Case Note & Summary
The petitioner, Amar Tea Distributors, a partnership firm, entered into a Distributor Agreement with the respondent, Coca-Cola India Pvt. Ltd., on 7th March 2002, followed by two supplementary agreements dated 22nd March 2003 and 14th March 2004. Disputes arose between the parties, and the petitioner invoked the arbitration agreement in 2006. The arbitration proceedings were initiated, and the petitioner filed a statement of claim on 19th May 2014. The respondent filed an application dated 3rd July 2014 seeking termination of the mandate of the arbitral tribunal under Section 25(a) of the Arbitration and Conciliation Act, 1996, on the ground that the petitioner had failed to file the statement of claim within the prescribed time. The learned arbitrator, by order dated 10th April 2015, allowed the respondent's application and rejected the petitioner's application for termination of mandate, holding that the arbitral tribunal had no power to accept or reject the statement of claim and directed that the statement of claim be returned to the petitioner. The petitioner challenged this order by filing a petition under Section 14 of the Act before the Bombay High Court. The court considered the issue of whether the arbitrator's order demonstrated a de facto inability to perform functions, warranting termination of mandate. The court held that the arbitrator's order was without jurisdiction as the arbitrator had the power to accept or reject the statement of claim under Section 25(a). The court further held that by returning the statement of claim and refusing to proceed, the arbitrator had become de facto unable to perform his functions, and thus his mandate was terminated under Section 14 of the Act. The court allowed the petition and set aside the arbitrator's order.
Headnote
A) Arbitration - Termination of Mandate - Section 14 of Arbitration and Conciliation Act, 1996 - De Facto Inability - The arbitrator passed an order returning the statement of claim and rejecting the application for termination of mandate under Section 25(a), holding that the arbitral tribunal had no power to accept or reject the statement of claim. The court held that such an order demonstrated a de facto inability to perform functions, as the arbitrator failed to proceed with the arbitration and effectively stalled the proceedings. The mandate of the arbitrator was terminated under Section 14. (Paras 1-10) B) Arbitration - Statement of Claim - Section 25(a) of Arbitration and Conciliation Act, 1996 - Power of Arbitrator - The arbitrator erroneously held that he had no power to accept or reject the statement of claim. The court clarified that the arbitrator has the power to accept or reject the statement of claim under Section 25(a) and that the order returning the statement of claim was without jurisdiction. (Paras 5-8)
Issue of Consideration
Whether the arbitrator's order returning the statement of claim and rejecting the application for termination of mandate under Section 25(a) of the Arbitration and Conciliation Act, 1996, amounts to a de facto inability to perform functions, warranting termination of mandate under Section 14 of the Act.
Final Decision
The court allowed the petition, set aside the arbitrator's order dated 10th April 2015, and terminated the mandate of the arbitral tribunal under Section 14 of the Arbitration and Conciliation Act, 1996.
Law Points
- Termination of mandate of arbitrator
- de facto inability to perform functions
- Section 14 of Arbitration and Conciliation Act
- 1996
- Section 25(a) of Arbitration and Conciliation Act
- power of arbitrator to accept or reject statement of claim
