On February 27, 2019, the Hon’ble High Court at Calcutta passed a judgment in the matter of Rahee-Allied (JV) & Ors. v. Union of India (A.P. No.864 of 2018).
Issue
Can the mandate of an arbitral tribunal be terminated by the High Court for non-expeditious disposal of the proceedings even when the arbitration agreement is prior to the 2015 amendment to the Arbitration and Conciliation Act, 1996 (‘the Act’)?
Facts in brief
This was an application by the petitioner praying for termination of mandate of the arbitral tribunal and appointment of substitute arbitrator. The petitioner submitted that the arbitral tribunal had been constituted in the year 2015 after which the presiding arbitrator was transferred, leading to re-constitution of the arbitral tribunal in January 2018. Though statement of claim was filed by the petitioner, the respondent, which was a State authority, kept seeking consecutive adjournments and had only filed ‘draft’ statement of defence as on date. The petitioner contended that the arbitral tribunal was bound to pass its award within 1 (one) year of the date of reconstitution of the arbitral tribunal, i.e. January 18, 2018. By not doing so and by virtue of the fact that petitioner had not extended its consent for extension of mandate under Section 29A of the Act, the petitioner contended, the arbitral tribunal’s mandate has expired.
The respondent contended that since the arbitration agreement between the parties was one executed prior to the 2015 amendment to the Act, Section 29A would have no application to the instant case and there is therefore no question of termination of the mandate of the arbitral tribunal in the instant case. The respondent relied on the Hon’ble Supreme Court’s judgment in SP Singla Constructions Pvt. Ltd. v. State of Himachal Pradesh and Anr. (Civil Appeal no.11824 of 2018) in this regard.
Judgement
The Hon’ble Judge first distinguished the judgment of the Hon’ble Supreme Court in SP Singla (supra) relied upon by the respondent. In that case, the private party had avoided participating in the arbitral proceedings. The Hon’ble Supreme Court, upon observing the same and in the interests of justice, afforded the appellant therein the opportunity to go before the departmental arbitrator, despite being conscious of the fact that after the Amendment Act, 2015 there cannot be a departmental arbitrator. The Hon’ble Judge observed that the facts in this case were entirely different.
The Hon’ble Judge thereafter observed that in the instant case, the arbitral tribunal had been extremely lackadaisical in its approach and had even allowed filing of ‘draft’ statement of defence, when no such procedure was contemplated in the contract provisions. It was thus observed that this was a fit case inviting the application of ‘default procedure’ as laid down by the Hon’ble Supreme Court in Union of India v. Uttar Pradesh State Bridge Corporation Ltd., (2015) 2 SCC 52, wherein it was held that if the arbitrators appointed by the State/departmental authority are unable to devote enough time to the arbitration proceedings, the Courts should step in and appoint substitute arbitrator, keeping aside the procedure agreed between the parties for appointment of arbitrator.
The Hon’ble Court thus allowed the petition and held that arbitral tribunal’s mandate was terminated, and appointed substitute arbitrator.
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