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The Supreme Court has directed the Gujarat High Court to decide a matter involving Section 29A of the Arbitration Act, which imposes a time limit within which an arbitration is to be decided.
In doing so, the Apex Court has modified an order passed by the Gujarat High Court by which it stayed the proceedings of the arbitration in question.
By way of background, various disputes had arisen between Col. Manbhupinder Singh Atwal and the erstwhile partners of C2R Projects LLP. Atwal, along with two other partners of the LLP, invoked arbitration proceedings against the Neeraj Kumarpal Shah and other partners, seeking recovery of sums to the tune of about Rs. 76.34 crore.
The Supreme Court in 2017 had directed that the arbitration between the two parties in question would commence from the date on which the first sitting of the Arbitral Tribunal takes place. That date, according to the petitioners before the High Court (NK Shah and others), was February 1, 2018. The Tribunal was presided by former Gujarat High Court judge, Justice MB Shah.
As per Section 29A(1), the arbitral tribunal is required to pass the award within twelve months from the date on which it begins proceedings. Section 29A(3) allows for an extension of this time period by six months, provided there is consent by both parties.
Around ten months into the arbitration, the respondent before the High Court (Atwal) wrote a letter making allegations against the Tribunal, and refusing to take part in the proceedings. He had further refused to give his consent for extension for the time period of the arbitration. Thus, he filed an application under Section 17 for interim measures.
Two members of the Tribunal - Justice Shah and Justice GD Nanavati - however, passed a standing order rejecting the Section 17 application. On the day the order was sent to Justice JM Panchal - the third arbitrator - he decided to resign from the Tribunal. Former Supreme Court judge Panchal J had cited the respondents’ constant attempt to delay the proceedings as the reason for his resignation. Shortly after, the presiding arbitrator, Justice Shah, also resigned.