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SUPREME COURT OF INDIA
N.V. RAMANA, MOHAN M. SHANTANAGOUDAR, AJAY RASTOGI, JJ.
JAYESH H. PANDYA & ANR. – Appellant
Versus
SUBHTEX INDIA LTD. & ORS. – Respondent
Civil Appeal Nos. 6300 of 2009
Decided On : 27-08-2019
(a) Words and phrases - Waiver - A voluntary and intentional relinquishment of a right. (Para 20)
(b) Arbitration and Conciliation Act, 1996 - Section 14 r/w section 15 - Arbitration clause specifying four months time for conclusion of proceedings unless extended by consent of parties - Parties not seeking extension - Agreement also not providing for condonation of delay in conclusion of the proceedings - Proceedings could not be concluded within four months as stipulated in arbitration agreement - No consensus for extension of time - Held, the arbitrator became functus officio after expiry of four months and his mandate terminates. (Para 23)
Facts of the case:
The appellants are partners of a partnership firm by the name Hetali Construction Company. The first respondent is a company and is a claimant in the arbitral proceedings which was initiated pursuant to the arbitration agreement. The first respondent Subhtex India Limited instituted an application under Section 11 of the Arbitration and Conciliation Act, 1996 for appointment of an Arbitrator before the High Court of Judicature at Bombay despite resistance by the present appellants that the agreement was a collusive and a forged document. Initially late Shri Justice V.D. Tulzapurkar, former Judge of this Court was appointed as a sole Arbitrator without prejudice to the rights and contentions of the parties. The order passed by the Single Judge of the High Court was a subject matter of challenge in a writ petition which was dismissed.
Hon'ble Mr. Justice V.D. Tulzapurkar died in his place Hon'ble Mr. Justice S.N. Variava was appointed. However arbitral proceedings could not be completed and award not published within the stipulated four months.
The appellants filed a written application before the Arbitrator stating therein that as the period of four months from the date of first preliminary meeting had expired, the Arbitral Tribunal has become functus officio with no power to proceed with the arbitral proceedings any more. But that came to be rejected by the learned Arbitrator which came to be challenged by the appellants in Arbitration Petition ( L) before the High Court seeking a declaration that the Arbitrator has become de jure unable to perform his functions and the mandate to act as an Arbitrator in the arbitral proceedings between the parties has terminated. The arbitration petition filed at the instance of the present appellants came to be dismissed by the High Court.
Finding of the Court:
Arbitrator has become functus officio.
Result: Appeal allowed.
JUDGMENT :
AJAY RASTOGI, J.
1. The instant appeal is directed against the final judgment and Order dated 14th March, 2008 passed by the High Court of Judicature at Bombay whereby the High Court while dismissing the Arbitration Petition held that the appellants had waived their right to the extension of time for completion of the arbitration proceedings and making the award, beyond the stipulated period of four months.
2. The seminal facts in brief relevant for the present purpose are that the appellants are partners of a partnership firm by the name Hetali Construction Company. The first respondent is a company incorporated under the Companies Act, 1956 and is a claimant in the arbitral proceedings which was initiated pursuant to the arbitration agreement dated 28th April, 2000. The first respondent Subhtex India Limited instituted an application under Section 11 of the Arbitration and Conciliation Act, 1996(hereinafter being referred to as the "Act 1996") for appointment of an Arbitrator in A.P. No. 150 of 2003 before the High Court of Judicature at Bombay despite resistance by the present appellants that the agreement dated 28th April, 2000 was a collusive and a forged document. Initially, by an Order dated 14th November, 2003, late Shri Justice V.D. Tulzapurkar, former Judge of this Court was appointed as a sole Arbitrator without prejudice to the rights and contentions of the parties and it was clarified that the views expressed in the order dated 14th November, 2003 about the existence, validity and effect of the arbitration agreement were prima facie and it would be open to be examined by the learned Arbitrator under Section 16 of the Act, 1996. The order passed by the Single Judge of the High Court dated 14th November, 2003 was a subject matter of challenge in a writ petition filed under Article 226 of the Constitution of India which was dismissed vide judgment and order dated 20th January, 2004 with an observation that adequate remedies are available under Section 16 of raising all contentious issues relating to the existence of the arbitration agreement and constitution of the Arbitral Tribunal, before the Tribunal.
3. The order of the Division Bench of the High Court dated 20th January, 2004 came to be challenged in a Special Leave Petition (Civil) No. 3919 of 2004 before this Court. This Court issued notice on 8th March, 2004 and stayed proceedings before the learned Arbitrator until further orders. Unfortunately, the sole Arbitrator appointed pursuant to Order dated 14th November, 2003 died in October, 2004. The said special leave petition was dismissed on 24th April, 2007 with the following observation as under:-
"Heard.
In the facts and circumstances of the present case, we are not inclined to exercise our jurisdiction under Article 136 of the Constitution of India. The special leave petition is dismissed.
We are informed that Mr. Justice V.D. Tulzapurkar, former Judge of this Court, who was appointed as the Arbitrator, has passed away.
Counsel for the parties are agreed that Hon'ble Mr. Justice S.N. Variava, a former Judge of this Court be appointed in place of Mr. Justice V.D. Tulzapurkar, as the Arbitrator. We order accordingly. Learned Arbitrator shall fix his remuneration etc.
All the points including the existence, validity and enforceability of the contract, as indicated by the Division Bench in its Judgment, shall be decided by the learned Arbitrator.
Parties are directed to appear before the learned Arbitrator on 4th of May, 2007 with a certified copy of this order for further directions. The address and contact numbers of the learned Arbitrator are as under:
7-B, Rockside
116, Walkeshwar Road
Mumbai - 400 006
Phone Nos. (022) 23620614, 23620598
Copy of this order be sent to the learned Arbitrator."
4. It will be apposite to take note of the terms of the Arbitration Agreement dated 28th April, 2000 relevant for the purpose which are extracted hereunder:-
"l....
2....
3...
4. Arbitrator shall follow the procedure of allowing
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