Sections 14 and 29A(6) of the Arbitration Act – Extension of mandate of the Arbitrator and Substitution of the Arbitrator –
Judgment dated 5.1.2024 in Commercial Arbitration Petition (L) No.24453 of 2023 with Commercial Arbitration Petition No.368 of 2023 – Shanklesha Construction and others Vs. Ashok Mohanraj Chhajed
Section 14 is in respect of termination of mandate of Arbitrator if he becomes de jure or de facto unable to perform functions or for any other reason fails to act without undue delay.
Section 29A is in respect of time limit for arbitral award. Sub-section (4) provides that if the award is not made within the period specified or extended period, the mandate of Arbitrator shall be terminated unless the Court has extended the period. Sub-section (6) of Section 29A provides that while extending the period it shall be open to the Court to substitute the Arbitrator.
On 21.7.2017 the Partnership Deed was executed between the parties. On the disputes between the parties, arbitration was invoked and section 11 of AA application was filed for appointment of arbitrator.
On 19.3.2019, the High Court of Bombay appointed former Hon’ble Judge of the High Court as the sole Arbitrator. The said order was silent on the arbitrator’s fees.
On 11.4.2019 at the preliminary hearing it was specified that the fees would be as per Schedule IV to the Arbitration Act and fees for counter claim was to be indicated later on.
During the period of 2019 the 2023, the proceedings were conducted. However, the period had expired.
On 15.1.2023, the mandate of the learned Arbitrator expired by efflux of time.
On 24.2.2023, the learned Arbitrator indicated that only final hearing remained and five days were fixed for the same.
On 4.8.2023, the Respondent filed the petition under Section 29A of the AA for extension of time.
On 1.9.2023, the petitioners filed their petition under Sections 14 and 29A for extension of time and also substitution of the Arbitrator.
There was no dispute between the parties for extension of time for completion of the arbitration proceedings.
However, there was dispute on substitution of the Arbitrator.
The substitution of the Arbitrator was sought on two major grounds – one of increasing the fees illegally against the agreement in the preliminary meeting of 11.4.2019. Secondly, the order dated 19.12.2022 of the Arbitrator indicated that unless revised fees were paid she would no longer be able to act as sole Arbitrator. Various orders of the Arbitrator and the procedure adopted led to the delay attributable to the Arbitrator.
HELD that the order / minutes dated 19.12.2022 do not amount to unilateral revision or any deviation from the tripartite agreement pertaining to fees. Moreover, the Arbitrator was certainly entitled to claim fees as per Schedule IV which was clarified and interpreted subsequently in ONGC Judgment. Thus, there was no question of unilateral revision of the fees. Therefore, the said ground cannot be sustained. While the Court is not in agreement with the contention raised on behalf of the petitioners that while in the present proceedings this Court may not go into the merits of the orders / minutes of the meetings as also the procedure adopted. This Court is of the opinion that the allegations against the learned Arbitrator cannot form basis to render de facto unable to perform functions. If at all the petitioners are aggrieved by the manner in which the learned Arbitrator has proceeded and if award goes against them, they can certainly raise all such grounds under Section 34 of AA.
