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2012 DIGILAW 799 (BOM)

Snehdeep Auto Centre v. Hindustan Petroleum Corporation Ltd.

2012-04-16

MOHIT S.SHAH, N.M.JAMDAR

body2012
Judgment :- N.M. Jamdar J. This appeal challenges the order passed by the learned single Judge dated January 13, 2012 in Arbitration Petition No.430 of 2008. By the impugned order the learned single Judge allowed the Arbitration Petition filed by the respondent primarily on the ground that the award assailed therein was made after the period provided for in the agreement for making an award expired and thus after the mandate of the arbitrator had come to an end. 2. An agreement of dealership was entered into between the appellant and the respondent-Hindustan Petroleum Corporation for allotment of a petrol/diesel distributorship to the appellant. On December 11, 2002 the agreement was terminated by the respondent on the ground of alleged irregularities committed by the Appellant. The Appellant challenged the order of termination initially by way of a Writ Petition. The Writ Petition was disposed of on the ground that Arbitration proceedings are available to the appellant for redressal of his grievance. On July 21, 2005 arbitrator was appointed and on October 25, 2005 the Appellant filed his claim Statement on record. As per the agreement between the parties the award was to be made within six months after entering upon the reference. An extension of four months could be granted by the arbitrator by a written order. The relevant term reads as under:- “The award shall be made in writing within six months after entering upon the reference or within such extended time not exceeding further four months as the sole arbitrator shall by a writing under his own hands appoint”. 3. It is an admitted position before us that the initial period of six months for rendering the award expired on November 3, 2006 and further period of four months expired on March 3, 2007, and the award was made by the arbitrator on April 10, 2008. By the award the arbitrator set aside the termination of the dealership agreement dated June 1, 1995 and held that the claimant is entitled to Rs.9,94,068/-. The arbitrator also issued certain other ancillary directions. 4. The respondents thereafter preferred an Arbitration Petition bearing No.430 of 2008 in this Court. The respondent-Corporation assailed the award on several grounds pertaining to the action of termination of the agreement of dealership on the basis of alleged irregularities committed by the respondent. The arbitrator also issued certain other ancillary directions. 4. The respondents thereafter preferred an Arbitration Petition bearing No.430 of 2008 in this Court. The respondent-Corporation assailed the award on several grounds pertaining to the action of termination of the agreement of dealership on the basis of alleged irregularities committed by the respondent. The learned single Judge after hearing Counsel for the parties came to the conclusion that as admittedly the award was passed after the period provided under the contract i.e. ten months was over considering the law laid down in the case of N.B.C.C Ltd. v. J.G. Engineering Pvt. Ltd. reported in 2010 AIR Supreme Court 640, r.w. section 15 of the Arbitration and Conciliation Act, there was no other alternative but to set aside the award on the ground that it was made after the mandate of the arbitrator had come to an end by efflux of time provided under the agreement between the parties. The respondent is thus in appeal before us. 5. We have heard the learned Counsels appearing for both the sides. Learned counsel for the Appellant has urged that contention that the award was made after the period provided under the agreement, was not specifically raised by the respondent in the Arbitration Petition before the learned single Judge. He further argued that the respondent after the period stipulated was over on November 3, 2006 continued to make submissions in the Arbitration proceedings. On December 21, 2006 after the respondent made further submissions. On that date both the parties sought time from the arbitrator to file their written submissions which were accordingly filed on March 12, 2007. This conduct of the respondent, according to the Counsel for the appellant, amounts to clear waiver on the part of the respondent and this fact has not been considered by the learned single Judge. Learned Counsel for the appellant has submitted that the Judgment of Apex Court in the case of N.B.C.C Ltd. (supra) on which reliance is placed by the learned single Judge is clearly distinguishable in facts. In that case, the party had moved an application for a declaration that the mandate of arbitrator stood terminated. Learned Counsel for the appellant has submitted that the Judgment of Apex Court in the case of N.B.C.C Ltd. (supra) on which reliance is placed by the learned single Judge is clearly distinguishable in facts. In that case, the party had moved an application for a declaration that the mandate of arbitrator stood terminated. The Counsel for the appellant also places reliance on the Judgment of learned single Judge of this Court in the case of MasconMultiservices & Consultants Pvt. Ltd reported in 2008 (6) Bom.C.R.611 in which the Court has accepted the proposition that the waiver of the objection relating to the period specified in the agreement, can be presumed after examining the conduct of the parties. The learned Counsel for the respondent has contended that specific ground was taken in the Arbitration Petition that the arbitrator had no jurisdiction to make the award. He further urged that on merits, the appellant has no case and the documents on record would show that the respondent had breached terms of the agreement. In short, the argument of the learned Counsel for the respondent is that even otherwise, appellant does not have good case on merits and thus appeal be dismissed. 