The petitioners have invoked the jurisdiction of this Court under sections 14 and 15 read with section 9 of the Arbitration and Conciliation Act,1996 ( Act for short).

2.In this petition, the petitioners have inter alia prayed for the following main reliefs:

"(a) that this Honble Court may be pleased to declare that pursuant to the agreement between the parties dated 27.3.1998 and 9.11.1998 as contemplated by sections 14 and 15 of the Arbitration and Conciliation Act, 1996, as the time fixed for making and publishing the award within a period of two months from 9.11.1998 has come to an end on 9 1.1999, and as contemplated by section 14 of the said Act since the Arbitrators have failed to act without undue delay, the mandate of an arbitration stood terminated hence the arbitral proceedings have come to an end on 9.1.1999 and therefore the interim reliefs granted on 23.2.1998 have also come to an end.

(b) That this Honble Court may be pleased to declare that on account of efflux of time the arbitral proceedings which were commenced from 27.3.1998 have come to an end on 9.1. 1999 hence the interim orders passed under section 9 of the Act, 1996 pending the arbitral proceedings as per the order dated 23.2.1998 have also come to an end and does not exist any longer.

(c) That the Court Receiver, High Court, Bombay. who is appointed as receiver of estate, firms business, i.e. M/s Fateh Mohammed Nusiruddin & Co. who has taken the formal possession of the same on or about 2-12-1998 stands discharged without passing accounts an on the payments of costs, charges and expenses to be borne out by the respondents at whose instance the said Court Receiver was appointed vide order dated 23.2.1998."

BACKGROUND FACTS

3.Brief background facts of the case are that the petitioners and the respondents are partners of a partnership firm M/s Fateh Mohammed Nasiruddin & Co. The said partnership firm was constituted under deed of Partnership executed on or about 28th April, 1992. The dispute between the parties has resulted in the arbitration petition No.263 of 1998 under sections 9 read with section 21 of the Act, seeking ad-interim reliefs in terms of prayers (a), (b) and (c) of the said petition. The said petition came to be disposed of by order dated 23.2.1998, whereby the Court Receiver, Mumbai was appointed pending the hearing and disposal of the arbitral proceedings with direction to take possession of the buffaloes whatever be the number, belonging to the partnership without power to sell except with permission of the Court, with further directions to the Court Receiver to finalise the agency agreement within a period of 2 months in terms of the said order. In the same proceedings an order of Injunction was also passed pending disposal of the arbitration proceedings and the respondents were restrained from dealing with the properties belonging to the partnership firm and from operating bank accounts of the firm.

4.After disposal of the aforesaid petition, the Arbitration Application No.15 of 1998 under section 11 of the Act was filed by the respondents for seeking appointment of the Arbitrators to arbitrate the dispute between the parties; which was disposed of in terms of the consent order dated 27.3.1998. In pursuance of the said consent terms, it was agreed between the parties that the 3 persons be appointed as arbitrators in order to arbitrate the dispute between the parties and the Arbitrators were directed to make and publish their award within a period of four months from the date of order i.e. with effect from 27th March, 1998.

5.In pursuance of the aforesaid consent order, the arbitrators were to make and publish their award within four months from 27.3.1988. The said period expired on 27.7.1998. Since the arbitration proceedings were inconclusive jurisdiction of this Court was invoked to seek the declaration similar to the declaration sought to the present petition. The said petition was disposed of by another consent order dated 9th November 1998, whereby time was further extended by two months to enable arbitrators to make and publish their award. In the meanwhile, the interim reliefs already holding field were continued. The Court Receiver was also directed to proceed and act in accordance with order dated 23.2.1998 passed in Arbitration Petition No.263 of 1997 with a stipulation not to act upon the said order if for any reasons, the Court Receiver fails to take possession as per order dated 23.2.1998 or if arbitrators fail to complete the arbitral proceedings within 2 months as per order dated 9.11.1998.

