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IN THE HIGH COURT OF KERALA AT ERNAKULAM
C.S. SUDHA, J.
Managing Director, Kerala State Film Development Corporation Ltd – Appellant
Versus
L.Rajendran – Respondent
C.R.P.No.807 of 2019 and O.P.(C)No.3041 of 2019
Decided on : 22-08-2024
ARBITRATION - DISPUTE RESOLUTION - Section 14, Section 15, Section 27, Section 29-A of the Arbitration and Conciliation Act, 1996 - The court discussed the provisions of the Arbitration and Conciliation Act, particularly Sections 14 and 29-A, which govern the termination of an arbitrator's mandate and the timeline for arbitration proceedings. The court interpreted that the mandate of an arbitrator can only be terminated if they are de jure or de facto unable to perform their functions, and that the KSFDC's claims of bias and inefficiency did not meet the necessary legal standards for termination. The court emphasized the importance of expeditious arbitration and the need for parties to adhere to agreed timelines, ultimately concluding that the arbitrator's mandate had not been legally terminated and the arbitration proceedings should continue.
Fact of the Case:
The Kerala State Film Development Corporation Ltd. (KSFDC) filed a revision petition against a common order dismissing their applications to terminate the mandate of the arbitrator in an arbitration dispute concerning a film production agreement. The petitioner alleged deficiencies in service and sought arbitration after KSFDC rejected their claims for losses incurred during film production.
Finding of the Court:
The court found that the KSFDC's allegations of bias and inefficiency against the arbitrator did not satisfy the legal requirements for terminating the arbitrator's mandate. The court noted that both parties had raised allegations of bias, but the arbitration proceedings had not yet concluded, leaving the KSFDC the option to challenge any award made by the arbitrator later.
Issues: Whether the arbitrator's mandate could be terminated based on allegations of bias and inefficiency, and whether the arbitration proceedings had exceeded the time limits set by the Arbitration and Conciliation Act.
Ratio Decidendi: The court held that the mandate of an arbitrator can only be terminated if they are unable to perform their functions as per Section 14 of the Arbitration and Conciliation Act. The court emphasized that the KSFDC's claims did not meet the criteria for termination, and that the arbitration process should continue to its conclusion before any challenges could be made regarding the arbitrator's conduct.
Final Decision: The court dismissed both the revision petition and the original petition, allowing the arbitration proceedings to continue without interference.
ORDER :
C.S. SUDHA, J.
The revision petition under Section 115 CPC and original petition under Article 227 of the Constitution of India have been filed by the respondent, Kerala State Film Development Corporation Ltd. (the KSFDC), against the common order dated 26/10/2019 of the 1st Additional District Judge, Ernakulam, in C.M.A.(Arb.) No.978/2018 and C.M.A.(Arb.) No.303/2019. The parties herein will be referred to as described in C.M.A.(Arbitration) No.978/2018.
2. The petitioner in C.M.A.(Arb.) No.978/2018, producer of feature film by name 'Little Masters’, availed the facilities at Chitranjali Studio, Thiruvananthapuram, run by the KSFDC for the production of his movie relating to which the parties had entered into an agreement dated 01/09/2011. completed in December 2011. Thereafter, alleging deficiency in service and loss, the petitioner raised a dispute under clause 34 of the agreement and claimed an amount of Rs.60,60,000/-for the loss alleged to have been suffered by him under various heads. The respondent KSFDC rejected the request of the petitioner. The petitioner invoking the arbitration clause in the agreement filed Arbitration Request No.12 of 2013 before this Court. By order dated 18/03/2014, Sri. Paul Simon, Retd. District Judge was appointed as the sole Arbitrator. Pursuant to the said order, arbitral proceedings bearing number ARC (PS) 03/2014 commenced.
2.1. During the course of the proceedings, CW1 to CW4 were examined on the side of the petitioner. Thereafter, RW1 to RW3 were examined on the side of the respondent KSFDC. According to the petitioner, the examination of the then sound engineer of the KSFDC as RW4 could not be completed within a day and hence it was adjourned to another day. However, on the said day, the counsel for the petitioner was unable to appear before the Arbitrator for cross examining RW4 due to certain unavoidable circumstances. Though the Arbitrator was informed about the difficulty of the lawyer, without considering the same, he closed the examination of RW4 and adjourned the matter for hearing. The petitioner then filed I.A.No.06/2018 seeking permission to reopen the evidence and to recall RW4 for further cross examination. This application was allowed, and summons was issued to RW4. However, the witness never turned up for cross examination. Hence, the Arbitrator allowed the petitioner to take necessary steps to ensure the presence of RW4. The petitioner moved C.M.A.(Arb.) No.978/2018 under Section 27 of the Arbitration and Conciliation Act, 1996 (the Act) requesting the court to issue a warrant to RW4 to procure his presence before the Arbitrator.
2.2. The respondent KSFDC filed a detailed counter affidavit inter alia contending that delaying tactics was being adopted by the petitioner; that sufficient opportunity had already been granted to the petitioner and that the Arbitrator was granting adjournments on the mere asking of the petitioner and hence the petition was liable to be dismissed.
3. The KSFDC alleging bias, delay, inefficiency and incompetence of the Arbitrator, moved C.M.A.(Arb.) No.303/2019 under Section 14(2) read with Section 15 of the Act for terminating the mandate of the Arbitrator. According to the KSFDC, the petitioner was unnecessarily protracting the matter and seeking adjournments repeatedly without any reasonable cause. Despite the adjournment requests and delaying tactics of the petitioner being strongly objected to by the KSFDC, the Arbitrator ignoring the same kept liberally granting the requests for adjournment. The Arbitrator has also been unable to complete the proceedings within the time limit prescribed under Section 29-A of the Act, which shows his inefficiency. The KSFDC has been made liable to Arbitrator's fees for all the posting dates on which adjournments were sought by the petitioner. As the arbitration proceedings continue indefinitely, the same is causing great financial liability and loss to the KSFDC. Moreover, the Arbitrator has no right to
AI
The court established that allegations of bias and inefficiency against an arbitrator must meet specific legal standards for termination of their mandate, and that parties must allow arbitration to c....
The challenge for the appointment of Arbitrator under Section 13 of the Act can only be made along with the final award under Section 34.
Pre-award challenges to an arbitrator's mandate based on perceived bias are impermissible, and such concerns must be raised post-award under Section 34 of the Arbitration and Conciliation Act.
Arbitration - Time limit for arbitral award - A petition under Section 29A of Act cannot be permitted to be used by one of parties to seek substitution of an arbitrator merely on basis of its unsubst....
The main legal point established in the judgment is that the grounds for termination of an arbitrator's mandate must satisfy the circumstances laid down under the Act and the precedents set by the Ho....
The Court cannot intervene in arbitration proceedings unless a de jure inability of the arbitrator is established, as per the Arbitration and Conciliation Act, 1996.
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