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Power Grid Corporation of India Ltd. v. Deepak Cables (India) Limited - (High Court of Delhi) (25 Jan 2017)

Mandate of an Arbitrator "shall terminate" by or pursuant to agreement of parties



This is a joint application by both Petitioner and Respondents under Section 14(2) read with Section 15 of Arbitration & Conciliation Act, 1996. Both parties are involved in nine disputes concerning contracts executed in different regions of country and these disputes have been referred for adjudication to different Arbitral Tribunals (ATs), one for each of Northern, Eastern, Western, Southern and North Eastern regions. Present petition pertains to arbitration proceedings for disputes concerning Northern region. An agreement entered into between the parties at a meeting held on 27th May, 2016 and it was decided to consolidate nine arbitration proceedings, including one concerning the Northern region before one common AT. On that basis, an application was filed before AT that was seized of disputes concerning the Northern Region praying that it should declare its mandate as having been terminated. However, AT seized of disputes concerning Northern Region rejected said joint application on its perception that, grounds on which the AT’s mandate was being terminated was not, in fact, made out by parties.

Section 14(1)(b) of Act makes it explicit that where parties so agree, the mandate of an arbitrator “shall terminate”. Under Section 15(1)(b) of Act mandate of an Arbitrator "shall terminate" by or pursuant to agreement of parties. Additionally, under Section 32(2)(b) of Act, there is a statutory requirement for AT to issue an order of termination of its proceedings when "parties agree on the termination of the proceedings." All that AT was required to do was to enquire into whether, in fact, there was an agreement between parties to terminate its mandate. With there being a joint application before AT, that question simply did not arise. It gets further reinforced by the fact that even the present application is a joint application by both the parties.

In instant circumstances, there was no occasion for AT to review reasons that weighed with parties in deciding to terminate its mandate, whatever such reasons may have been. Court, therefore, has no hesitation in holding that, order dated 8th December, 2016 passed by the AT in present case is entirely without jurisdiction. With the parties being in agreement that their disputes in a consolidated manner should be adjudicated by a common AT, the question of an AT before whom one strand of the dispute is pending interdicting that process does not arise. In that view of matter, petition is allowed and order of the AT is set aside. Mandate of the three-member AT which has been constituted to adjudicate disputes arising between the parties in respect of the contract for the Northern region stands terminated.

Relevant : Section 14(2), 15 of Arbitration & Conciliation Act, 1996


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