. In view of our reasonings given hereinafter and in view of the facts involved in this case, we do not find any ground to rely on this decision of this Court for the purpose of this case. The other decision cited by the learned counsel for the appellant is the decision reported in General Manager, Department of Telecommunications, Thiruvananthapuram Vs. Jacob S/o Kochuvarkey Kalliath (Dead) by LRs. And Others [2003 (9) SCC 662]. The learned counsel particularly relied on para 8 of the said decision. We have carefully gone through ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the time fixed by the Court had expired on account of the mutual consent of the parties to extend the time limit. Such an action was clearly warranted under the arbitration agreement in force between the parties. On the contrary, the arbitrator had ceased to have any authority only after the time limit fixed by the parties had expired and the respondent did not give consent to the extension of the time for publishing the award. Thus, such a contention of the appellant cannot be accepted. The High Court had merely asserted this fact that the mandate of the arbitrator had automatically expired after the time fixed by the parties to the effect that it had lapsed. 9. The Appellant further argued that the High Court had failed to appreciate that the parties had undergone the process of arbitration for a long time and it was not wise to terminate the mandate of the arbitrator when the award was ready and fit to be published, considering the fact that a huge sum of money had been spent during the proceedings. Therefore, the High Court should not have ordered the appointment of a new arbitrator. It is to be noted that the High Court in its impugned judgment had ordered Shri A.K. Gupta to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the mandate of an arbitrator, it shall not imply acceptance of the validity of any ground referred to in this section or sub-section (3) of section 12." "Section 15: Termination of mandate and substitution of arbitrator- (1) In addition to the circumstances referred to in section 13 or section 14, the mandate of an arbitrator shall terminate- (a) Where he withdraws from office for any reason; or (b) By or pursuant to agreement of the parties (2) Where the mandate of an arbitrator terminates, a substitute arbitrator shall be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced. (3)Unless otherwise agreed by the parties, where an arbitrator is replaced under subsection (2), any hearings previously held may be repeated at the discretion of the arbitral tribunal. (4)Unless otherwise agreed by the parties, an order or ruling of the arbitral tribunal made prior to the replacement of an arbitrator under this section shall not be invalid solely because there has been a change in the composition of the arbitral tribunal." 11. With reference to the contention made by the appellant that the arbitrator having concluded the proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the arbitrator replaced. In this connection, it would be appropriate to refer to the relevant portion of the impugned judgment of the High Court, which gives an elaborate observation on the above-mentioned issue raised by the appellant: "The question therefore is, whether in view of section 15 (2) of the 1996 Act, an independent arbitrator can be appointed by this Court as prayed for by the appellant or whether the appellant should once again invoke the Arbitration Clause, call upon the Chairman-cum- Managing Director of the respondent to appoint an arbitrator, wait for a further period of 30 days, to see whether the Chairman-cum-Managing Director acts or not and then make a request to the Hon'ble Chief Justice or his designate under Section 11(6) of the 1996 Act to appoint an arbitrator. Arbitration is an informal, quick and easy alternative mode of adjudication of disputes by agreement of the parties. This Court cannot but take judicial notice of the fact that the Arbitration Clause was invoked way back in May 1996 and almost 10 years have expired since then. The appointment of successive Arbitrator by the Chairman-cum-Managing Director of the respondent has only result ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... qualifications required by the agreement and other considerations. xxxxxxxxxxxxxx In all these cases at hand the High Court does not appear to have focused on the requirement to have due regard to the qualifications required by the agreement or other considerations necessary to secure the appointment of an independent and impartial arbitrator. It needs no reiteration that appointment of the arbitrator or arbitrators named in the arbitration agreement is not a must, but while making the appointment the twin requirements of Sub-section (8) of Section 11 have to be kept in view, considered and taken into account. If it is not done, the appointment becomes vulnerable. In the circumstances, we set aside the appointment made in each case, remit the matters to the High Court to make fresh appointments keeping in view the parameters indicated above." In the aforesaid decision in the case of Northern Railway Administration (Supra), Arijit Pasayat, J. (as His Lordship then was), held that the High Court in the said case did not appear to have focused on the requirement to have due regard to the qualifications required by the agreement or other conditions necessary to secure the appointme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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