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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO. 458 OF 2007
B.K. Gopakumar,
Indian Inhabitant, Focus Films,
P.B. No. 5710, Hotel Silver Sands
Thiruvananthapuram-695 036. ....Petitioner.
Vs.
M/s. National Film Development
Corporation Ltd., Regd. Office;
"Discovery of India" Bldg., Nehru Centre,
Dr. Annie Besant Road, Worli,
Mumbai-400 018, represented
by Dy. Manager (S& L/ P&A) ....Respondent.
Ms. Priti Menon i/by M/s. Shreeji & Lal for the Petitioner.
Mr. A.K. Singh i/by M/s. Lex Remedeum for the Respondent.
CORAM : ANOOP V. MOHTA, J.
JUDGMENT RESERVED ON :- 24/09/2010
JUDGMENT DELIVERED ON :- 01/10/2010
JUDGMENT:-
Rule, returnable forthwith.
2 Heard finally by consent of the parties.
3 The Petitioner-Producer - original Respondent has challenged award
dated 7th March, 2007, passed by an ex-officio- Arbitrator who was also the
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2 arbp458.07.sxwChairman of M/s. National Film Development Corporation Ltd. (for short,
the Corporation), based upon the Arbitration agreement between the
parties.
4 Loan agreement dated 10th November, 1992 (the agreement)
executed between the Petitioner and the Respondent-Corporation.
Supplemental loan agreement dated 30th September, 1994 was also
executed. As the Petitioner-producer unable to repay the amount, principal
as well as interest, as of 31st March, 2001, by notice dated 29th October,
2001, the Corporation Manager invoked clause 17 of the Agreement and
submitted to the then Chairman-Sole Arbitrator to invoke and adjudicate
the claims against the Petitioner-producer. The said arbitration proceeding
could not be proceeded as a new Chairman was appointed. By letter dated
12th May, 2005 again request was made to adjudicate the claims to the new
Chairman who was also an ex-officio Arbitrator. The Arbitrator, thereafter,
issued notice to both the parties on 14th May, 2005. Preliminary meeting
dated 20th May, 2005 the Petitioner was absent. The Arbitrator directed the
Corporation to file statement of claims. It was filed accordingly.
5 The next meeting was held on 18th June, 2005. On 28th January,
2006, 25th March, 2006 and 27th May, 2006, the Petitioner was again
absent. The meeting was held on 20th January, 2007 to give an opportunity
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to the Petitioner. He was present on that day. As it is stated the Arbitrator
after hearing both the parties, by an award directed the Petitioner to pay
the amount within six months from 7th March, 2007.
6 The Petitioner has filed an application on 20th January, 2007 and
raised a preliminary objection that the Arbitrator has no jurisdiction to
proceed with the dispute and to adjudicate the claims in view of the clauses
17 (b) and 17 (c) of the Agreement it is stipulated that the Arbitrator shall
make the award within 12 months from the date of entering on the
reference. The Arbitrator shall be entitled with the consent of the parties to
extend the time to make award. There was no consent obtained or given by
the Petitioner at any point of time. Nothing is pointed on record with this
regard even the consent of otherside. The Arbitrator without considering
the above, passed impugned order on 07/03/2007.
7 Clause 17 (a), (b) (c) of the agreement are reproduced as under:-
“17.a)In the event of any dispute or difference or question or
Non-performance arising between the parties hereto
however touching this agreement or as to the
construction or meaning or effect of this agreement or of
any of the terms, clauses or things therein contained as to
the rights, duties and liabilities of the parties hereto
under these presents or otherwise howsoever on any
amount then the same shall be referred to the sole
arbitration of the Chairman of the Corporation whose
decision shall be final and binding upon the parties and it::: Downloaded on – 09/06/2013 16:30:03 :::
4 arbp458.07.sxwshall be no objection by the Producer that the said
arbitrator is interested in the Corporation or in thedispute or difference or questions or that he has dealt
with any matter in dispute or difference or that he has in
the course of his duties expressed views on all or any ofthe matters in disputes or differences or questions and the
decision of the said arbitrator shall be final, conclusive
and binding on the both the parties.
b) The Arbitrator shall make his award within twelve
months of entering on the reference.
c) the Arbitrator shall be entitled with the consent of the
parties to extend the time to make award.”
8
There is no serious dispute with regard to the clauses so raised above.
The parties have agreed for above clauses to get adjudicated their
differences/ disputes. As noted, at the first time the dispute was raised in
the year 2001. There is nothing on record to show what happened to that
proceedings, once initiated by invoking the above clauses in question.
