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2008 Supreme(Del) 508
AIR 2008 DELHI 197
BADAR DURREZ AHMED, J.
Kurup Engineering Co. Pvt. Ltd.
Versus
M/s. Bharat Heavy Electricals Ltd. and Ors.
O. M. P. 45 of 2008
Decided On:- 6 -5 -2008.
Advocateds Appeared:
Amit Sharma, for Petitioner.
The main legal point established is that an arbitrator's mandate can be terminated if they fail to act without undue delay, as per Ss. 14 and 15 of the Arbitration and Conciliation Act, 1996.
Headnote:
Arbitration - Termination of Arbitrator's Mandate - Ss. 14 and 15 of the Arbitration and Conciliation Act, 1996 - S. 11(6) - S.B.P. and Company v. Patel Engineering Ltd., 2005 (8) SCC 618 : (AIR 2006 SC 450)
Fact of the Case:
The petitioner sought termination of the mandate of the sole arbitrator and appointment of a substitute arbitrator under Ss. 14 and 15 of the Arbitration and Conciliation Act, 1996. The petitioner alleged repeated cancellations and adjournments by the arbitrator, bias, and failure to act without undue delay.
Finding of the Court:
The court found that the arbitrator had failed to act without undue delay, leading to the termination of the arbitrator's mandate. It directed the appointment of a substitute arbitrator in accordance with S. 15(2) of the Act.
Issues: 1. Termination of the arbitrator's mandate under Ss. 14 and 15 of the Act. 2. Allegations of bias and failure to act without undue delay.
Ratio Decidendi: The court held that the arbitrator's repeated cancellations and adjournments constituted undue delay, leading to the termination of the mandate. It emphasized the need for expeditious arbitration proceedings and directed the appointment of a substitute arbitrator.
Final Decision: The petition was allowed, and the court directed the appointment of a substitute arbitrator in accordance with S. 15(2) of the Act.
2. The facts leading to the filing of the present petition are that on 23-10-2003, the respondent awarded the work of erection of, inter alia, the HSRG Boiler at the Indian Oil Corporation Limited Refinery at Mathura, U.P. The contract was terminated by the respondent (BHEL) before the expiry of the contract term. Disputes had arisen between the parties and the petitioner had invoked the arbitration clause. Since the respondent did not appoint the arbitrator within the 30 days period given in the notice, the petitioner filed an application under S. 11(6) of the said Act for appointment of an arbitrator (i.e., Arbitration Application No. 281/2005). In the meanwhile, the respondent had appointed Mr. Jitendra Kumar, AGM, as the sole arbitrator. He held the first, second and third proceedings on 5-1-2005, 27-1-2005 and 23-2-2005. Thereafter, there was a stay of proceedings by this Court. However, by an order dated 26-7-2005, the said petition was disposed of by directing that since the delay in appointment was of only 4 to 5 days, the arbitrator who had already been appointed would continue with the proceedings.
3. Being aggrieved by the said order dated 26-7-2005, the petitioner filed a writ petition being W.P. (C) No. 12721/2005 before a Division Bench of this Court. In the meanwhile, the decision of the Supreme Court in the case of S.B.P. and Company v. Patel Engineering Ltd., 2005 (8) SCC 618 : (AIR 2006 SC 450) was pronounced wherein the Supreme Court, inter alia, held that the order passed under S. 11(6) of the said Act is a judicial order and not an administrative order. Consequently, the Division Bench, by its order dated 25-11-2005 dismissed the writ petition on this ground. Thereafter, the petitioner filed a Special Leave Petition (S.L.P. (C) No. 655/2006) before the Supreme Court against the order passed on 26-7-2005 under S. 11(6) of the said Act. On 30-1-2006, the Special Leave Petition was also dismissed by the Supreme Court. It is, therefore, clear that the appointment of Mr. Jitendra Kumar as the sole arbitrator became final.
4. On 31-1-2006, the fourth proceedings were held before the sole arbitrator. The petitioner filed its statement of claims on 1-4-2006. The fifth proceedings were held on 13-4-2006 and the respondents were directed to file their reply to the statement of claim as also their counter claim by 12-5-2006 and the next proceedings were scheduled to be held on 28-6-2006. However, on 27-6-2006, the learned arbitrator issued a letter postponing the proceedings till the first week of September, 2006. It is alleged by the petitioner that the arbitrator simultaneously and unilaterally extended time to the respondents till 31-7-2006 for filing the counter claim without there being any request made by the respondent-BHEL. Thereafter, the proceedings were again postponed and by a letter dated 12-7-2007 the arbitrator fixed 31-8-2007 as the date for the sixth proceeding. The arbitrator once again extended time to the respondents for filing the counter claim. This date was also cancelled and by a letter dated 28-8-2007, the arbitrator rescheduled the proceedings for 25-9-2007 on account of his pre-occupation. Again on 21-9-2007, the arbitrator sent a letter stating that due to his non-avai
