LINEAR ENTERPRISES Vs. MAHA ACTIVE ENGINEERING PRIVATE LIMITED

JUDGEMENT

(1.) This Application is filed under Sec. 29A of the Arbitration and Conciliation Act, 1996 (for short 'Act') for extension of mandate of Arbitral Tribunal.

(2.) Applicant is a propriety concern engaged in the field of repairing, servicing and overhauling of all types of breakers, OLTC and control and relay panel works amongst other things. Respondent is said to be a leading consultant and licensed electrical contractor engaged in Power Transmission and Distribution Infrastructure project works. Maharashtra State Electricity Distribution Company Ltd. (for short "MSEDCL") invited bids for supply, testing, transport, construction, erection, Testing and Commissioning of Numerical relays for protection of feeders, capacitors and incomers along with the communication facility on standard protocol, Automatic Voltage Regulators, Winding temperature Indicators, Oil Temperature Indicators for Power Transformers and its allied works including a five year guarantee in three towns of Pune, Kolhapur and Nashik. Applicant and Respondent executed Memorandum of Understanding on 4/3/2015 on certain terms and conditions and entered into a Joint Venture in respect of the said tender flouted by MSEDCL. As a result of which, work order came to be awarded to them on 14/5/2015. Agreement between Applicant and Respondent contains arbitration clause and as dispute arose between the parties, notice dtd. 14/10/2020 was issued by Applicant to the Respondent through an advocate calling upon the Respondent to pay Rs.61,02,257.00 towards VAT and TDS refund along with interest at the rate of 24% per annum. Since there was no response to the requisition of the Applicant, the Applicant resorted to the dispute resolution mechanism as agreed in Clause No. 18 of the Memorandum of Understanding. A notice was therefore issued on 20/12/2020 invoking arbitration. By consent of the parties, Arbitral Tribunal was formed. On 31/7/2021, Applicant filed Statement of Claim and Respondent filed its defence and counter claim. The pleadings were completed on 25/3/202. An Application was filed under Sec. 16(2) of the Act on 29/11/2021 before the Tribunal. However, the Tribunal has rejected the said Application which has resulted into filing of Writ Petition No. 3021/2022 which came to be dismissed on 17/3/2022. On 17/7/2022, the then Presiding Arbitrator recused from the proceeding as he was elevated to the Bench. Hence, Application being Arbitration Application No. 22/2022 was moved under Sec. 11(6) read with Sec. 15(2) of the Act before this Court. This Court, by order dtd. 21/4/2023 allowed the said Application and appointed Justice Shri S. P. Deshmukh (Retired) as Presiding Arbitrator. On 22/3/2024, Respondent through its advocate filed an Application seeking termination of the Arbitral Tribunal mandate in the light of expiration of the time limit mentioned in Sec. 29A of the Act. Applicant/Respondent to the said Application by filing reply dtd. 27/3/2024 contended that the time limit is not over. The Arbitral Tribunal, by order dtd. 9/4/2024 has held that an order would be obtained from this Court for seeking extension of the mandate. Hence, this Application.

(3.) Learned counsel for the Applicant submits that though initially appointment of Arbitral Tribunal was with the consent of the parties, substitution of the Presiding Arbitrator has been done by order of this Court and therefore, this Court has jurisdiction to entertain the application for extension of the period of Arbitral Tribunal. It is submitted that in fact the period of Arbitral Tribunal is not over however, since an application is moved by the Respondent to that effect before the Arbitral Tribunal, the present application is pursued for formal extension of time for completion of arbitration proceeding. It is his submission that after recusal of the earlier Presiding Arbitrator, the Arbitral Tribunal was practically defunct due to non-availability of the Presiding Arbitrator till 21/4/2023, so as per the arbitral law, the newly appointed Presiding Arbitrator was required to give his disclosure statement etc. and time is consumed in completion of formalities. The first meeting of the Arbitral Tribunal thereafter was conducted on 20/8/2023. It is submitted that in the peculiar facts of the case, it cannot be held that the tenure of the Arbitral Tribunal is over and in any case in the interest of justice, the same is required to be extended by this Court. It is submitted that the language of Sec. 29A does not prohibit this Court from extending the time for the Arbitral Tribunal to pass an award even after period /term of Arbitral Tribunal is already over.