Supreme Court Directs Timely Disposal of Arbitration Cases under M.P. Act, 1983

Date of the Judgment: April 19, 2018
Citation: Civil Appeal No(s). 4250 of 2018 (Arising out of SLP (C) No(s).24172 of 2017)
Judges: Adarsh Kumar Goel, J., Rohinton Fali Nariman, J.
Can arbitration proceedings be allowed to drag on for years, defeating the very purpose of a speedy dispute resolution mechanism? The Supreme Court of India recently addressed this critical question in a case concerning the M.P. Madhyastham Adhikaran Adhiniyam, 1983, emphasizing the need for timely disposal of arbitration matters. The Court, while disposing of the appeal, issued directions to ensure that arbitration proceedings under the Act are concluded within a reasonable timeframe. The judgment was authored by Justice Adarsh Kumar Goel and Justice Rohinton Fali Nariman.

Case Background

M/s Essel Infra Projects Ltd. (the appellant) had approached the Supreme Court, highlighting the significant delays in the disposal of arbitration proceedings under the M.P. Madhyastham Adhikaran Adhiniyam, 1983 (the M.P. Act, 1983). The appellant pointed out that these proceedings often took up to five years or even longer, thus frustrating the very objective of a speedy dispute resolution mechanism. The State of Madhya Pradesh (the respondent) did not dispute that such delays were occurring in some cases. The core issue was the lack of timeliness in the arbitration process under the M.P. Act, 1983, which was intended to be a quick alternative to traditional litigation. The appellant sought directions from the Supreme Court to ensure that these proceedings are concluded within a reasonable timeframe.

Timeline

Course of Proceedings

The case reached the Supreme Court via a Special Leave Petition (SLP) filed by M/s Essel Infra Projects Ltd. The appellant was aggrieved by the inordinate delays in the arbitration proceedings under the M.P. Act, 1983. The Supreme Court granted leave to consider whether any direction was required for timeliness in the disposal of these proceedings. The Court noted the submissions of the appellant regarding the delays and the State’s acknowledgment of the same.

Legal Framework

The primary legal framework in question was the M.P. Madhyastham Adhikaran Adhiniyam, 1983 (M.P. Act, 1983). The Act was enacted to provide a mechanism for speedy dispute resolution through arbitration. The Supreme Court observed that the object of the legislation was to ensure a quick and efficient alternative to traditional court proceedings. However, the delays in the arbitration process were undermining the very purpose of the Act. The Supreme Court did not specify any particular section of the M.P. Act, 1983 but focused on the overall objective of the legislation.

Arguments

Appellant’s Submissions:

• The appellant, represented by Sh. Parag Tripathi, senior counsel, submitted that the Tribunal proceedings under the M.P. Act, 1983, were taking an unreasonably long time, often up to five years or more.
• The appellant argued that such delays defeated the purpose of the legislation, which was to provide a speedy dispute resolution mechanism.

Respondent’s Submissions:

• The State of Madhya Pradesh, represented by its counsel, did not dispute that delays were occurring in some cases.
• The State did not provide any specific reasons for the delays or suggest any measures to address them.

The main argument of the appellant was that the delays in arbitration proceedings were unacceptable and needed to be addressed, while the respondent acknowledged the existence of such delays without offering any counter-arguments or solutions. The innovativeness of the appellant’s argument lies in bringing to the Supreme Court’s notice the practical ineffectiveness of the M.P. Act, 1983 in achieving its stated objective of speedy dispute resolution due to the procedural delays.

Issues Framed by the Supreme Court

The Supreme Court framed the following issue for consideration:

1. Whether any direction is required for timeliness in disposal of proceedings under the M.P. Madhyastham Adhikaran Adhiniyam, 1983 (M.P. Act, 1983).

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Supreme Court referred to the judgment in Krishnakant Tamrakar Vs. State of Madhya Pradesh [Criminal Appeal No.470 of 2018], dated 28.03.2018. This case was cited in connection with the need for statutory amendments if timelines for speedy disposal cannot be achieved. The court did not rely on any other authorities.

Judgment

The Supreme Court disposed of the appeal with specific directions to ensure timely disposal of arbitration proceedings under the M.P. Act, 1983. The Court emphasized that the object of the legislation was to provide a speedy dispute resolution mechanism, and the State must monitor timeliness to ensure that arbitration proceedings do not take unduly long. The Court suggested a reasonable timeframe of one to two years for the conclusion of arbitration proceedings and two years for the disposal of revision petitions in the High Court.

