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TMI Blog2024 (5) TMI 844X X X X Extracts X X X X X X X X Extracts X X X X ..... eveloped by Sheil under the Development Agreement dated 11th August 1993 (for short, 'the Agreement'). A Memorandum of Understanding (MOU) was executed by and between the first appellant and Marico, by which the first appellant agreed to sell another portion of its property to Marico. Under the MOU, Marico was given the benefit of a certain quantity of FSI/TDR. Marico issued a public notice inviting objections, to which Sheil submitted an objection and stated that any transaction between the first appellant and Marico would be subject to the Agreement. The dispute between the first appellant and Sheil led Sheil to institute a suit (Suit no.2541 of 2006) for the specific performance of the MOU as modified by the alleged consent terms. The first appellant and Marico were parties to the said suit. Marico also filed a suit (Suit no.2116 of 2011) against the first appellant herein, and Sheil was also made a party defendant to the suit. A consensus was reached amongst the three parties, and a senior Member of the Bar was appointed as the sole Arbitrator. The order of appointment of the sole Arbitrator was passed on 13th October 2011 in the suit filed by Marico. The order records that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the Arbitral Tribunal by taking recourse to Section 14(2) of the Arbitration Act. By the impugned judgment and order, the learned Single Judge set aside the order of termination of the proceedings passed by the Arbitral Tribunal and directed the Arbitral Tribunal to continue the proceedings. We may note here that I.A. no.180843 of 2023 reveals that on 26th July, 2023, the learned sole Arbitrator informed the parties of his unwillingness to continue as the sole Arbitrator. SUBMISSIONS 6. Mr Nakul Divan, the learned senior counsel appearing for the first appellant, pointed out that the learned Single Judge of the High Court of Judicature at Bombay in her judgment dated 13th January 2023 in the case of Kothari Developers v. Madhukant S Patel Arbitration Petition (L) No.29362 of 2022 held that the Arbitral Tribunal was entitled to invoke its power under Section 32(2) (c) of the Arbitration Act if it is proved that the proceedings have become unnecessary due to the claimant's inaction. He submitted that Section 14 of the Arbitration Act does not empower the Court to secondguess the Arbitral Tribunal, especially when the decision of the Arbitral Tribunal is based on the appre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter Marico's reference was decided. He further submitted that after preliminary directions were issued on 8th November 2011 regarding the filing of pleadings, no further directions were issued by the sole Arbitrator in the reference of Sheil. He submitted that the decision of the Calcutta High Court in the case of NRP Projects Pvt. Ltd.1 is confined to the facts of the case before it. He submitted that Marico's reference took six years, and that is the reason for postponing Sheil's reference. The learned senior counsel would, therefore, submit that the interference made by the High Court in the arbitral proceedings under Section 14 of the Arbitration Act was certainly justified. CONSIDERATION OF SUBMISSIONS 8. Chapter V of the Arbitration Act contains provisions regarding the conduct of arbitral proceedings. If parties do not agree on the timelines for filing statements of claim and defence, under subsection (1) of Section 23, the Arbitral Tribunal has the power to determine the timelines for filing pleadings. Subsection (4) of Section 23, incorporated with effect from 23rd October 2015, provides that the filing of pleadings (statements of claim and defence) shall be co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;s mandate. Sections 14 and 15 are the relevant sections. The Arbitrator is empowered to withdraw from his office, which terminates his mandate. However, the arbitral proceedings continue by the arbitrator's substitution. 12. The order of termination passed by the learned Arbitrator, in this case, gives an impression that he was of the view that unless parties move the Arbitral Tribunal with a request to fix a meeting or a date for the hearing, the Tribunal was under no obligation to fix a meeting or a date for hearing. The appointment of the Arbitral Tribunal is made with the object of adjudicating upon the dispute covered by the arbitration clause in the agreement between the parties. By agreement, the parties can appoint an Arbitrator or Arbitral Tribunal. Otherwise, the Court can do so under section 11 of the Arbitration Act. An Arbitrator does not do pro bono work. For him, it is a professional assignment. A duty is vested in the learned Arbitrator or the Arbitral Tribunal to adjudicate upon the dispute and to make an award. The object of the Arbitration Act is to provide for an efficient dispute resolution process. An Arbitrator who has accepted his appointment cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on termination of arbitral proceedings as provided under clause (b) of subsection (2) of Section 32; or d. When the Arbitral Tribunal finds that the continuation of proceedings has become unnecessary or impossible for any other reason, as provided under clause (c) of subsection (2) of Section 32. 15. Therefore, clause (c) of subsection (2) of Section 32 can be invoked for reasons other than those mentioned in subsection (1) of Section 32 and clauses (a) and (b) of subsection (2) of Section 32. Under clause (c), the mere existence of a reason for terminating the proceedings is not sufficient. The reason must be such that the continuation of the proceedings has become unnecessary or impossible. In a given case, when a claimant files a claim and does not attend the proceedings, clause (a) of Section 25 comes into operation, resulting in the learned Arbitrator terminating the proceedings. If, after filing a claim, the claimant fails to appear at an oral hearing or fails to produce documentary evidence, it cannot be said that the continuation of proceedings has become unnecessary. If the claimant fails to appear at an oral hearing after filing the claim, in view of clause (c) of Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... co and Sheil to file their statements of claim. Therefore, even the learned Arbitrator proceeded on the footing that there were two distinct claimants and claims. They were directed to file their statements of claim in the respective arbitral proceedings. After that, on 20th December 2011, the learned Arbitrator granted an extension of time to complete the pleadings. Both the claimants filed their respective statements of claim. The learned Arbitrator first conducted arbitral proceedings in which the claimant was Marico. Paragraph 10 of the award dated 6th May 2017 made on Marico's claim is very relevant, which reads thus: "10. The 2nd Respondent has also filed a reply to the Statement of Claim. However, no evidence was led by the 2nd Respondent (either documentary or oral) nor was any argument addressed by the 2nd Respondent to me, although the 2nd Respondent was present at all hearings of this arbitration." (emphasis added) The respondent no.2 before the Arbitral Tribunal was Sheil, as can be seen from the cause title of the award. Thus, Sheil was represented throughout before the Arbitral Tribunal during the hearing of the claim of Marico. Therefore, it cannot be said tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if it is to be implied, there must be convincing circumstances on record which lead to an inevitable inference about the abandonment. In the facts of the case, there was no abandonment either express or implied. In a case where the claim is abandoned, the learned Arbitrator can take the view that it would be unnecessary to continue the proceedings based on the already abandoned claim. In this case, the inference of the abandonment has been drawn by the learned Arbitrator only on the grounds that Sheil did not challenge the Marico award and took no steps to convene the meeting of the Arbitral Tribunal. The failure to challenge the award on Marico's claim will not amount to abandonment of the claim filed by Sheil in January 2012. In the claim submitted by Sheil, a prayer was made in the alternative for passing an award in terms of money against the first appellant. Therefore, we hold that there was absolutely no material on record to conclude that Sheil had abandoned its claim or, at least, the claim against the first appellant. Till the award dated 6th May 2017 was passed in Marico's claim, Sheil's representative was always present at all hearings till the passing of the award. Afte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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