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A.P. No. 400 of 2009

Ghanshyam Sarda v. Govind Kumar Sarda

2009 SCC OnLine Cal 1698 : (2010) 3 ICC 242 (Cal) : (2009) 4 Cal LT 325

(BEFORE I NDIRA BANERJEE, J.)

Ghanshyam Sarda
Versus
Govind Kumar Sarda
Mr. P.C. Sen with Mr. P.K. Ghosh, Sr. Advocates & Mr. P. Roy, Advocate, … for the
petitioner.
Mr. Anindya Mitra with Mr. Jayanta Mitra, Mr. L.C. Behani, Sr. Advocates & Mr. S.
Talukdar, Advocate, … for the respondent no. 1.
Mr. Biswanath Mitra with Ms. Sujata Mitra, Advocates, … for the respondent no. 2.
A.P. No. 400 of 2009
Decided on July 16, 2009
ORDER
INDIRA BANERJEE, J.:— In this application the petitioner has, inter alia, prayed for
the following orders :-
“(b) An order be passed declaring that the mandate of Mr. Amar Nath Shroff, the
learned named sole Arbitrator shall not be terminated with the expiry of July 19,
2009;
(c) An order be passed declaring that Mr. Amar Nath Shroff the learned named sole
Arbitrator will not become de jure or de facto unable to perform his function as the
sole Arbitrator with the expiry of July 19, 2009;
(d) An order be passed directing that Mr. Amar Nath Shroff shall be entitled to
continue with the arbitration proceedings till the disputes as raised by an between the
parties are resolved in totality;
(e) An order be passed directing the Respondent No. 1 to participate in the
arbitration proceedings till all the disputes are settled by the learned Sole Arbitrator,
Mr. Amar Nath Shroff in totality;”
Disputes which had arisen between the petitioner and his brothers, that is the
respondents, were referred to arbitration in terms of an arbitration agreement which is
extracted in paragraph (3) of the petition. The arbitration agreement, inter alia,
provides as follows:
“Subject to the parties to the arbitration rendering full co-operation and assistance
to the Sole Arbitrator, the Sole Arbitrator shall complete the arbitration proceedings
within a period of 60 days from the date of the agreement, which may be extended by
mutual consent of the parties to arbitration.”
The question is, whether this Court can really modify the terms and conditions of an
arbitration agreement on the basis of which arbitration proceedings have commenced.
The arbitration agreement expressly provides that the Sole Arbitrator would have to
complete the arbitration proceedings within a period of 60 days from the date of the
agreement, which might be extended by mutual consent of the parties to arbitration.
The period of sixty days from the date of the agreement admittedly ends on 19th July,
2009.
At the sitting of the Arbitral Tribunal held on 12th July, 2009, the petitioner and the
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respondent no. 1 agreed to further extension of time for completion of the arbitration
proceedings. The respondent no. 1 did not, however, agree to the extension of time. In
the absence of mutual consent of the parties to arbitration, whatever be the reason for
any party withholding consent, this Court, in my view, does not have power to pass an
order directing the Sole Arbitrator to continue with and/or complete the arbitration
proceedings. Passing of such an order would, in effect, amount to modification and/or
alteration of the arbitration agreement, which this Court cannot do.
The Arbitration Act, 1940 which has been repealed by the Arbitration and
Conciliation Act, 1996, hereinafter referred to as the 1996 Act, contained an express
provision, that is, Section 28 which provided as follows :
“Section 28: Power to Court only to enlarge time for making award. - (1) The
Court may, if thinks fit, whether the time for making the award has expired or not and
whether the award has been made or not, enlarge from time to time the time for
making the award.
(2) Any provision in an arbitration agreement whereby the arbitrators or umpire
may, except with consent of all the parties to the agreement, enlarge the time for
making the award, shall be void and of no effect.”
Legislature has, in its wisdom, chosen to delete the provision conferring power on
the Court to extend the time for making and publishing an award. There is no
provision in the 1996 Act that is similar to Section 28 of the Arbitration Act, 1940. It
may, thus, legitimately be inferred that it was not the intention of Legislature that
Courts should extend the time granted to the Arbitrator/Arbitral Tribunal to make and
publish an award, overriding the arbitration agreement between the parties, from
which the Arbitrator/Arbitral Tribunal derives its authority to arbitrate.
Mr. P.C. Sen, learned Senior Counsel appearing on behalf of the petitioner,
submitted and may be rightly, that the respondent no. 1 took an unreasonable stand
with a view to obstruct proceedings which had progressed to a considerable extent.
The fact remains that the arbitration agreement, from which the Arbitral Tribunal
derives its power to arbitrate, stipulates a time limit that might be extended by
mutual consent.
Mr. Sen cited the judgement of Bombay High Court in Kifayatullah Haji Gulam
Rasool v. Bilkish Ismail Mehsania reported in 2001 (1) Arbitration Law Reporter
(Bombay) 10. In the facts of the aforesaid case, the Bombay High Court held that
even though the mandate of the Arbitrator stood terminated upon expiry of the time
agreed in terms of a consent order, the arbitration proceedings were still pending, with
the result that the interim orders would continue to operate. In this application, this
Court is not required to decide whether the arbitral proceedings have terminated.
Moreover the Court observed that even the arbitral proceedings could be terminated, if
