Supreme Court sets aside judgment, emphasizes adherence to arbitration terms.

The Supreme Court allowed the appeal, setting aside the High Court's judgment. It held that the Arbitrator's mandate had expired, and the appellants had not waived their right to enforce the time limit. The respondents were granted the liberty to pursue their grievances as permissible under the law. The judgment underscores the importance of adhering to the agreed terms of arbitration and the limitations on extending arbitration timelines without mutual consent.

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Issues Involved:
1. Waiver of right to extension of time for arbitration proceedings.
2. Validity of the arbitration agreement.
3. Arbitrator's mandate and functus officio status.
4. Jurisdiction of the Court to extend arbitration time.

Issue-wise Detailed Analysis:

1. Waiver of right to extension of time for arbitration proceedings:
The High Court dismissed the Arbitration Petition, holding that the appellants had waived their right to enforce the time limit for arbitration proceedings by their conduct. The appellants participated in the arbitration proceedings beyond the stipulated four months without raising timely objections. The Supreme Court, however, overturned this decision, emphasizing that the appellants had consistently objected to the extension of time and had not waived their rights.

2. Validity of the arbitration agreement:
The appellants contended that the arbitration agreement dated 28th April 2000 was collusive and forged. Despite this, the arbitration proceedings continued, with the High Court and the Arbitrator addressing the validity and enforceability of the agreement. The Supreme Court noted that the appellants had raised objections regarding the agreement's validity, but the focus of the judgment was on the procedural aspects of the arbitration timeline.

3. Arbitrator's mandate and functus officio status:
The Arbitrator was required to make an award within four months from the first preliminary meeting, as per the arbitration agreement. The Arbitrator's mandate expired on 4th September 2007, and the appellants refused to consent to an extension. The Arbitrator continued proceedings, but the Supreme Court held that the Arbitrator became functus officio after the stipulated period, rendering further proceedings invalid.

4. Jurisdiction of the Court to extend arbitration time:
The Supreme Court highlighted that under the Arbitration and Conciliation Act, 1996, the Court does not have the power to extend the arbitration time without the consent of both parties. This limitation contrasts with the 1940 Act, which allowed the Court to extend time. The Supreme Court cited the case of NBCC Limited Vs. J.G. Engineering Private Limited, emphasizing that the Arbitrator's mandate automatically terminates if the time is not extended by mutual consent.

Conclusion:
The Supreme Court allowed the appeal, setting aside the High Court's judgment. It held that the Arbitrator's mandate had expired, and the appellants had not waived their right to enforce the time limit. The respondents were granted the liberty to pursue their grievances as permissible under the law. The judgment underscores the importance of adhering to the agreed terms of arbitration and the limitations on extending arbitration timelines without mutual consent.

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