Arbitrator has to deliver the Award within the prescribed or extended time

The court never terminates the mandate of an arbitrator. It stands terminated on the happening of an event or event. The court only declares it.

An agreement was entered into with members of the family ran into disputes and differences relating to ownership and control of Companies, Joint family businesses, partition of joint family properties and so on. An Arbitrator, named in the agreement, was appointed to resolve the disputes. 

One of the clause of the agreement stated that the arbitrator would make his award within a period of four months from the date of service of a copy of agreement upon him and he would have the power to extend the time from time to time with the consent of all the parties. 

Even after the expiry of time period of four months nothing except few sittings happened before the arbitrator. It was contended that since the time period originally fixed was not extended, the authority of the arbitrator stood terminated by efflux of time and the Court was sought to make such declaration. This contention was countered by the Respondents stating that this clause was waived as several sittings which were held by the arbitrator were after the expiry of time for making the award provided in the agreement and therefore the clause fixing time period has to be considered as waived in view of the provisions of Section 4 of the Arbitration and Conciliation Act, 1996 (Act).
It was observed that as the fact reveals several meetings were held by the Parties and the arbitrator after the expiry of the time stipulated by the agreement for making and publishing the award. These meetings were nothing of the kind held by specialist arbitrators to resolve legal disputes between the parties but merely discussing business affairs and parties putting forward the facts and figures regarding their businesses.

The meetings held after expiry of the time for the arbitrator to make and publish the award, were infact of no moment or consequence. On expiry of the time the mandate of the arbitrator stood terminated. Even if it was assumed that holding of meetings by the arbitrator after the expiry of time could constitute waiver by the parties of the above stipulation regarding time, those meetings with the arbitrator could not be said to be steps taken in arbitration. They were mere discussion between the parties. There is no requirement in the Act for an award to be passed within a particular time. The agreement may contain a clause containing a time period for making the award or for enlargement of time by consent of the parties. In that case time can only by enlarged by consent of the parties.

Assuming, in the present matter, the parties had waived the time stipulation when they sat before the Arbitrator on several dates and these sittings were to arbitrate. After waiver of the original time stipulation, the Arbitrator was required to act and make and publish the award within reasonable time. There was no evidence on record to suggest that the Petitioner delayed the proceedings or expressed an unwillingness to participate before the arbitrator. The Arbitrator did nothing. Not a meeting was convened. Not even a letter or a notice was issued. Then after four years, there was a flurry of activity on the part of the arbitrator to revive the proceedings. Well before those four years expired, the reasonable time stood expired and also the mandate of arbitrator stood terminated. The court never terminates the mandate of an arbitrator. It stands terminated on the happening of an event or event. The court only declares it.

In view of the above factual background, the proceedings before arbitrator were held to be liable for quashed and the application seeking such declaration was accordingly allowed.

[Ram Chandra Rungta vs. Ram Swarup Rungta and Ors.]
(Calcutta HC, 02.12.2014)