LexLALITKUMAR V. SANGHAVI (D) TH. LRS. NEETA LALIT KUMAR SANGHAVI & ANR. versus DHARAMDAS V. SANGHAVI & ORS.
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[2014] 3 S.CR. 558 A LALITKUMAR V. SANGHAVI (D) TH. LRS. NEETA LALIT KUMAR SANGHAVI & ANR. v. DHARAMDAS V. SANGHAVI & ORS. (Civil Appeal No. 3148 of 2014) B MARCH 04, 2014 [DR. B.S. CHAUHAN, J. CHELAMESWAR AND M.Y. EQBAL, JJ.] C ARBITRATION AND CONCILIATION ACT, 1996: ss.14, 32 - Termination of arbitration proceedings by arbitrator on the ground that the claimant did not take interest in the matter and did not pay the fees - Fresh application uls. 11 for appointment of arbitrator - Dismissed as not maintainable on 0 the ground that remedy lies in invoking writ jurisdiction and not application u/s. 11 - Held: The order by which the Arbitral Tribunal terminated the arbitral proceedings could only fall within the scope of s.32(2)(c) i.e. the continuation of the proceedings has become impossible - By virtue of s.32(3), E on the termination of the arbitral proceedings, the mandate of the Arbitral Tribunal also comes to an end - Having regard to the scheme of the Act and more particularly on a cumulative reading of s. 32 and s. 14, the question whether the mandate of the arbitrator stood legally terminated or not can be examined by the court as provided u/s. 14(2) - The F apprehension of the appellant that they would be left remediless is without basis in law - The appellants are at liberty to approach the appropriate court for the determination of the legality of the termination of the mandate of the Arbitral Tribunal. G On an application under Section 11 of Arbitration and Conciliation Act, 1996, the Arbitral Tribunal was constituted. On 29.10.2007, the Presiding Arbitrator terminated the arbitration proceedings on the ground that H 558 LALITKUMAR V. SANGHAVI (D) TH. LRS. NEETA LAUT KUMAR 559 SANGHAVI v. DHARAMDAS V. SANGHAVI the claimant did not take interest in the matter and did not A pay the fees. The original applicant filed arbitration application for appointment of the arbitrator. The application was held to be not maintainable and it was. held that the remedy was filing a writ petition. Aggrieved, the appellant filed the instant appeal. B Dismissing the appeal, the Court HELD: 1.1. Chapter Ill of the Arbitration and Conciliation Act, 1996 deals with the appointment, challenge to the appointment and termination of the C mandate and· substitution of the arbitrator etc. Section 11 provides for the various modes of appointment of an arbitrator for the adjudication of the disputes which the parties agree to have resolved by arbitration. Arbitrators could be appointed either by the agreement between the D parties or by making an application to the Chief Justice of the High Court or the Chief Justice of India, as the case may be, as specified under Section 11 of the Act. Section 12(3) provides for a challenge to the appointment of an arbitrator on two grounds. They are - (a) "that E · circumstances exist" which "give rise to justifiable doubts as to" the "independence or impartiality" of the arbitrator; (b) that the arbitrator does not "possess the qualification agreed to by the parties". Section 14 declares that "the mandate of an arbitrator shall F terminate" in the circumstances specified therein. Section 14(2) provides that if there is any controversy regarding the termination of the mandate of the arbitrator on any of the grounds referred to in the clause (a) then an application may be made to the Court - "to decide on G the termination of the mandate". Section 32 of the Act, on the other hand, deals with the termination of arbitral proceedings. From the language of Section 32, it can be seen that arbitral proceedings get terminated either in the making of the final arbitral award or by an order of the H 560 SUPREME COURT REPORTS [2014] 3 S.C.R A arbitral tribunal under sub-Section 2. Sub-section (2) provides that the arbitral tribunal shall issue an order for the termination of the arbitral proceedings in the three contingencies mentioned in sub-clauses (a) to (c) thereof. The contingencies are (a) the claimant withdraws his B claim, unless the respondent objects to the order and the arbitral tribunal recognises a legitimate interest on his part in, obtaining a final settlement of the dispute, (b) the parties agree on the termination of the proceedings, or (c) the arbitral tribunal finds that the continuation of the c proceedings has for any other reason become unnecessary or impossible. [Paras 10, 11, 12 and 13) [565
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