the Arbitral Tribunal found that arbitral proceedings had become impossible. The
judgement is, therefore, of no assistance to the petitioner.
In Shyam Telecom Ltd. v. ARM Ltd. reported in 2004 (3) Arbitration Law Reporter
(Delhi) 146, the Delhi High Court held as follows :
“15.* * * *
Unless parties agree to the contrary, the terms of Arbitration agreement must
operate in full. The consequence of the Arbitrator not concluding the proceedings and
rendering the award within the period prescribed under the Arbitration agreement as
in the present case would uncloth the Arbitrator of his legal authority to continue with
the proceedings unless the parties agree to extend the period of making the award or
a party waives his right to such an objection. It must, therefore, be held that expiry of
the prescribed period for making the Award, would render the Arbitrator ‘de jure’
unable to continue with the proceedings and has the effect of termination of the
mandate of the Arbitrator within the meaning of the Section 14 of the Act.
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17.* * * *
It is true that 1996 Act does not prescribe any time limit for making and publishing
the Award but that does not mean that parties cannot by mutual agreement provide
for a time limit for making the Award by the Arbitrator and if so prescribed it would
run contra to the provisions of the Act. This view appears to be more plausible and
acceptable having regard to the object of having Arbitration as the alternate mode for
settlement of disputes/differences between the parties. The method of Arbitration to
resolve the disputes/differences between the parties certainly aims at expeditious
resolution of the disputes because it is considered that the time taken by the Courts
established by the State for resolution of the disputes is unduly long and cumbersome.
It must, therefore, be held that the provision of time limit for rendering Award by the
Arbitrator in an Arbitration agreement is not hit by the provisions of the Act and is to
be given effect unless the parties agreed to modify or extend the same by mutual
consent. ……”
In the aforesaid case, however, the Court having regard to the totality of the facts
was of the view that the petitioner concerned had waived its right to object to the
continuation of the proceedings.
Unlike this case, in the case before the Delhi High Court there was no provision for
extension of time by mutual consent. The arbitration agreement in the instant case
provides for extension of time only by mutual consent. In the absence of mutual
consent there can be no extension of time.
This application is in effect and substance an application for extension of time
agreed upon by the parties by which the Arbitrator should conclude the arbitration
proceedings. This Court has no jurisdiction to grant such extension.
It was strenuously urged before this Court, that in view of the provision of Section
14(2) of the 1996 Act, this Court might decide the controversy of whether or not the
mandate of the Arbitrator stood terminated. However, as rightly submitted by Mr.
Mitra, learned Senior Counsel appearing on behalf 0f the respondent no. 1, there is
really no controversy. The petitioner has himself proceeded on the basis that time
expires on 19th July, 2009.
Section 14 is to be read as a whole. Section 14(1) provides that the mandate of an
Arbitrator shall terminate -
(a) If he becomes de jure or de facto unable to perform his functions or for other
reasons fails to act without undue delay;
(b) He withdraws from his office or the parties agree to the termination of his
mandate.
Where there is a time stipulation for completion of arbitration in the arbitration
agreement itself the Arbitrator becomes de jure unable to perform his functions upon
expiry of such time. In the absence of mutual consent such time cannot be extended.
Moreover if the arbitrator decides not to further proceed in the absence of mutual
consent, this Court cannot compel the Arbitrator to continue. The mandate of the
arbitrator terminates.
As rightly argued by Mr. Sen, under the provisions of Section 32 of the 1996 Act,
the arbitration proceedings terminate upon pronouncement of final award or
alternately on an order for termination of the arbitral proceedings being passed by the
Arbitral Tribunal in the circumstances specified in paragraph 32(2) of the 1996 Act.
Unless continuance of the arbitral proceedings becomes impossible, the arbitral
proceedings might continue even upon termination of the mandate of an Arbitrator.
Where the mandate of an Arbitrator terminates, a substitute Arbitrator might be
appointed in accordance with the rules that were applicable to the appointment of the
Arbitrator being replaced. In other words, if the Arbitrator, being replaced, had been
appointed in terms of the arbitration agreement, the substitute Arbitrator would have
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to be appointed in terms of the arbitration agreement and if the Arbitrator, being

replaced, had been appointed by the Hon'ble Chief Justice under Section 11
Subsection 6, the substitute Arbitrator would have to be appointed by the Hon'ble
Chief Justice. In this application, however, it is not necessary for this Court to decide
whether the arbitral proceedings have terminated or not.
This application is thoroughly misconceived and the same is dismissed.
Affidavits not having been called for, the allegations made in the petition shall be
deemed not to have been admitted.
Urgent certified copy of this order, if applied for, be supplied to the parties subject
to compliance with all requisite formalities.
———
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