The Supreme Court has directed the Gujarat High Court to deliver its decision as expeditiously as possible in an issue involving section 29 of the Arbitration and Conciliation Act. Section 29 deals with the time period within which the proceedings is to be completed. It states that the proceedings shall be completed within a period of 12 months from the date of Arbitral Tribunal enters upon the reference failing which the tribunal shall be terminated unless otherwise extended by the order of the court.
Brief facts:
The arbitration in dispute was invoked by Col. Manbhupinder Singh Atwal along with his partners against Neeraj Kumarpal Shah, partner of C2R Projects LLP due to the various disputes aroused between them wherein the claimant has sought to recover a sum amounting to Rs.76.34 Crore.
By the order of the Supreme Court dated 24/07/2017, Former justice, Hon’ble Justice M.H.Shah was appointed as the chairman of the arbitral tribunal. The order further states that for the purpose of calculating the time period within which the award shall be passed, the arbitral proceedings shall commence from the date of its first sitting.
The proceedings were duly commenced and pending the proceedings, the claimant addressed a letter dated 28/11/2018 to the arbitral tribunal stating that in view of the circumstances existing, the proceedings could not be completed within the stipulated time. The letter further stated that the claimant is not consenting to extend the period of the arbitral tribunal as the tribunal has not discharged its duty in a fair and just manner and hence called upon the presiding arbitrator to withdraw from the arbitral proceedings.
On forwarding the above letter to the co-arbitrator Justice Hon’ble Justice J.M.Panchal, by letter dated 29/11/2018 addressed to the Presiding arbitrator Justice M.H.Shah, tendered his resignation with immediate effect stating that the allegations raised by the claimant’s counsel vide letter dated 28/11/2018 are baseless.
Justice M.H.Shah in his reply on 01/12/2018 to the claimant’s letter dated 28/11/2018 communicating the resignation of Justice J.M.Panchal expressed his displeasure on the baseless allegations of the claimant.
Subsequently a new arbitrator was appointed who by his letter dated 24/1/2019 prescribed the details regarding the payments to be made to the arbitrators and further stated that the arbitral tribunal shall not be constituted. Further in his communication dated 15/8/2019, the arbitrator has stated that on the failure of the parties to deposit the payment within prescribed time in the manner stipulated, the arbitral tribunal shall be suspended in part or as a whole. The petitioner herein has objected the exorbitant costs charged by the arbitrator.
Now, the petitioner herein contends that the first hearing of the arbitral tribunal was on 01/02/2018 and the proceedings are to be completed within a period of 12 months i.e. 31/01/2019. Even suppose the time period was extended, the period would have elapsed on 31/07/2019. The petitioner herein contends that the arbitral tribunal was not constituted till then and also the mandate of the arbitral tribunal has also elapsed hence, the arbitral tribunal is not conferred with the jurisdiction to proceed.
The respondent defended saying that the petition is ill-timed as the second round of arbitration was about to commence on the next day and the arbitrators had already reached the place of arbitration for which the cost were incurred by the respondent solely. He further stated that through various communications, it is evident that the petitioner had actually participated in the arbitral proceedings and hence at this juncture cannot repudiate. Also the respondent stated that the petitioner herein has filed a writ petition for the dispute arising out of arbitration which is not maintainable.
Key Features:
1. The Gujarat high court leaving the issue with regard to the maintainability of writ petition contended that the present issue was whether the mandate of the arbitral tribunal has elapsed.
2. It contended that the concession offered to the petitioner or the communication by the petitioner or the amount of expenditure incurred does not confer jurisdiction to the arbitral tribunal.
3. The court observed that on appreciating the date on which the arbitral tribunal has commenced the proceedings, the mandate has prima facie terminated.
4. The court held that on considering the peculiar facts of the case, the petitioner has a sound ground for the court to interfere.
The Gujarat high Court stayed the proceedings of the arbitral tribunal that was posted on 13th February, 2020. A special leave petition to the Apex Court was preferred by the claimant against the order of the Gujarat High court that was listed before Justice R.Nariman and Justice Ravindra Bhatt. The bench vacated the stay directing the tribunal to restrict its powers only to the extent of recording evidence and hearing the parties. The Apex Court further directed the Gujarat High court to dispose the petition before it in an expeditious manner. The petition is further to be listed on 16/03/2020 for further proceedings.
Edited by J. Madonna Jephi
Approved & Published – Sakshi Raje
Reference:
1. Special Civil Application No. 3913 of 2020, Gujarat High Court, order dated 12/02/2020
2. SPECIAL LEAVE PETITION (CIVIL) Diary No(s). 5800/2020, The Supreme Court of India, order dated 14/02/2020.
