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Jayesh H. Pandya & Anr. v. Subhtex India Ltd. & Ors.

Civil Appeal · 2019 INSC 958Decided 27 Aug 2019
Civil Appeal No. 6300 of 2009
Justice N.V. Ramana · Justice Mohan M. Shantanagoudar · Justice Ajay Rastogi

Background

A commercial dispute between partners of a construction firm and a company went to arbitration under an agreement that required the arbitrator to make the award within four months of receiving the agreement, extendable only with both parties' consent. After a substitute arbitrator was appointed by the Supreme Court, the four-month period expired without the appellants' consent to extend it, yet the arbitrator continued the proceedings and rejected the appellants' objection that his mandate had lapsed; the Bombay High Court upheld the arbitrator's continuation, holding the appellants had waived their objection by participating in the proceedings.

Decision Breakdown

The Supreme Court set aside the High Court's ruling, holding that under Sections 14 and 15 of the Arbitration and Conciliation Act, 1996, an arbitrator's mandate automatically terminates if the time fixed by the parties' agreement expires without their consent to extend it, and courts have no power to extend that time themselves where the agreement itself provides the mechanism for extension. It held there was no valid "waiver" here since the appellants had clearly and consistently objected to any extension of time, and the arbitration proceedings must be governed strictly by the parties' own agreed terms and schedule, not relaxed merely to keep the process alive.

Lesson Learnt

If an arbitration agreement fixes a strict time limit for the arbitrator to deliver an award and specifies that extensions require both parties' consent, that limit is binding: an arbitrator cannot simply continue past the deadline without consent, and genuinely objecting parties are not deemed to have waived their rights merely by having participated in the process up to that point.

Official source (sci.gov.in)View Judgment (PDF)

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