6.In spite of grant of two months time to enable the Arbitrators to complete the proceedings and to publish their award, the arbitrators could not complete the arbitration proceedings and also could not publish their award in terms of the order dated 9th November 1998. The petitioners have again invoked jurisdiction of this Court to seek declaration that the mandate of arbitrators stands terminated and that the arbitration proceedings have come to an end with the expiry of period. of two months granted in order dated 9.11.1998 i.e. on 9.1.1999. The petitioners contend that if they are held entitled to the declaration claimed, then interim relief should be vacated and receiver should be discharged forthwith.

POINTS FOR CONSIDERATION

7.In the aforesaid facts points for consideration are as under:

(i) Whether the mandate of the arbitral Tribunal stood terminated on 9.11.1998

(ii) Whether the arbitration proceedings have come to an end on 9.11.1998

(iii) If yes, what is the effect thereof on the interim reliefs, which were to operate pending disposal of arbitration proceedings

RIVAL CONTENTIONS

Point No. l

8. The learned Counsel appearing for the petitioners placed reliance on the provisions of sections 14 and 15 of the Act in support of his submissions and contended that if the arbitrators fail to act without undue delay or pursuant to the agreement of the parties the mandate of the arbitrators can be brought to an end. According to him, turning to the facts of this case, failure on the part of the Arbitrators to act without undue delay and further failure on their part to complete arbitration proceedings in pursuance of the agreement between the parties as reflected in the consent order dated 27.3.1998 and 9th November 1998 must result in the finding that the mandate of the arbitrators stands contravened.

9.The learned Counsel for the petitioners further submitted that parties to the arbitration dispute had specifically prescribed time limit upto 9.1.1999 for completing arbitration proceedings and for publishing the award. Since the arbitrators have failed to complete the arbitration proceedings and failed to make an award within a stipulated time limit, their mandate has come to an end. It is urged by the learned Counsel for the petitioners that the words "subject to an agreement between the parties", "unless otherwise agreed by the parties" appear in the Act of 1996, and various provisions thereof do indicate that the parliament, in its wisdom, has given a free will to the parties to arbitration agreement to agree to the procedure for the purpose of arbitration proceedings, as such in his submission, time limit prescribed by consent of parties for completing arbitration proceedings and for making award was perfectly legal and valid. Since the arbitrators failed to complete the proceedings within stipulated time frame it should be declared that the mandate of the arbitrators has come to an end or stood terminated on 9.1.1999. There is no serious contest on behalf of the respondents to these submissions advanced by the learned Counsel for the petitioners.

10.In order to appreciate the submissions advanced in this behalf it is necessary to turn to the relevant legal provisions around which revolves the controversy. They are contained in sections 14 and 15 of the Act. The same are extracted and reproduced hereinunder:

"14. Failure or impossibility to act (1) The mandate of an arbitrator shall terminate if

(a) he becomes de jure unable to perform his functions or for other reasons fails to act without undue delay; and

(b) he withdraws from his office or the parties agree to the termination of his mandate.

15. Termination of mandate and substitution of arbitrator- (1) in addition to the circumstances referred to in section 13 and section 14, the mandate of an arbitrator shall terminate

(a) Where he withdraws from office for any reason; or

(b) by or pursuant to agreement of the parties.

(2) Where the mandate of an arbitrator terminates, a substitute arbitrator shall be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced.

(3) Unless otherwise agreed by the parties, where an arbitrator is replaced under sub-section (2), any hearing previously held may be repeated at the discretion of the arbitral tribunal.

(4) Unless otherwise agreed by the parties, an order or ruling of the arbitral tribunal made prior to the replacement of an arbitrator under this section shall not be valid solely because there has been a change in the composition of the arbitral tribunal."

11.Section 14 specifies the grounds for terminating the mandate of an arbitrator and methods of doing so. The grounds for terminating the mandate are: (i) the arbitrator becomes de jure or de facto unable to perform his function or (ii) for some other reasons fails to act without undue delay or (iii) the arbitrator withdraws from his office or (iv) the parties agree to the termination of his authority as an arbitrator; whereas three methods can be employed for terminating the mandate of the arbitrator. They are (a) by withdrawal of the arbitrator from his office (b) by agreement of parties and (iii) by decision by the Court.

