Case Note & Summary
The petitioner, Teltech Instrumentation Pvt. Ltd., filed an arbitration petition under Section 14(2) of the Arbitration and Conciliation Act, 1996, seeking a declaration that the mandate of the arbitrator nominated by the respondent, Bharat Petroleum Corporation Ltd., stood terminated. The dispute arose from a tender inquiry where the petitioner participated. After various pre-bid meetings, the respondent placed an order with another company and claimed damages from the petitioner. The arbitration clause (clause 21) required that the arbitration be completed within two years of entering into reference, with a possible extension of up to 12 months. The respondent invoked the arbitration clause on 12 July 2002, and on 18 October 2002, the Director of the respondent nominated three arbitrators. However, the arbitration proceedings dragged on for seven years without completion, as the arbitrators abandoned or ceased to act. The respondent appointed a new arbitrator on 28 April 2009, despite the expiry of the time limit. The petitioner objected, arguing that the mandate of the earlier arbitrators had terminated due to the failure to complete the arbitration within the stipulated time. The court examined the arbitration clause and found that the time limit had expired, and no extension was agreed upon. Consequently, the court held that the mandate of the arbitrator stood terminated under Section 14(2) of the Act. The court allowed the petition, declaring that the mandate of the arbitrator appointed by the respondent on 28 April 2009 was terminated, and directed that the parties may seek appointment of a new arbitrator in accordance with the arbitration agreement.
Headnote
A) Arbitration - Termination of Arbitrator Mandate - Section 14(2) Arbitration and Conciliation Act, 1996 - Time Limit - The arbitration clause provided that the arbitration must be completed within two years of entering into reference, extendable by up to 12 months. The arbitration was not completed within this period, and the arbitrator ceased to act. The court held that the mandate of the arbitrator stood terminated as the time limit had expired and no extension was agreed upon. (Paras 1-5) B) Arbitration - Appointment of Arbitrator - Clause 21 - The clause required completion of arbitration within two years, with a possible extension of up to 12 months. Since the arbitration was not completed within the stipulated time, the mandate of the arbitrator was terminated. The court directed that the parties may seek appointment of a new arbitrator in accordance with the arbitration agreement. (Paras 4-5)
Issue of Consideration
Whether the mandate of the arbitrator stands terminated due to failure to complete the arbitration within the time limit prescribed in the arbitration clause.
Final Decision
The court allowed the petition, declaring that the mandate of the arbitrator appointed by the respondent on 28 April 2009 stands terminated. The parties may seek appointment of a new arbitrator in accordance with the arbitration agreement.
Law Points
- Termination of arbitrator mandate
- time limit for arbitration
- Section 14(2) Arbitration and Conciliation Act
- 1996
- arbitration clause interpretation
- failure to complete arbitration within stipulated period