6. It is an admitted position that award was passed after the period provided for in the agreement was over. The award was passed on April 10, 2008 after the period specified in the agreement both initial and extendable for making the award was over. However, to our mind the Judgment of the Apex Court in the case of N.B.C.C Ltd., (supra) relied upon by the learned single Judge does not lay down an absolute proposition that moment the award is made after the stipulated period then it must be set aside. In that case the six months period was provided by the High Court by its order and not by agreement between the parties. The respondent in that case had moved an application before the High Court for a declaration that the mandate of the arbitrator stood terminated. The party in that case had taken a clear stand that the mandate of the arbitrator was terminated and his application itself was a clear and unequivocal act to enforce such a time limit. The respondent in that case had moved an application before the High Court for a declaration that the mandate of the arbitrator stood terminated. The party in that case had taken a clear stand that the mandate of the arbitrator was terminated and his application itself was a clear and unequivocal act to enforce such a time limit. The Apex Court in the said Judgment in the case of N.B.C.C Ltd., (supra) observed that - “The arbitrator was bound to make and publish his award within the time mutually agreed to by the parties, unless the parties consented to further enlargement of time”. The learned Counsel for the appellant is right in contending that this observation of the Apex Court does not rule out a contingency where conduct of the parties can be implied with certainly to mean that they have consented not to insist on mandatory time limit. 7. The learned single Judge of this Court in the case of Mascon Multiservices (supra) came to the conclusion that the inquiry on facts to find out whether the parties have waived the condition of termination of arbitration by efflux of time is permissible. The learned Judge has held that if a party attends number of meetings after the award has expired it would be a strong indication of the waiver. The learned Judge however, cautioned that the strength of indication of waiver is not necessarily directly proportional to the number of meetings attended and it is the nature of meeting and nature of conduct which is important. The learned Judge has held that the conduct should be such that the waiver can be clearly inferred. 8. In the case at hand after the period stipulated of six months was over on November 3, 2006, the respondent made further submission in the arbitration proceedings on December 14, 2006. The respondent made further submissions on December 21, 2006. On March 3, 2007 the period of four months thereafter expired. Thereafter on March 12, 2007 both the parties therein submitted their Written Statement. In the written submission, the respondent did not contend that the mandate of arbitrator had come to an end. Thus, the respondent did not take a clear and unambiguous stand that, the arbitrator cannot proceed to declare the award as his mandate has come to an end. Thereafter on March 12, 2007 both the parties therein submitted their Written Statement. In the written submission, the respondent did not contend that the mandate of arbitrator had come to an end. Thus, the respondent did not take a clear and unambiguous stand that, the arbitrator cannot proceed to declare the award as his mandate has come to an end. This conduct of the respondent amounts to clear waiver to the objection of time limit being mandatory requirement for pronouncement of the award. Making submissions and filing written submissions cannot be termed as formal steps but were integral part of the proceedings before the arbitrator. The respondents had opportunity, both at the time of making oral submissions on December 14, 2006 and December 21, 2006 to raise the contention that the mandate of the arbitrator has come to an end by efflux of time. Respondent also had an opportunity to put on record this contention in the written submissions filed on March 12, 2007. This conduct of the respondent amounts to clear waiver on their part to the condition of time limit stipulated in the agreement. 9. Apart from the above, the conduct of the respondent in not raising a specific ground in the Arbitration Petition, according to us, is sure indication of the fact that the respondent had waived the condition of time limit and also the objection to the jurisdiction of the arbitrator on this ground. The advocate for respondent relied on ground (o) of the Arbitration Petition to contend that a specific objection was raised. The clause reads as under - “(o) The said award is bad in law, without jurisdiction or in excess of jurisdiction, against public policy and law and is liable to be set aside on the following amongst other grounds, which are set out without prejudice to one another”. 10. This ground is a omnibus contention taken in the Petition. This ground does not specifically challenge the arbitration award on the ground that same was made after the mandate of arbitration had come to an end. The omission to take a specific contention in the Arbitration Petition coupled with the conduct of the respondents in continuing to make the submissions after the period in the agreement had come to an end clearly goes to show that the respondent had waived this stipulation. 11. The omission to take a specific contention in the Arbitration Petition coupled with the conduct of the respondents in continuing to make the submissions after the period in the agreement had come to an end clearly goes to show that the respondent had waived this stipulation. 11. Since the learned single Judge allowed the Arbitration Appeal only on the short ground of jurisdiction of the arbitrator without going into any other aspect, we are not inclined to entertain the argument of the respondent based on merits of the case in respect of the alleged breach of agreement by the appellant, especially since we propose to remand the matter for decision of the Petition on merits. 12. Thus, in conclusion we are not in agreement with the learned single Judge that the present arbitration Petition needs to be automatically allowed because the award of the arbitrator was passed after the period stipulated in the agreement had come to an end without looking into any other aspect. Having considered the facts narrated above, we find that the conduct of the respondent is such that a clear inference can be drawn that it had waived the time limit stipulated in the agreement and the objection regarding the jurisdiction of the arbitrator. 13. In the result, the appeal is allowed. The order passed by the learned single Judge dated January 13, 2012 in Arbitration Petition No.430 of 2008 is set aside and the matter is remanded back to the learned single Judge for consideration of the Petition on merits. We make it clear that we have not observed anything on the merits of the case of both the parties in the Arbitration Petition.