2010 Supreme(SC) 7

2010 (1) Supreme 65
SUPREME COURT OF INDIA
Tarun Chatterjee and Aftab Alam,JJ.
N.B.C.C. Ltd. — Appellant
versus
J.G. Engineering Pvt. Ltd. — Respondent
Civil Appeal No. 8 of 2010
(Arising Out of SLP) No. 19471 of 2007)
Decided on : 5-01-2010

IMPORTANT POINTS
1. Arbitrator has no power to further extend the time beyond that which is fixed without the consent of both the parties to the dispute.
2. It is true that apparently there is no provision under the Act for the Court to fix a time limit for the conclusion of an arbitration proceeding, but the Court can opt to do so in the exercise of its inherent power on the application of either party. Where however the Arbitration agreement itself provides the procedure for enlargement of time and the parties have taken recourse to it, and consented to the enlargement of time by the arbitrator, the Court cannot exercise its inherent power in extending the time fixed by the parties in the absence of the consent of either of them.

Headnote:Arbitration and Conciliation Act, 1996 – Section 14 – Appeals against orders passed by High Court whereby it allowed petition of respondent and thereby terminated mandate of arbitrator and appointed a new Arbitrator for deciding the dispute between the parties – Evidence on record that inspite of conducting a number of proceedings, arbitrator was unable to conclude the proceedings within the time fixed by High Court – Respondent moved the High Court to terminate the mandate of arbitrator as he had failed to conclude the proceedings within time limit fixed by parties – High Court accordingly terminated the mandate of the arbitrator on account of his failure to publish the award within the time fixed by parties – Held that High Court was perfectly justified in doing so – Arbitrator has no power to further extend the time beyond that which is fixed without the consent of both the parties to the dispute-Admittedly respondent did not give any consent for extension of time of arbitrator – Thus arbitrator had no power to further enlarge time to make and publish the award and therefore his mandate had automatically terminated after expiry of time fixed by parties to conclude proceedings – Arbitration is an efficacious and alternative way of dispute resolution between the parties – The present case illustrates that inspite of adopting this efficacious way of resolving the disputes between parties through the arbitration process, there was no outcome and the arbitration process had lingered on for a considerable length of time – The contention of appellant therefore cannot be justified that since dispute was highly technical in nature, it had to be dealt with elaborately by the arbitrator and thus, he was justified in being late – That apart, even assuming that arbitration process involved highly technical and complex issues, which was time consuming, even then, it was open for arbitrator or for 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 – There was no cogent reason for delay in making and publishing the award by the arbitrator – He already had 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 parties, unless the parties consented to further enlargement of time- In the present case, arbitrator had failed to publish the award within the time limit fixed by the parties, and hence, High Court was justified in terminating mandate of arbitrator – No fault could be found with the impugned order of High Court in this regard – However since before appointing an arbitrator under Section 11(6) of the Act, High Court had failed to take into consideration the effect of Section 11(8) of Act impugned order of High Court set aside and case remanded back to High Court for fresh decision of the application under Section 11(6) of the Act – Appeals allowed. (Paras 4, 5, 14 to 16)

        Inherent Powers – Power of Court to extend time and give life to the vitiated award –Scope – Court does not have any power to extend the time under the Act unlike Section 28 of the 1940 Act which had such a provision – The Court has therefore been denuded of the power to enlarge time for making and publishing an award – It is true that apparently there is no provision under the Act for the Court to fix a time limit for the conclusion of an arbitration proceeding, but the Court can opt to do so in the exercise of its inherent power on the application of either party – Where however the Arbitration agreement itself provides the procedure for enlargement of time and the parties have taken recourse to it, and consented to the enlargement of time by the arbitrator, the Court cannot exercise its inherent power in extending the time fixed by the parties in the absence of the consent of either of them. (Para 7)

        Arbitration and Conciliation Act, 1996 – Section 14 – Appeals against orders passed by High Court whereby it allowed petition of respondent and thereby terminated mandate of arbitrator and appointed a new Arbitrator for deciding the dispute between the parties – Contention of appellant that arbitrator having concluded the proceedings couldn’t be said to have failed to act so as to attract the provisions of Section 14 of the Act, which would call for termination of arbitration proceeding – Admittedly arbitrator had not concluded proceedings as had been agreed to by the parties within the time fixed for doing so – The mandate of the arbitrator was terminated only because of the fact that the arbitrator having failed to conclude his proceedings within time did not warrant to be continued as an arbitrator in the absence of the consent of both the parties – It is clear from a bare reading of sub section 1 (a) of section 14 of the Act, mandate of an arbitrator shall terminate if he fails to act without undue delay – In the present case, it was clear that the arbitrator had extended the time provided to it without any concrete reasons whatsoever and thus his mandate was liable to be terminated – Sub section 1(b) further states that the mandate of an arbitrator shall also stand to be terminated if he withdraws from his office or the parties agree to the termination of his mandate- From the perusal of records and the submissions of the parties, held that mandate of arbitrator was extended by an agreement between parties, which was not extended beyond 30th September, 2005-Thus it could be construed that parties had not agreed to extension of the mandate of the arbitrator failing which, the mandate was automatically terminated – Further, Subsection (2) of Section 14 of Act stipulates that ifa controversy remains concerning any of the grounds referred to under clause (a) of subsection 1, a party may, unless otherwise agreed to by the parties, apply to the Court to decide on termination of the mandate – Thus the respondent rightly applied to Court for the termination of the mandate of the arbitrator pursuant to the provisions of this section, and the Court was within its jurisdiction to decide accordingly. (Paras 11, 12)

       Facts of the Case :

        Present Appeals have been filed against orders passed by High Court whereby it allowed petition of respondent and thereby terminated mandate of arbitrator and appointed a new Arbitrator for deciding the dispute between the parties.

       Findings of the Court :

        Evidence on record showed that inspite of conducting a number of proceedings, arbitrator was unable to conclude the proceedings within the time fixed by High Court. Respondent moved the High Court to terminate the mandate of arbitrator as he had failed to conclude the proceedings within time limit fixed by parties. High Court accordingly terminated the mandate of the arbitrator on account of his failure to publish the award within the time fixed by parties. Held that High Court was perfectly justified in doing so . Arbitrator has no power to further extend the time beyond that which is fixed without the consent of both the parties to the dispute. Admittedly respondent did not give any consent for extension of time of arbitrator. Thus arbitrator had no power to further enlarge time to make and publish the award and therefore his mandate had automatically terminated after expiry of time fixed by parties to conclude proceedings. Arbitration is an efficacious and alternative way of dispute resolution between the parties.The present case illustrates that inspite of adopting this efficacious way of resolving the disputes between parties through the arbitration process, there was no outcome and the arbitration process had lingered on for a considerable length of time . The contention of appellant therefore cannot be justified that since dispute was highly technical in nature, it had to be dealt with elaborately by the arbitrator and thus, he was justified in being late. That apart, even assuming that arbitration process involved highly technical and complex issues, which was time consuming, even then, it was open for arbitrator or for 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. There was no cogent reason for delay in making and publishing the award by the arbitrator. He already had 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 parties, unless the parties consented to further enlargement of time. In the present case, arbitrator had failed to publish the award within the time limit fixed by the parties, and hence, High Court was justified in terminating mandate of arbitrator. No fault could be found with the impugned order of High Court in this regard.

       Result : Appeals allowed.