A Single Bench of the Calcutta High Court, vide its judgment dated January 21, 2020 in the case of Torero Corporation Pvt. Ltd. vs. AVA Merchandising Solutions Private Ltd. A.P. No. 531 of 2019, answered the question that whether an award rendered by the Arbitrator can be challenged under Section 14 of the Arbitration and Conciliation Act, 1996 (“the Act”) basis the fact that the award was rendered after termination of the time period specified under Section 29A of the Act?
Facts of the Case:
The petitioner, a “micro enterprise” under the definition of S. 2(h) of the Micro, Small and Medium Enterprises Development Act, 2006 (“MSMED Act”) filed an application under Section 29A of the Act for extension of time before the Court to make and publish the award rendered by the West Bengal State Micro Small Enterprises Facilitation Council, Kolkata ("said Council").
The claimant had initiated an arbitration proceeding before the West Bengal State Micro Small Enterprises Facilitation Council, Kolkata ("said Council"), against the respondent for realising all its alleged dues. On October 4, 2018 the said Council made and published the award holding the present respondent liable to pay a certain amount. Subsequently, the respondent filed an application under Section 34 of the Act. However, the respondent did not make deposit of 75% of the said award as stipulated under Section 19 of the Act.
The respondent had also filed an application under Section 14 of the Act, alleging therein that the said Council had made and published the award long after their mandate stood terminated for not making the award within the time specified under Section 29A (1) of the Act. By a common judgment and order dated July 01, 2019, a learned Single Judge of the Court allowed the application of the respondent under Section 14 of the Act holding, inter alia, that the said Council made the said award, after its mandate stood terminated and rejected the application under Section 34 of the Act as an misconceived one.
Arguments:
It was argued on behalf of the petitioner that the order dated July 1, 2019 in so far as the same allowed the application filed by the respondent under Section 14 of the Act after making the award by the said Council and during the pendency of the application under Section 34 of the Act is patently erroneous.
Per contra, it was argued on behalf of the respondents that the remedy of the petitioner would lie under Section 15(2) of the Act, but when by the said order dated July 1, 2019 the learned Single Judge of the Court has already rejected the application under Section 34 of the Act and did not set aside the award made by the said Council, the petitioner is not entitled to obtain any order for initiation of fresh arbitral proceeding.
Findings and Observations by the Court:
The Court, held that:-
“….once an Arbitral Tribunal makes and publishes an award even, after termination of its mandate, the remedy of the aggrieved party lies in challenging the award under Section 34 of the Act and no application under Section 14 is maintainable.”
(emphasis supplied)
Moreover, the Court also observed that since the respondent did not deposit 75% of the amount awarded by the said Council as per Section 19 of the Act, their application under Section 34 of the Act to challenge the said award was not maintainable.
However, the Court while dismissing the application of the petitioner under Section 29A of the Act, held that:-
“in view of the order dated July 1, 2019 holding that the mandate of the said Council stood terminated before the making the award, there is no finality with regard to the adjudication of the disputes between the parties……..The remedy of the petitioner in this case lies in taking recourse to Section 15(2) of the Act of 1996 for fresh arbitration.”
(emphasis supplied)
Thus, the Court directed the petitioner to approach the said Council for re-adjudication of its claims on merit.
This update has been contributed by Arka Majumdar (Partner) and Kunal Dey (Associate).
7A, 7th Floor, Tower C, Max House,
Okhla Industrial Area, Phase 3,
New Delhi – 110020
The rules of the Bar Council of India do not permit advocates to solicit work or advertise in any manner. This website has been created only for informational purposes and is not intended to constitute solicitation, invitation, advertisement or inducement of any sort whatsoever from us or any of our members to solicit any work in any manner. By clicking on 'Agree' below, you acknowledge and confirm the following:
a) there has been no solicitation, invitation, advertisement or inducement of any sort whatsoever from us or any of our members to solicit any work through this website;
b) you are desirous of obtaining further information about us on your own accord and for your use;
c) no information or material provided on this website is to be construed as a legal opinion and use of this website will not create any lawyer-client relationship;
d) while reasonable care has been taken in ensuring the accuracy of the contents of the website, Argus Partners shall not be responsible for the results of any actions taken on the basis of information provided in this website or for any error or omission in the website; and
e) in cases where the user has any legal issues, the user must seek independent legal advice.