12.Section 15 provides for additional grounds for termination of the mandate and for appointment of substitute arbitrator. The additional grounds provided are (a) where he withdraws from office for any reason or (b) by or pursuant to the agreement of the parties. Though sub-section (1) purports to state additional grounds for termination of authority of an arbitrator but one of the grounds mentioned therein is covered by the grounds set out in clause (b) of sub-section (1) of section 14. On the authority of the arbitrator being terminated, a substitute arbitrator in place of arbitrator whose authority is terminated has to be appointed and such appointment, as per sub-section (2) is required to be made by following the same procedure as followed while appointing the arbitrator who is being substituted.

13.In the aforesaid legal canvas if one turns to the facts of the present case, it is clear that the mandate to the arbitrator to complete the arbitration proceedings on or before 9.1.1999 was given in the consent order dated 9.11.1998. Consent order is nothing but an agreement between the parties with super imposed seal of the Court. It is open for the parties to provide for termination of the mandate of the arbitrator while agreeing for arbitration or to reach an agreement in this behalf during the pendency of the arbitration proceedings. In other words, the mandate given to the arbitrator can be subject to the agreement between the parties. In my opinion, the consent order dated 9.11.1999 contained an agreement between the parties that the authority of the arbitrators shall come to an end on 9.1.1999. This mode and method adopted by the parties in this case was permissible under the Act. Admittedly, even otherwise, the arbitrators failed to act without undue delay. I, therefore, hold that the mandate of the arbitral tribunal stood terminated on 9.1.1999 by efflux of time and also due to failure on the part of the arbitrators to act without undue delay.

Point No.2:

14.The learned Counsel for the petitioners further contended that as soon as the mandate of the arbitral tribunal stood terminated, it must automatically result in termination of the arbitration proceedings. The learned Counsel for the respondents while opposing the said contentions of the petitioners, contended that the arbitral proceedings can only come to an end in the manner set out in section 32 of the Act.

15.In order to appreciate the contention of the parties, few relevant provisions of the Act dealing with commencement and termination of the arbitral proceedings need to be noticed.

"21. Commencement of arbitral proceeding - Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent.

25. Default of a party - Unless otherwise agreed by the parties, where, without showing sufficient cause -

(a) the claimant fails to communicate his statement of claim in accordance with sub-section (1) of section 23, the arbitral tribunal shall terminate the proceedings: (emphasis supplied)

(b) .................

(c) .................

32. Terminal of proceedings - (1) The arbitral proceedings shall be terminated by the final arbitral award or by an order of the arbitral tribunal under sub-section (2),

(2) The arbitral tribunal shall issue an order for the termination of the arbitral proceedings where

(a) the claimant withdraws the 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 proceedings has for any other reason become unnecessary or impossible.

(3) subject to Section 33 and sub-section (4) of section 34, the mandate of the arbitral tribunal shall terminate with the termination of the arbitral proceedings."

16.On the above backdrop let us consider the legal provisions providing for commencement and termination of the arbitration proceedings.

(a) Section 21 of the Act provides for commencement of the arbitral proceedings. This section provides that in the absence of an agreement between the parties to the reference, the arbitral dispute in respect of a particular dispute shall commence on the date on which a request for that dispute to be referred to the Arbitration is received by other party. If in the arbitral agreement parties provide any other mode for commencement of the arbitral proceedings, the arbitral proceedings will commence in accordance therewith.

(b) Section 25 incorporates the course of action arbitral Tribunal may adopt in the event of party committing any of the three defaults mentioned in this section. The provision of section 25 is intended to enable the arbitral tribunal not to allow any proceedings to drag on at the instance of one or the other party. What is contemplated in this section is an order passed by arbitral Tribunal terminating arbitral proceedings. No such order has been passed by the arbitral tribunal in this case as such even provision of section 25 is not available to the petitioners. The said provision cannot be invoked before this Court. However, the petitioners are at liberty to obtain appropriate orders in this behalf from the arbitral Tribunal but not from this Court.

