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Jayesh H. Pandya and Ors. Vs. Subhtex India Ltd. and Ors. - (Supreme Court) (27 Aug 2019)

There must be a voluntary and intentional relinquishment of a right and voluntary choice is essence of waiver

MANU/SC/1162/2019

Arbitration

The instant appeal is directed against the final judgment passed by the High Court whereby the High Court while dismissing the Arbitration Petition held that, the Appellants had waived their right to the extension of time for completion of the arbitration proceedings and making the award, beyond the stipulated period of four months.

It is established that, the Arbitrator was unable to complete the arbitral proceedings within four months from the date of the first preliminary meeting held on 4th May, 2007 in terms of Clause (5) of the arbitration agreement and objection to extend the time was recorded by the Appellants before the Arbitrator. The Arbitrator having failed to do so rejected their application by an Order that came to be challenged by the Appellant invoking Section 14 of the The Arbitration and Conciliation Act, 1996 by filing an Arbitration Petition in the High Court with a declaration that, the Arbitrator has become je jure unable to perform his functions and the mandate to act as an Arbitrator in the arbitral proceedings between the parties stood terminated which came to be dismissed by the High Court under the impugned judgment.

It is clear from the bare reading of Sub-section 1(a) of Section 14 that mandate of an arbitrator shall terminate if it fails to act without undue delay. In the present case, the first preliminary meeting was held on 4th May, 2007 and the Arbitrator in terms of the agreement was supposed to conclude and pass the award within a period of four months which indisputedly stood expired on 4th September, 2007 and in the meantime the Appellants recorded their objection of not consenting for extension of time beyond 4th September, 2007 and thus, it can be construed that, parties were not in agreement for extension to the mandate of the Arbitrator failing which the arbitral proceedings automatically stood terminated.

Sub-section (2) of Section 14 clearly stipulates that, if a controversy remains concerning any of the grounds referred to in Clause (a) of Sub-section (1), the party may, unless otherwise agreed by the parties, apply to the Court to decide on the termination of the mandate and the Appellants rightly applied to the Court for termination of the mandate of the Arbitrator pursuant to the provisions of this Section and the Court was within its jurisdiction to decide accordingly.

It is true that the object of the scheme of the Act, 1996 is to secure expeditious resolution of disputes and it is based on the fulcrum of promptitude but at the same time the Arbitrator is required to adjudicate the disputes in view of the agreed terms of contract and the procedure. Therefore, the arbitration proceedings are supposed to be governed and run by the terms as agreed by the parties. The Arbitrator, therefore, cannot go beyond the Clause of the arbitration agreement.

The essential element of waiver is that there must be a voluntary and intentional relinquishment of a right. The voluntary choice is the essence of waiver. There should exist an opportunity for choice between the relinquishment and an enforcement of the right in question. It cannot be held that, there has been a waiver of valuable rights where the circumstances show that what was done was involuntary.

The parties have admittedly agreed and the time period so prescribed is final and binding. It means the arbitration proceedings should commence and end within the prescribed period of time which in the instant case was of four months and expired on 4th September, 2007 and, there was no occasion for either party to raise an objection as long as the time was available at the command of the Arbitrator to conclude the arbitral proceedings and pass an award within the time Schedule fixed under the terms of contract as agreed by the parties.

There is no provision under the arbitration agreement to condone the delay, when agreement between the parties binds them to see that the arbitration proceedings should be concluded within the time prescribed. This time restriction is well within the scope and purport of the Act, 1996 at national and international arbitrations. The Arbitrator indeed became de jure unable to perform his functions and the mandate to act as an Arbitrator in the arbitral proceedings between the parties as prayed for stood terminated. The judgment and order of the High Court is set aside. Appeal allowed.

Tags : AWARD   ARBITRAL PROCEEDINGS   TERMINATION  

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