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High Court of Judicature at Bombay
ANOOP V. MOHTA, J.
Teltech Instrumentation Pvt. Ltd.
Versus
Bharat Petroleum Corporation Ltd.
ARBITRATION PETITION NO.962 OF 2010
Decided on : 01-03-2012
Arbitration and Conciliation Act, 1996 - Section 14(1) - Termination of mandate of arbitrator. Where parties not agreed to mandate of arbitrator, extending time to complete arbitration proceedings, therefore mandate of arbitrator automatically gets terminated.
Where in terms of the arbitration clause in the agreement between the parties, it was obligatory to complete the Arbitration proceedings within two years and/or within extension period of 12 months. It was specifically agreed that if such arbitrator is unable to act or refused to act, the respondents shall designate another person to act as an arbitrator in accordance with the terms of the said agreement. The said arbitrator shall been titled to proceed with the reference from the point at which it, was left by his predecessor. The clause nowhere provided that if new arbitrator and/or officer is appointed as an arbitrator, the Arbitration proceedings will re-commence from that date. In view of the agreed clauses as referred above, there is no question of extension of time even by consent of the parties as the parties themselves agreed the time schedule, so fixed.
The Court, even otherwise, in such situation cannot direct and/or compel any one of the parties to continue with the arbitration and when the clause are so clear. A time, if extended by consent of the parties, if provided, is one thing but if the agreement clauses itself mandated that Arbitration proceedings should be concluded within two plus one year, and further provide that even subsequent arbitrator should continue from the point at which his/her pre decessor left the arbitration, itself means the intentions was that it should be finished within three years from the date of commencement. In the present case, it was in the year 2002. Therefore, further proceedings after 2005 even if any, is unsustainable.
The Petitioners have invoked Section 14 (2) of the Arbitration and Conciliation Act, 1996 (for short, the Arbitration Act, 1996) as there exists arbitration clause in the agreement, and thereby seeking declaration that the mandate of Arbitrator nominated by the Director (Marketing) of the Respondents pursuance to the Arbitration clause contained in the tender inquiry stands terminated.
2 The Petitioners participated in a tender inquiry by the Respondents as tender documents were forwarded to the Petitioners along with other six. Various pre-bid meetings took place between 4 August 1999 to 17 October 2000. In the meantime, one France company appointed the Petitioners for casting and assembling of batch controllers for the entire world. There was no clause where the Petitioners were restricted to import or deal in or to supply (all that batch controllers) any other make. The Petitioners on 17 October 2000, as the Respondents inquiry was at negotiations stage, expressed inability to supply a flow meters and accordingly requested to modify the terms. The Respondents ultimately without accepting the Petitioners offer, placed order with other company and lodged a claim as compensation for damages, being the difference between the price at which the materials were offered by the subsequent tenderers and the price quoted by the Petitioners.
3 A Letter of intent dated 22 August 2000 issued by the Respondents to the Petitioners with details of technical and commercial terms. By letter dated 12 July 2002, the Respondents invoked the Arbitration Clause.
4 On 18 October 2002, the Director of Respondents nominated three Arbitrators. The matter went on for seven years but for one reason or other, the Arbitrators abandoned or ceased to act as Arbitrators. Therefore, the Arbitration could not be completed within two years after entered into the reference on or within such time not exceeding further 12 months as provided in clause 21. The Arbitrator in fact, issued directions on but could not proceed with the Arbitration further.
5 The Respondents in spite of above mandate of time, by letter dated 28 April 2009 appointed the present Arbitrator. The Petitioners, therefore, objected by letter dated 6 August 2009 that as the mandate of Arbitrators stand terminated, therefore, there is no question of appointment of any Arbitrator. The learned Arbitrator, however, by order dated 8 March 2010 dismissed the Application of the Petitioners.
6 The Petitioners, therefore, invoked Section 14, by reserving the rights under Section 34 of the Arbitration Act, 1996 and basically prayed as under:
“a) That this Hon’ble Court may be pleased to hold that the mandate of Shir J. Dinaker, or any other arbitrator as may be nominated by Director (Marketing) of the Respondents pursuant to the arbitration clause contained in Tender Enquiry No. M/M/WL/60T/1999/167OR stands terminated.”
7 This Court, by order dated 3 May 2010, not granted any ad-interim relief. On 18 July 2011, while admitting the Petition, prima facie observed that the Petitioners never objected to the fourth Arbitrator on 27 April 2007 on the ground that the mandate was expired. Therefore, the period of two years would begin only after the present Arbitrator enters upon the reference. It is further observed that it is open for the Petitioners to extend the time as provided under clause 21(p). The learned counsel appearing for the Petitioners relied upon a Judgment of the Supreme Court in NBCC Ltd. Vs. J.G. Engineering Pvt. Ltd(2010(3) Mh.L.J. 18). However, the learned Judge has observed that in that case mandate of the Arbitrator had expired and it is also observed in the order that the Petitioners are entitled to take the same contention in Section 34 Application.
8 Heard both the parties finally.
9 It is relevant to note Clause 21 (a) and (b) of the terms and conditions, which reads as under:
“21(a) Any dispute or difference of any nature whatsoever any claim, cross-claim, counterclaim or set
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