The SC ordered Gujarat HC to rule on a matter relating to Section 29A of The Arbitration Act, which provides a time limit to determine arbitration

Team SoOLEGAL 21 Feb 2020 3:09pm

The SC ordered Gujarat HC to rule on a matter relating to Section 29A of The Arbitration Act, which provides a time limit to determine arbitration

The Supreme Court directed the Gujarat High Court to decide a matter concerning Section 29A of the Arbitration Act, which sets a time limit within which to conclude an arbitration.

In doing so, the Apex Court amended an order passed by the Gujarat High Court which stayed the arbitration proceedings at issue.

In the past, various conflicts had arisen between Col. Manbhupinder Singh Atwal and the former partners of C2R Projects LLP. Atwal, together with two other partners of the LLP, initiated arbitration proceedings against the Neeraj Kumarpal Shah and other partners, seeking to recover amounts in accordance with Rs. 76,34.

In 2017 the Supreme Court had directed the arbitration between the two parties concerned to begin from the date on which the Arbitral Tribunal's first sitting takes place. The date was 1 February 2018 according to the petitioners before the High Court (NK Shah and others). Former Gujarat High Court judge, Justice MB Shah, presided over the Tribunal.

According to Section 29A(1), the arbitral tribunal is required to pass the award within twelve months of the date proceeding commences. Section 29A(3) requires this time to be extended by six months, if all parties agree.

The respondent before the High Court (Atwal) wrote a letter making allegations against the Tribunal about ten months into the arbitration, and refused to participate in the proceedings. He had also refused to grant his permission to prolong the arbitration for the time period. Therefore, he filed a request for temporary measures under section 17.

Nevertheless, two members of the Tribunal, Justice Shah and Justice GD Nanavati passed a standing order denying the appeal for Section 17. He decided to resign from the Tribunal the day the order was sent to Justice JM Panchal (the third arbitrator). Former judge of the Supreme Court, Panchal J had cited the persistent effort by the respondents to postpone the proceedings as the reason for his resignation. The presiding arbitrator, Justice Shah, resigned soon afterwards, too.

The respondent then named Singaporean Senior Counsel Andrew Yeap as his court candidate, requesting that the presiding arbitrator be of a neutral nationality. The appellant had objected to this in the High Court. It was eventually decided that they could nominate a non-Indian national to the Tribunal. Vinayak Pradhan was then named presiding arbitrator and wrote to the parties detailing new fees to be paid to the Tribunal. The petitioner instead objected to the bill for the exorbitant fees.

The Arbitral Tribunal had set the next date of hearing between 13-20 February this year on January 3. Shah therefore approached the Gujarat High Court to pursue a way to quash the Tribunal's mandate.

Taking note of the facts surrounding the case, the High Court order passed by Justice AY Kogje states,

A simple fact of ascertaining date on which the arbitration started, there is no clarity, prima facie leading this Court to believe the contention of the learned Senior Advocate for the petitioner that international arbitration is foisted upon the petitioner with a forgone conclusion of resisting the claim of the petitioner on his inability to pay the somewhat exorbitant arbitration costs, little remains to arbitrate.

The manner in which arbitration is proceeding, the outcome is also not far to imagine. In background of the peculiar facts of the case, the Court finds that the petitioner has made a ground to interfere.”

The High Court also noted the “shifting stand of the presiding arbitrator” as cause to create doubt about the ability of the Tribunal to continue proceedings.

This, in the opinion of the Court, creates doubt about the jurisdiction of the Tribunal to arbitrate beyond the period during which mandate is operational. Prima facie, no amount concession or participation of the petitioner in the arbitration proceedings can confer jurisdiction and similarly, no amount of expenditure incurred in the present arbitration proceedings can also confer jurisdiction.”- Gujarat High Court

The Court therefore ordered that there would be no further hearings after 13 February. It also released a returnable notice dated 26 February.

Aggravated by this decision, Atwal went to the Supreme Court. The Bench of Justice Rohinton Nariman and Justice Ravindra Bhat amended the order of the High Court after hearing of the parties. It was directed that the Arbitral Tribunal would continue the hearing from 15 to 18 February. It was also ordered,

The Arbitral Tribunal will, for the time being, confine itself to taking evidence and hearing the parties.”

The Apex Court also directed the Gujarat High Court to take up the matter on February 26 and to complete the hearing and deliver a judgment “as soon as practically possible”. It was further clarified, “This order substitutes the order that has been passed on 12.02.2020”. The Court will next take up the matter on March 16, 2020.

Senior Adv. Abhishek Manu Singhvi and Adv. Nakul Dewan have represented the petitioner before the Supreme Court. A DSK Legal team consisting of Kirat Singh Nagra, Kartik Yadav, Pranav Vyas, Manhar Singh Saini, Parinay Vasandani, and Karanvir Singh Goraya briefed them on.

Senior advocates Shyam Divan and Maninder Singh, along with attorneys Gursharan Virk, Masoom Shah, Aastha Mehta and others, represented the respondents.

Tagged: Section 29A   Supreme Court   Gujarat High Court   Justice MB Shah   Justice Rohinton Nariman   Justice Ravindra Bhat  
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