Kishor Jitendra Dalal vs Jaydeep Investments and others

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1996 Supreme(Bom) 537

IN THE HIGH COURT OF BOMBAY
S.M. Jhunjhunuwala, J.
Kishor Jitendra Dalal.... Petitioner.
Versus
Jaydeep Investments and others.... Defendants.
Arbitration Petition No. 254 of 1995, decided on 10-1-1996.
Advocates appeared :
K.J. Dalal, for the petitioners.
S.J. Purohit with R.S. Maurya, i/b Purohit Co., for the respondent No. 1.

Headnote:Sections 28 and 46-See Bombay Stuck Exchange By-laws - By-laws Nos. 254 and 261.
       BOMBAY STOCK EXCHANGE BYE-LAWS
       By-laws Nos. 254 and 261-Arbitration Act, 1940, Sections 28 and 46-Securities Contracts (Regulation) Act, 1956, Section 4-Stock Exchange - President of-Under By-laws empowered to extend time without consent of either party.
       Under these By-laws, the arbitrators are to make their award within four months after entering on the reference or after having been called upon to act by notice in writing from any party or within such extended time as the arbitrators may fix with the consent of the parties to the reference or the Governing Board or the President may allow. Further, the Governing Board or the President may, if deemed fit, whether the time for making the award has expired or not and whether the award has been made or not extend from time to time for making the award by the period not exceeding one month at a time from the due date of the award. Under Bye-laws 254 and 261, the Governing Board or the President of the Exchange has power to extend the time for the arbitrators to make the award despite there being no consent of a party to the reference for such enlargement of time.
       There is no doubt that as per sub-section (2) of Section 28, the arbitrators can enlarge the time for making the award upon the consent of all the parties to the agreement. Therefore, if one of the parties to the agreement declines to give consent for enlargement of time for making the award, the arbitrators under sub-section (2) of Section 28 cannot enlarge the time to make the award.
       As per Section 46, Section 6 (1), 7, 12, 36 and 37 of the Act will not apply to statutory arbitrations so also, if there is anything in the Act which is inconsistent with the enactment under which arbitration is taking place or with any rules or by- laws framed under that enactment, the provisions of that enactment and the rules and by-laws thereunder shall prevail. Therefore, since provision has been made under By-law 254 and 261 of the By-laws of the Exchange empowering the Governing Board or the President of the Exchange to enlarge time for the arbitrators to make the award despite there being no consent of the party or parties to the agreement which provision though inconsistent with sub-section (2) of Section 28 of the Act shall prevail and in that view of the matter, the Governing Board or the President of the Exchange has the power to enlarge the time for the arbitrators to make the award. In exercise of such powers from time to time, the time for making the awards by the arbitrators has in fact been enlarged by the Governing Board or the President of the Exchange. Even otherwise also if the time to make the award is not yet enlarged by the Governing Board or the President of the Exchange, under By-laws 254 read with By-law of the Exchange, the Governing Board or the President of the Exchange can still enlarge the time for the arbitrators to make the award. In the circumstances, the arbitrators have neither become functus officio nor have ceased to have the jurisdiction to arbitrate in the matter. The proceedings before the arbitrators have not become null and void.

JUDGMENT - S.M. JHUNJHUNUWALA, J.:---By this petition, the petitioner seeks declaration that the arbitration proceedings in Case No. 45 of 1991 pending before respondents 2 and 3, the Arbitrators, have become null and void since time for the Arbitrators to make the award has expired and the petitioner has declined to give his consent for enlargement of time for the Arbitrators to make the award.

The petitioner has been a member of The Stock Exchange, Bombay (for short, 'the Exchange'). However, the membership of the petitioner is presently suspended by the Governing Board of the Exchange. Prior to suspension of the membership of the petitioner, the 1st respondents had effected transactions in shares through the petitioner at the Exchange in accordance with Rules, Bye-laws and Regulations of the Exchange. In respect of such transactions, certain disputes and differences arose by and between the 1st respondents and the petitioner which the 1st respondents referred to arbitration as per Arbitration agreement in existence by and between the petitioner and the 1st respondents. The 1st respondents had appointed the 2nd respondent as their Arbitrator and the petitioner had appointed the 3rd respondent as his Arbitrator. The reference to Arbitration was made some time in the month of April, 1991. In the proceedings pending before them, the Arbitrators have held several meetings to hear the reference. The hearings of the reference have now practically concluded and the Arbitrators are to make the award.

2. According to the petitioner, the Arbitrators were required to make the award within four months of entering upon the reference and since the Arbitrators have not made the award within the time prescribed under Clause 3 of the First Schedule to the Act and as the petitioner has declined to give his consent for extension of time for the Arbitrators to make the award, the Arbitrators have become functus officio and as such, are not now entitled to make the award and the proceedings before them have become null and void.

3. Earlier and even on 7th April, 1994, the petitioner himself had requested the Arbitrators to make the award. On 3rd August, 1994, the petitioner had submitted before the Arbitrators that since the petitioner was not giving his consent for enlargement of time for the Arbitrators to make the award, by reason of section 28 of the Act the proceedings before the Arbitrators had become null and void and that the Arbitrators ceased to have jurisdiction to make the award.

4. In support of his submission that the Arbitrators have ceased to have jurisdiction to make the award since the petitioner has declined to give his consent for enlargement of time for the Arbitrators to make the award, the petitioner has put reliance on sections 28 and 46 of the Act as also on the case of (Hari Krishna Wattal v. Vaikunth Nath Pandya)1, reported in A.I.R. 1973, S.C. 2479.

5. Though the notice of the petition has been served upon all the respondents, respondents 2, 3 and 4 are not appearing to oppose admission of the petition. Mr. Purohit, the learned Advocate appears for the - 1st respondents to oppose admission of the petition. Mr. Purohit submits that the Rules, Bye-laws and Regulations of the Exchange are statutory and by reason of Bye-laws 254 and 261 of the Bye-laws of the Exchange, the Governing Board or the President of the Exchange has the power to extend the time for the Arbitrators to make the award and for that purpose, it is not necessary to have the consent of either party to the reference. Mr. Purohit further submits that by reasons of section 46 of the Act, the provisions as contained in the statutory Bye-laws of the Exchange enabling the Governing Board or the President of the Exchange to extend time for the Arbitrators or the Umpire, as the case may be, though inconsistent with provisions of section 28 of the Act prevail and as such, though section 28 of the Act contemplates mutual consent of the parties to enable the Arbitrat

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