Case Note & Summary
The petitioner, M/s. Madhav Structural Engineers Limited, filed a petition under Section 14 of the Arbitration and Conciliation Act, 1996 seeking termination of the mandate of the sole arbitrator, Dr. D.K. Sankaran (respondent no.2), and appointment of a substitute arbitrator. The dispute arose from a contract awarded by respondent no.1 (Maharashtra State Road Development Corporation) to the petitioner for road construction, which was terminated on 18th October 2002. In 2007, the petitioner filed Arbitration Petition No. 100 of 2007 for appointment of an arbitrator, and on 8th July 2010, the learned designate of the Chief Justice appointed respondent no.2 as the sole arbitrator. The arbitrator entered upon reference and held several hearings, but failed to pass the award within the time limit prescribed under Section 29A of the Act, which was inserted by the 2015 amendment. The petitioner contended that despite multiple extensions and the arbitrator's assurance to pass the award by 31st March 2016, no award was passed. The court noted that the arbitrator had not passed the award even after the expiry of the extended period and was absent despite service. The court held that the arbitrator's mandate stood terminated under Section 14 read with Section 29A of the Act. Consequently, the court appointed a former judge of the Bombay High Court as the substitute sole arbitrator to decide the disputes between the parties, with the arbitrator to be paid fees as per the Fourth Schedule of the Act.
Headnote
A) Arbitration - Termination of Mandate - Section 14, 29A Arbitration and Conciliation Act, 1996 - Failure to Pass Award Within Time - The arbitrator failed to pass the award within the time limit prescribed under Section 29A of the Act, despite the proceedings having commenced prior to the amendment. The court held that the arbitrator's mandate stood terminated as he failed to conclude the arbitration within the extended period. The court appointed a substitute arbitrator to decide the dispute between the parties. (Paras 1-14)
B) Arbitration - Appointment of Substitute Arbitrator - Section 14(2) Arbitration and Conciliation Act, 1996 - Termination of Mandate - Upon termination of the arbitrator's mandate, the court appointed a former judge of the Bombay High Court as the substitute sole arbitrator to adjudicate the disputes between the petitioner and respondent no.1. (Paras 14-15)
Issue of Consideration
Whether the mandate of the sole arbitrator should be terminated under Section 14 of the Arbitration and Conciliation Act, 1996 for failure to pass the award within the statutory time limit under Section 29A of the Act, and whether a substitute arbitrator should be appointed.
Final Decision
The court allowed the petition, terminated the mandate of the sole arbitrator (respondent no.2), and appointed a former judge of the Bombay High Court as the substitute sole arbitrator to decide the disputes between the petitioner and respondent no.1. The arbitrator shall be paid fees as per the Fourth Schedule of the Arbitration and Conciliation Act, 1996.
Law Points
- Termination of mandate of arbitrator under Section 14 of Arbitration and Conciliation Act
- 1996
- Failure to pass award within time limit under Section 29A
- Appointment of substitute arbitrator under Section 14(2)
- Applicability of Section 29A to pending proceedings
Case Details
2016 LawText (BOM) (06) 73
Arbitration Petition No. 584 of 2016
Mr. Anirudha Garge with Mr. Sandeep M. Phatak for the Petitioner, Mr. Prashant Chavan i/b Ms. Reshmarani J. Nathani for the Respondent No.1
M/s. Madhav Structural Engineers Limited
The Vice Chairman And Managing Director, M/s. Maharashtra State Road Development Corporation & Dr. D.K. Sankaran
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Nature of Litigation
Petition under Section 14 of the Arbitration and Conciliation Act, 1996 for termination of mandate of the sole arbitrator and appointment of a substitute arbitrator.
Remedy Sought
Petitioner sought termination of the mandate of the sole arbitrator (respondent no.2) and appointment of a suitable person as sole arbitrator to decide the dispute between the petitioner and respondent no.1.
Filing Reason
The arbitrator failed to pass the award within the statutory time limit under Section 29A of the Arbitration and Conciliation Act, 1996, despite multiple extensions and assurance to pass the award by 31st March 2016.
Previous Decisions
On 8th July 2010, the learned designate of the Chief Justice allowed Arbitration Petition No. 100 of 2007 and appointed respondent no.2 as the sole arbitrator.
Issues
Whether the mandate of the sole arbitrator should be terminated under Section 14 of the Arbitration and Conciliation Act, 1996 for failure to pass the award within the time limit under Section 29A.
Whether a substitute arbitrator should be appointed to decide the dispute between the parties.
Submissions/Arguments
Petitioner argued that the arbitrator failed to pass the award within the time limit prescribed under Section 29A of the Act, despite the proceedings having commenced prior to the amendment. The arbitrator had assured to pass the award by 31st March 2016 but failed to do so.
Respondent no.1 did not oppose the petition. The arbitrator remained absent despite service.
Ratio Decidendi
Under Section 14 read with Section 29A of the Arbitration and Conciliation Act, 1996, if an arbitrator fails to pass the award within the prescribed time limit (including extensions), the mandate of the arbitrator terminates. The court has the power to appoint a substitute arbitrator under Section 14(2) to ensure the dispute is resolved.
Judgment Excerpts
By this petition filed under section 14 of the Arbitration & Conciliation Act, 1996, the petitioner has prayed for an order of termination of mandate of the learned arbitrator, the respondent no.2 herein on the grounds mentioned in the arbitration petition and seeks an appointment of any other suitable person as a sole arbitrator to decide the dispute between the petitioner and the respondent no.1.
The learned arbitrator is absent, though served.
In my view, the mandate of the learned arbitrator is liable to be terminated under section 14 of the Arbitration Act.
Procedural History
The respondent no.1 awarded a contract to the petitioner on 2nd March 2001, which was terminated on 18th October 2002. In 2007, the petitioner filed Arbitration Petition No. 100 of 2007 for appointment of an arbitrator. On 8th July 2010, the learned designate of the Chief Justice appointed respondent no.2 as the sole arbitrator. The arbitrator entered upon reference and held hearings but failed to pass the award within the time limit under Section 29A. The petitioner filed the present petition on 16th June 2016 seeking termination of the arbitrator's mandate and appointment of a substitute.
Acts & Sections
- Arbitration and Conciliation Act, 1996: 14, 29A
