IN THE HIGH COURT OF JUDICATURE AT BOMBAY
R.D. DHANUKA, J.
Amar Tea Distributors a Partnership firm – Petitioner
Versus
Coca-Cola India Pvt. Ltd. – Respondent
Arbitration Petition No. 537 of 2016
Decided On : 27-07-2016
Arbitration Act - Quashing of Arbitrator's Order - Section 14, Arbitration and Conciliation Act, 1996 - 25(a)
Fact of the Case:
The petitioner sought to quash an order by the arbitrator allowing the respondent's application for termination of the arbitration proceedings due to delay in filing the statement of claim. The petitioner had filed a statement of claim in the earlier arbitration proceedings, and a similar claim in 2014. The respondent challenged the award from the earlier proceedings, and the court directed a fresh hearing by the arbitrator.
Finding of the Court:
The court found that the arbitrator had the power to grant an extension of time to file pleadings if sufficient cause was shown, and that no prejudice was caused to the respondent by the delay. The court held that the arbitrator's decision to terminate the proceedings was harsh and unreasonable.
Issues: The issues included whether the arbitrator had the power to grant an extension of time, whether the delay in filing the statement of claim was justified, and whether the termination of proceedings was warranted.
Ratio Decidendi: The court held that the arbitrator had the implicit power to grant an extension of time to file pleadings and documents, and that the delay in filing the statement of claim was satisfactorily explained. The court also found that no prejudice was caused to the respondent by the delay, and that the termination of proceedings was harsh and unreasonable.
Final Decision: The court made the arbitration petition absolute, directed the arbitrator to take the statement of claim on record, and permitted both parties to file written statements and counterclaims within eight weeks.
R.D. DHANUKA, J.
1. By this petition filed under Section 14 of the Arbitration and Conciliation Act, 1996 (for short “the Arbitration Act”), the petitioner has prayed for quashing and setting aside the order dated 10th April 2015 passed by the learned arbitrator thereby allowing the application dated 3rd July 2014 filed by the respondent herein and rejecting the application for termination of the mandate of the arbitral tribunal under Section 25 (a) of the Arbitration Act and holding that the statement of claim dated 19th May 2014 filed by the petitioner would be given back to the petitioner (original claimant) when the said order was pronounced on the ground that the arbitral tribunal had no power to accept or reject the same. The learned arbitrator also directed that the respective pleadings in the application would also be returned along with the copies of the order to both the parties. Some of the relevant facts for the purpose of deciding this petition are as under:-
2. The petitioner herein is the original claimant in the arbitration proceedings whereas the respondent herein is the original respondent.
3. The parties had entered into a Distributor Agreement on 7th March 2002 on the terms and conditions recorded therein. The parties thereafter executed two supplementary agreements dated 22nd March 2003 and 14th March 2004. The dispute arose between the parties. Sometime in the year 2006, the petitioner invoked the arbitration agreement. The dispute was referred to a Senior Counsel of this Court pursuant to the order passed by this Court on 12th October 2010. On 17th April 2006, the petitioner filed its statement of claim before the learned arbitrator appointed by this Court for an amount of Rs.75,74,277.14/- with interest @ 18% p.a. from the date of termination till its realisation. On 8th September 2006, the respondent filed its counter claim for an amount of Rs.54,38,341.42/- with interest @ 18% p.a. in the said counter claim.
4. Learned arbitrator made an award in the said arbitration proceedings on 12th October 2010. The respondent herein challenged the said award by filing an arbitration petition (507 of 2008) in this Court. By consent of the parties, the said arbitration petition was allowed and the said impugned award dated 12th October 2010 came to be set aside. This Court directed that the reference shall be heard afresh by the learned sole arbitrator, a senior counsel of this Court.
5. Learned arbitrator issued a notice on 23rd November 2010 by which a preliminary meeting was fixed on 12th April 2011. In the said meeting, the learned arbitrator issued a direction to file statement of claim on or before 18th January 2011 and to file written statement/reply and counter claim if any on or before 4th March 2011. The learned arbitrator issued further direction about filing of documents and affidavit of documents. In the said meeting, the learned arbitrator made it clear that on 12th April 2011, the advocates alone shall make an attempt to ascertain the compliance with the schedule mentioned in the minutes of meeting and to issue further direction as may be necessary.
6. On 19th May 2014, the petitioner filed fresh statement of claim. It is the case of the petitioner that the said statement of claim filed on 19th May 2014 was more or less identical to that of the statement of claim filed in the first round of arbitration. The petitioner through advocate's letter forwarded the said statement of claim to the learned arbitrator and also a copy to the learned advocate representing the respondent. On 22nd May 2014, the respondent through its advocate raised an objection for taking the said statement of claim on record. In view of the objection raised by the respondent through its advocate, the learned arbitrator vide his letter dated 3rd June 2014 fixed a meeting on 9th June 2014 for discussion on the arbitration proceedings.
7. On 1st July 2014, the respondent filed an application under Section 25(a) of the Arbitration
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