Second time in 2005, same clauses were invoked again and the Chairman
being Arbitrator, issued notice to the Petitioner. The Petitioner for various
reasons unable to attend the meetings so fixed by the Arbitrator. The
Respondent filed statement of claim on 06/06/2005. The matter was again
adjourned from time to time to give opportunity to the Petitioner, within 12
months. The Arbitration proceedings could not be completed. Admittedly,
there is no written consent on record. On the contrary, the application
dated 20th January, 2007 was filed by the Petitioner raising the preliminary
objections in view of clause 17 (a), (b) and (c) as referred above, as there
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was no consent to extend the time to make the award. The continuation of
proceedings after expiry of 12 months from the date of reference, itself is,
therefore, illegal and bad in law. Even, we take 14th May, 2005, the date on
which the Arbitrator issued notice and though served, the Petitioner failed
to appear on the fixed dates except 20th January, 2007. The Arbitrator
ought not to have proceeded further as there was no further time provided
or agreed to extend the time to pass the award. The Application so filed
shows that there was no consent given by the petitioner to extend the time
to make the award. First reference was made in the year 2001 and the
second in May, 2005. In both these cases, the Arbitrator unable to pass the
award within 12 months from the date of the reference. The application so
filed by the Petitioner was not decided. The Petitioner appeared on 20th
January, 2007, that itself was after 12 months from May, 2005. The
Arbitrator has not even referred to the earlier reference made in the year
2001. The award, therefore, so passed without obtaining the consent as
required, therefore, was beyond the stipulated and agreed period of 12
months. Therefore, such award is bad in law and unsustainable. The
Arbitrator could have passed ex-parte award within 12 months, as the
Petitioner was not appearing inspite of service.
9 The Arbitrator, cannot on his own, without consent, even within
stipulated period, extend the time for making/passing the award. The
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Arbitrator, as well as, the parties are bound by the consent terms/ clauses.
As per Section 21 of the Act, the Arbitrator as referred, entered into the
reference dated 20/05/2005 and as per the agreement bounding period for
making the award itself expired in May, 2006. Instead passing an ex-parte
order within the period fixed of 12 months, in absence of the Petitioner, the
extension so granted even for granting opportunity to the Petitioner, is of no
use, as the Arbitrator could not have continued with the proceedings in
view of the specified clause and the agreed time. He looses the jurisdiction
to adjudicate the matter. Such clauses, in my view, need to be respected in
all circumstances. The parties have agreed for such clauses with intention
to see and settle the dispute as early as possible within agreed time. If they
themselves breach such clauses, there is no question of accepting the
submission based upon Section 4 of the Act revolving around the doctrine
of waiver and/or estoppel merely because the Petitioner or other party
though served not appeared within stipulated time. If the clause provided
that Arbitrator should make award within 12 months of entering into
reference, there is no question of waiting beyond 12 months by any one.
The Arbitrator could have obtained the consent from the parties to extend
the time to make the award. In the present case, there is no such extension
pointed out. The submission that there was implied consent, in the present
facts and circumstances, is of no use for want of material and/or related
evidence on the record.
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10 The Apex Court in 2010 (3) Mh.L.J. 18, NBCC Ltd. Vs. J.G.
Engineering Private Limited, referring to sections 14, 15, 21 and 32 held
that -(a) if consent is not given by the parties for enlargement of time the
authority of the Arbitrator ceases automatically after expiry of the time so
fixed; (b) the Court cannot exercise its inherent power to extend the time
fixed by the parties in the absence of the consent of both the parties the
same applies even to the arbitral tribunal; (c) the parties, if not agreed to
the extension, the Arbitration proceeding terminates automatically.
11 The good intention of the Arbitration clause to resolve their disputes
speedily through this process, as provided under the Act, still in the present
facts and circumstances, is defeated completely. In my view, such clauses
need to be respected and in the present case it supports the Petitioner
though there was no specific denial to the claims raised by the Respondent.
In view of above, therefore, no option but to set aside the impugned award
on this ground itself.
12 The award dated 7th March, 2007 was dispatched on 4th May, 2007
and received on 17th May, 2007. The Petition under Section 34 (3) of the
Act was filed on 16th August, 2007. Considering the facts and
circumstances of the case as it is still within limitation of 3 months and 30
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days, the submission that the Petition is barred by law is unacceptable as
there is case made out even to condone the delay, even if any. Therefore,
the delay is also condoned. But the award need to be set aside.
13 Resultantly, the Petition is allowed. The impugned award is quashed
and set aside.
14 Rule made absolute in terms of prayer clause (a). No costs.
(ANOOP V. MOHTA, J.)
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