Case Note & Summary
The petitioner, Simplex Infrastructures Limited, filed an arbitration petition under Sections 14 and 15 of the Arbitration and Conciliation Act, 1996, seeking termination of the mandate of the three-member arbitral tribunal constituted on 3rd May 2007 by the Deputy Chief Engineer of the respondent, Union of India (Central Railway). The dispute arose from a contract awarded on 28th September 2000, with the petitioner submitting consolidated claims on 18th July 2005 and disputes crystallizing on 6th December 2005. The arbitral tribunal was constituted under the contract, and the petitioner filed its Statement of Claims on 4th October 2007. The respondent filed its Statement of Defence and Counter-claims on 24th November 2008, and the petitioner filed a rejoinder on 4th December 2009. Despite the completion of pleadings, the tribunal failed to fix a preliminary hearing for over seven years. The petitioner made repeated requests for hearing on 18th June 2010 and 12th January 2012, and also wrote to the General Manager of the respondent on 20th February 2012 highlighting the delay. The petitioner argued that the tribunal's inaction constituted a failure to act without undue delay, warranting termination of its mandate under Section 14(1)(a) of the Act. The respondent did not oppose the petition and left the matter to the court's discretion. The court analyzed the facts and found that the tribunal had not commenced hearings despite the passage of over seven years since its constitution, which amounted to a failure to act without undue delay. The court held that the mandate of the tribunal stood terminated under Section 14(1)(a) read with Section 15 of the Act. Consequently, the court appointed a retired judge of the Bombay High Court as sole arbitrator in substitution of the three-member tribunal, with the arbitrator to be nominated by the court upon request by the petitioner. The court directed that the arbitrator shall be entitled to fees as per the Bombay High Court Rules and that the arbitration proceedings shall continue from the stage already reached, with the parties to bear their own costs.
Headnote
A) Arbitration - Termination of Mandate - Sections 14 and 15, Arbitration and Conciliation Act, 1996 - Inordinate Delay - The petitioner sought termination of the mandate of the three-member arbitral tribunal constituted on 3rd May 2007, on the ground that the tribunal failed to commence hearings for over seven years despite repeated requests. The court held that the tribunal's failure to act without undue delay justified termination of its mandate and appointed a retired judge as sole arbitrator in substitution. (Paras 1-10) B) Arbitration - Appointment of Substitute Arbitrator - Section 15, Arbitration and Conciliation Act, 1996 - Substitution of Arbitral Tribunal - The court, after terminating the mandate of the existing tribunal, appointed a retired judge of the High Court as sole arbitrator in place of the three-member tribunal, noting that the respondent had not opposed the substitution and that the delay was attributable to the tribunal's inaction. (Paras 8-10)
Issue of Consideration
Whether the mandate of the arbitral tribunal should be terminated under Sections 14 and 15 of the Arbitration and Conciliation Act, 1996, due to inordinate delay in conducting the proceedings, and whether a substitute arbitrator should be appointed.
Final Decision
The court allowed the petition, terminated the mandate of the existing three-member arbitral tribunal, and appointed a retired judge of the Bombay High Court as sole arbitrator in substitution. The arbitrator shall be nominated by the court upon request by the petitioner. The arbitrator shall be entitled to fees as per the Bombay High Court Rules. The arbitration proceedings shall continue from the stage already reached. Parties to bear their own costs.
Law Points
- Termination of mandate of arbitral tribunal due to failure to act without undue delay
- Appointment of substitute arbitrator under Section 15 of Arbitration and Conciliation Act
- 1996
- Inordinate delay in arbitration proceedings as ground for termination
