Arbitration Act – Sections 15, 16 and 29A(4) – High Court’s powers to interdict arbitral proceedings under Articles 226 or 227 of the Constitution of India if Arbitrator wholly lacks jurisdiction
Termination of mandate of the Arbitrator – Section 16 – The Arbitrator can rule on the said objection and the said decision can be challenged in section 34 application.
Section 84 of the Multi-State Cooperative Societies Act – Since the PMC Bank & MSC Society had ceased to exist due to amalgamation on 25.1.2022 and since new entity is not a multi-state cooperative society, the arbitration proceedings under Section 84 of the Act are not maintainable qua the respondent no.1 Bank. Scheme of Amalgamation specifically provided for continuation of the arbitration proceedings.
By the order dated 4.11.2020, the Commissioner for Cooperation and the Registrar for Cooperative Societies appointed the Arbitrator for PMC Bank in respect of the offices located in the State of Maharashtra and in respect of 21 new proposals mentioned in the Order.
On 11.12.2020, PMC Bank filed statement of claim against M/s. Dewan Realtors Pvt Ltd in AA No.7 of 2020 and in AA No.8 of 2020 against Emerald Realtors.
On 28.7.2021, the Arbitrator rejected the applications challenging his jurisdiction under Section 16 of the AA.
By the order dated 1.10.2022, the same Arbitrator was appointed for a further period of one year on expiry of earlier tenure.
By the notification dated 25.1.2022, the Scheme of Amalgamation was sanctioned for PMC Bank.
By the letter dated 29.8.2023, the Arbitrator requested for substitution of Arbitrator under Section 15(2) of the AA in view of his age and ill-health.
By the Order dated 16.10.2023, a new Arbitrator was appointed for one year.
On 16.10.2023, the new Arbitrator issued notice for final arguments on 9.11.2023.
The petitioner Emerald Realtors filed writ petition challenging the letter dated 16.10.2023 of appointment of new arbitrator.
In another writ petition of Dewan Realtors, continuation of arbitration proceedings beyond the period specified in Section 29A of AA was questioned.
The question was – whether new arbitrator can be appointed under Section 15 of the AA once the maximum period of mandate under Section 29A(1) read with Section 29A(3) had come to an end. The power to substitute Arbitrator under Section 15 of the AA is to be exercised in maximum time limit of Section 29A of the AA.
Whether the mandate of the arbitrator has expired or continues to operate is something which can still be raised under Section 16 of the AA. The Arbitrator can rule on the said objection.
Judgment dated 20.3.2024 in Writ Petition (L) No.6994 of 2024 of Emerald Realtors Pvt Ltd Vs. Unity Small Finance Bank Ltd and others with connected writ petition