(c) Section 32 of the Act makes provision for termination of the arbitral proceedings. Under this section it is provided that the arbitral proceedings shall automatically stand terminated when final award is made. Hence, for automatic termination of the arbitral proceedings, arbitral award has to be final. Reading of section 32 unequivocally provides that only final award shall terminate the arbitral proceedings. The final award is one which decides or completes decision of claims presented.

The arbitral proceedings can also be terminated by an order of the arbitral Tribunal which order can only be passed when claimant withdraws the claim or when the parties to the reference agree on the termination of the proceeding, or the arbitral Tribunal finds that continuation of the arbitral proceeding has become unnecessary or impossible. As per clause (b) of sub-section 2 of section 32 the parties to the agreement have also been given liberty to terminate arbitral proceedings but such a request must be made to the arbitral tribunal by the parties to the proceedings and it must be accepted by the arbitral Tribunal by an order passed in that behalf. As per subsection 3 the mandate of the arbitral tribunal, can also be brought to an end with termination of arbitral proceedings subject to section 33 and sub-section (4) of section 34 of the Act.

17.In the above premises, the Act makes specific provision for commencement and termination of the arbitral proceedings. In the instant case, none of the events as contemplated under section 32 of the Act have taken place. No final award has been passed. No joint request depicting agreement of parties have been made to the arbitral tribunal to terminate proceedings. No orders have been passed by the Arbitral Tribunal as contemplated under sub-section (2) of section 32 of the Act. Therefore, it cannot be said that the arbitral proceedings have come to an end. I, therefore, hold that the arbitral proceedings have not come to an end even though the mandate of the arbitrators have come to an end.

Point No.3:

18.Under section 9 of the Act, Court has a power to grant interim reliefs for the purpose of and in relation to the arbitration proceedings. Interim reliefs are always granted only in the aid of and as ancillary to, the main relief which may be available to the party on final determination of his rights in a suit or proceedings. The Apex Court has in Cotton Corporation of India vs. United Industrial Bank, AIR 1983 SC 1272 [LQ/SC/1983/255] has laid down as under:

"It is indisputable that temporary injunction is granted during the pendency of the proceeding so that while granting final relief the court is not faced with a situation that the relief becomes infructuous or that during the pendency of the proceeding an unfair advantage is not taken by the party in default or against whom temporary injunction is sought. But power to grant temporary injunction was conferred in aid or as auxiliary to the final relief that may be granted..."

19.In State of Orissa V. Madam Gopal Rungta 1952 SCR 28 [LQ/SC/1951/60] : (AIR 1952 SC 12 [LQ/SC/1951/60] ) a Constitution Bench of the Apex Court has thus said:

"... an interim relief can be granted only in aid of, and as ancillary to, the main relief which may be available to the party on final determination of his rights in a suit or proceedings...."

Thus interim relief is granted to maintain status-quo so that final relief can appropriately be moulded without partys position being altered during pendency of the proceedings.

20.Turning to the facts of this case, the order by way of interim measure has been passed by this Court on 23.2.1998. The said order has been specifically made operative pending hearing and final disposal of the arbitral proceeding. As already found by me the arbitral proceedings have not come to an end and the same are still pending. I am told that petition under section 11 of the Act is pending for adjudication. Thus, in my opinion the interim order dated 23.2.1998 as modified by subsequent order dated 9.11.1998 shall continue to operate so long as the arbitral proceedings are not terminated in accordance with the provisions of the Act.

21.In view of above, I hold that mandate of the Arbitrators stood terminated with effect from 9.1.1999. However, arbitral proceedings are still pending, with the result the interim order dated 23.2.1998 as modified by the subsequent order dated 9.11.1998 shall continue to operate during the pendency of the arbitral proceeding. In view of above findings, the petition is partly allowed and the same is made absolute in terms of prayer (a) excluding the braketed portion. Rest of reliefs claimed in the petition are rejected. No order as to costs.