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2016 Supreme(Mad) 1586

IN THE HIGH COURT OF JUDICATURE AT MADRAS
SANJAY KISHAN KAUL & R. MAHADEVAN, JJ.
Bharat Heavy Electricals Limited - Petitioner
Vs.
M/s.Jyothi Turbopower Services Private Limited & Ors. - Respondents
W.P. No.8057 of 2016
Decided On : 07-06-2016

Advocates Appeared:
For the Petitioner: Mr. Krishna Srinivasan for Mr. S. Ramasubramaniam & Asso.
For the Respondents: Mr. Thriyambak J. Kannan.

Headnote:

Arbitration and Conciliation Act, 1996 - Section 25 (a) - Constitution of India,1950 - Article 226 - Order of termination – Jurisdiction - Terminated by passing order - These proceedings were sought to be reopened by first respondent / original claimant by filing an application maintainability of which was objected to by petitioner without even filing a reply on ground that once Arbitrator has terminated mandate he had become functus officio - Arbitrator however opined to contrary vide impugned order that there was an implied power of procedural review which was sought to be exercised in respect of prayer made for recalling order of termination of proceedings and calling upon petitioner to file a counter on merits - Question which thus arises for consideration is whether an Arbitrator actually becomes functus officio and incapable of recalling such an order terminating proceedings - Held, Petitioner has in fact unnecessarily rushed to Court where even merits of application are yet to be examined - Petitioner seeks to make a mountain out of a molehill on the ground that there have been some extraordinary delay and first respondent / claimant should be held to have missed the bus - Delay really is for a period beyond of July till November when statement of claim was filed - However on merits of factual matrix of case court say no more because that is an aspect to be considered by learned Arbitrator as application is still pending for consideration on merits – Since time period of two (2) weeks for filing reply to application by petitioner has expired court grant two weeks further time for same from this date - Writ Petition is accordingly dismissed

ORDER :

The alternative dispute resolution mechanism of arbitration inter alia has the objective of expeditious resolution of commercial disputes. This objective is often breached by the manner in which the arbitration proceedings carry on. We are confronted with the factual situation where the statement of claim itself was not filed resulting in the learned Arbitrator / the second respondent exercising powers under Section 25 (a) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the said Act') and terminating the proceedings. These proceedings were sought to be reopened by the first respondent / original claimant by filing an application, the maintainability of which was objected to by the petitioner without even filing a reply on the ground that once the Arbitrator has terminated the mandate, he had become functus officio. The Arbitrator, however, opined to the contrary vide the impugned order dated 22.12.2015 that there was an implied power of procedural review which was sought to be exercised in respect of the prayer made for recalling the order of termination of the proceedings and calling upon the petitioner to file a counter on merits. The question which, thus, arises for consideration is whether an Arbitrator actually becomes functus officio and incapable of recalling such an order terminating the proceedings.

2. The factual matrix required for determination of the aforesaid legal issue is limited in its scope. A contract agreement dated 31.03.2010 was entered into by the petitioner with the first respondent / claimant for purposes of handling at site stores/storage yard, transportation to site of work, erection, testing and commissioning of 67.5 MW STG with associated auxillaries and 1 No.Turbo Blower with its auxillaries including supply and application of final painting for STG unit 5 (STG-5) and Turbo Blower of Unit 4 (TB-4). This contract agreement was, however, shortclosed by the petitioner. The contract contains an arbitration clause 2.36 requiring reference to sole arbitration of General Manager or his nominee of the petitioner. The first respondent / claimant invoked the arbitration clause on 13.06.2012 eliciting no reply and resulting in O.P.No.799 of 2012 being filed under Section 11 (6) of the said Act, which was allowed vide an order dated 06.03.2015 appointing the second respondent as the Sole Arbitrator. The learned Arbitrator commenced the proceedings and on 25.04.2015 granted time to the first respondent / claimant to file the statement of claim by 31.07.2015. No statement of claim was filed and thus, the learned Arbitrator sent an email to the counsel for the first respondent on 26.08.2015 as a reminder, to which a response was received vide email dated 27.08.2015 informing that the counsel was not getting any communication from the first respondent / claimant and that he would inform the party accordingly. The learned counsel for the petitioner, however, sent an email dated 29.08.2015 seeking an order from the learned Arbitrator to terminate the arbitration proceedings under Section 25 (a) of the said Act. Since the statement of claim was still not filed, an email was sent on 03.10.2015 by the learned Arbitrator to the counsel for the first respondent that if no information was received on or before 15th of October, 2015, the proceedings would be terminated. The counsel for the first respondent / claimant vide email dated 03.10.2015 informed that there had been no receipt of information from his client and he would communicate the matter, which was soon followed by a communication requesting one (1) week's time to file the statement of claim on or before 19.10.2015, which was acceded to. Since still no statement of claim was filed, the learned Arbitrator vide order dated 24.10.2015, terminated the proceedings on the ground that the first respondent / claimant apparently h












































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