What weighed in the mind of the Court?

The Supreme Court’s primary concern was to ensure that the arbitration mechanism under the M.P. Act, 1983, functioned as intended, i.e., as a speedy dispute resolution mechanism. The Court was clearly influenced by the fact that the delays in the proceedings were undermining the very purpose of the legislation. The Court’s emphasis on timelines, monitoring, and the possibility of statutory amendments indicates a strong desire to make the arbitration process efficient and effective. The sentiment was that the delays were not only causing inconvenience but also defeating the purpose of the legislation.

Fact:Law Ratio:

Logical Reasoning:

The Court’s reasoning was based on the following points:

• “Having regard to the object of the legislation which is to provide speedy dispute resolution mechanism, the State must monitor timeliness so that arbitration proceedings do not take unduly long time.”
• “One to two years may, in our view, be taken as reasonable time for the purpose.”
• “In case it is found that timelines as contemplated cannot be achieved, statutory amendments be considered so as to provide remedies at any other appropriate forum.”

The Court did not consider any alternative interpretations. The decision was reached by emphasizing the need to adhere to the legislative intent of speedy dispute resolution and providing specific directions to achieve this goal.

Key Takeaways

• Arbitration proceedings under the M.P. Act, 1983, should ideally be completed within one to two years.
• Revision petitions in the High Court should be disposed of within two years.
• The State Government must monitor the timeliness of arbitration proceedings and set up adequate benches.
• The Chairman of the Tribunal must ensure no unreasonable delays occur.
• If timelines are not followed, parties can approach the Chief Justice of the High Court for directions.
• Statutory amendments may be considered if timelines cannot be achieved through the current framework.

Directions

The Supreme Court issued the following directions:

• The State must monitor the timeliness of arbitration proceedings.
• A reasonable time of one to two years should be considered for the conclusion of arbitration proceedings.
• Revision petitions before the High Court should be disposed of expeditiously, not beyond two years.
• The Chairman of the Tribunal must ensure no unreasonable delay takes place.
• The Chairman should communicate any dearth of benches to the State Government.
• The State Government must take immediate action to address the dearth of benches.
• If speedy disposal is not taking place, parties can move the Chief Justice of the High Court for directions.
• If timelines cannot be achieved, statutory amendments should be considered.

Development of Law

The ratio decidendi of the case is that arbitration proceedings under the M.P. Act, 1983, must be conducted in a timely manner, and the State has a responsibility to ensure this. The judgment does not change any previous positions of law but reinforces the importance of timely dispute resolution in arbitration and provides directions to achieve this objective.

Conclusion

The Supreme Court’s judgment in M/s Essel Infra Projects Ltd. vs. State of Madhya Pradesh is a significant step towards ensuring that arbitration proceedings under the M.P. Act, 1983, are conducted efficiently and within a reasonable timeframe. The Court’s directions emphasize the need for the State to monitor and manage arbitration proceedings effectively, thereby upholding the legislative intent of speedy dispute resolution. The judgment also provides a mechanism for parties to seek intervention from the High Court if timelines are not followed, and it highlights the need to consider statutory amendments if the current framework is inadequate.

Category

Parent Category: Arbitration Law
Child Categories:

• M.P. Madhyastham Adhikaran Adhiniyam, 1983
• Timely Disposal of Arbitration
• Speedy Dispute Resolution
• Arbitration Proceedings

Parent Category: M.P. Madhyastham Adhikaran Adhiniyam, 1983
Child Categories:

• Arbitration Proceedings
• Timely Disposal

FAQ

Q: What is the main issue in the M/s Essel Infra Projects Ltd. vs. State of Madhya Pradesh case?
A: The main issue was the inordinate delays in the disposal of arbitration proceedings under the M.P. Madhyastham Adhikaran Adhiniyam, 1983.

Q: What did the Supreme Court direct regarding the timelines for arbitration proceedings?
A: The Supreme Court directed that arbitration proceedings should ideally be completed within one to two years, and revision petitions in the High Court should be disposed of within two years.

Q: What is the role of the State Government in this matter?
A: The State Government must monitor the timeliness of arbitration proceedings, set up adequate benches, and take immediate action if there is a dearth of benches.

Q: What can parties do if timelines are not followed?
A: If timelines are not followed, parties can approach the Chief Justice of the High Court for directions.

Q: What is the significance of this judgment?
A: This judgment is significant because it emphasizes the need for timely disposal of arbitration proceedings and provides specific directions to ensure that the arbitration mechanism functions as intended.