Case Note & Summary
The appeal arose from an order of a Single Judge dismissing a petition challenging an arbitral award dated 31.3.2004. The dispute originated from Suit No.2335 of 1994 filed by the respondents, which was disposed of by consent on 30.9.2003, referring the disputes to the sole arbitration of Mr. Justice S.M. Jhunjunwala (Retd.) under the Arbitration and Conciliation Act, 1996. Clause 6 of the consent order required the arbitrator to dispose of the reference within four months from entering upon the reference. The arbitrator entered upon the reference on 30.9.2003, making the deadline 30.1.2004. However, the award was passed on 31.3.2004, beyond the stipulated period. The appellants contended that the arbitrator's mandate terminated automatically on 30.1.2004, and the subsequent proceedings were without jurisdiction. The arbitrator rejected this contention by a detailed order dated 19.3.2004. The Single Judge upheld the award. On appeal, the Division Bench considered whether the time limit was mandatory or directory. The court held that the time limit was directory, not mandatory, and the arbitrator's mandate did not terminate automatically. The parties had participated in proceedings after the deadline without objection, and the arbitrator had jurisdiction to continue. The appeal was dismissed, affirming the award.
Headnote
A) Arbitration - Mandate of Arbitrator - Time Limit - Section 14, 15 Arbitration and Conciliation Act, 1996 - The court held that the time limit of four months in the consent order was directory and not mandatory, and the arbitrator's mandate did not automatically terminate upon its expiry. The arbitrator had jurisdiction to continue proceedings and pass the award. (Paras 3-5)
Issue of Consideration
Whether the arbitrator's mandate terminated automatically upon expiry of the four-month period stipulated in the consent order, thereby rendering the subsequent award invalid.
Final Decision
The appeal is dismissed. The order of the learned Single Judge is confirmed. The arbitral award dated 31.3.2004 is upheld.
Law Points
- Arbitration
- Mandate of arbitrator
- Time limit
- Consent order
- Section 14 Arbitration and Conciliation Act 1996
- Section 15 Arbitration and Conciliation Act 1996
Case Details
2006 LawText (BOM) (05) 21
Appeal No.161 of 2006 with Arbitration Petition No.307 of 2004
Dr. S. Radhakrishnan, S.J. Vazifdar
Mr. T.G. Vora i/b M/s. Bharat Joshi & Co. for Appellants; Mr. P.K. Samdhani, Senior Advocate with Mr. Chetan Kapadia i/b M/s. Basant Tilokani & Co. for Respondents
Maganlal Dalichand Santokchand & Anr.
Narpatraj Besarmal Mehta & Ors.
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Nature of Litigation
Appeal against dismissal of petition challenging an arbitral award
Remedy Sought
Appellants sought to set aside the arbitral award on the ground that the arbitrator's mandate had terminated due to expiry of the time limit stipulated in the consent order
Filing Reason
The award was passed beyond the four-month period stipulated in the consent order referring disputes to arbitration
Previous Decisions
The learned Single Judge dismissed the petition challenging the award; the arbitrator rejected the contention of mandate termination by order dated 19.3.2004
Issues
Whether the arbitrator's mandate terminated automatically upon expiry of the four-month period stipulated in the consent order, thereby rendering the subsequent award invalid.
Submissions/Arguments
Appellants argued that clause 6 of the consent order required the arbitrator to dispose of the reference within four months, and the mandate terminated on 30.1.2004, making the award dated 31.3.2004 without jurisdiction.
Respondents contended that the time limit was directory and the arbitrator had jurisdiction to continue, especially since the appellants participated in proceedings after the deadline.
Ratio Decidendi
The time limit stipulated in a consent order for an arbitrator to complete the reference is directory, not mandatory. The arbitrator's mandate does not terminate automatically upon expiry of such time limit, especially where parties continue to participate without objection. The arbitrator retains jurisdiction to pass the award.
Judgment Excerpts
The only ground urged before us was that in view of clause 6 of the minutes of the order, the arbitrator’s mandate came to an end on 30.1.2003.
The learned arbitrator rejected this contention by a detailed order dated 19.3.2004.
Procedural History
Suit No.2335 of 1994 filed by respondents was disposed of by consent on 30.9.2003, referring disputes to arbitration. Arbitrator entered reference on 30.9.2003. Award passed on 31.3.2004. Appellants filed Arbitration Petition No.307 of 2004 challenging award, which was dismissed by Single Judge. Appeal No.161 of 2006 filed against that dismissal.
Acts & Sections
- Arbitration and Conciliation Act, 1996: 14, 15
