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Report No. 76

11.7. Importance of paragraph 3.-

It has been very often found that the time limit in paragraph 3 is exceeded; and this is the most important problem which we have to deal with. Apart from the fact that the pronouncement of an award after the expiry of the time limit raises legal problems, an important matter of which notice has to be taken is that the period of four months has been found to be unrealistic, and is hardly observed in practice. We have before us the instance of the Andaman contracts, referred to by the Public Accounts Committee. The following is an extract from the report of the Committee1:-

"3.271. The Committee are also unhappy over the manner in which the arbitration cases have been pursued. It is distressing to see that the proceedings in the first Arbitration started as far back as in July 1961 in the case of the contracts with the North Andaman Licensee and dragged on for over 5 years before reaching anything like finality, in spite of the time limit of 4 months provided in law for the completion of arbitration. The other three arbitration cases still pending settlement have taken as such as 6 years to 12 years, the Fifth Arbitration case was disposed of after 4 years. The Committee fail to understand the rationale behind the provision in the law of a limit of 4 months for the completion of arbitration when the actual time taken could be as long as 12 years.

The Committee would like the Ministry of Law to examine this aspect thoroughly in consultation with other Ministries who actually have to go in for arbitrations or have to face arbitration proceedings in cases of agreements with private firms in order to amend the law suitably. The Committee repeat that the mere provision in law of something which cannot be enforced in practice hardly carries any meaning. This present case assumes importance because although the agreement was cancelled in February 1968, the disputes which had already arisen appear paradoxically to be capable of being settled only by arbitration."

1. Public Accounts Committee (Sixth Lok Sabha, Ninth Report) (September 1977), pp. 200-201, para. 3.271.

11.8. At the same time, we have to guard against undue prolongation of arbitration proceedings because of a longer time limit. Already there is a feeling that arbitrations are unduly delayed. It has, for example, been stated by the Secretary, Department of Legal Affairs, as follows1-

"It is a fact that on quite a few occasions the public Accounts Committee has commented adversely on the working of the Arbitration Act. Their comments include, inter alia, the long delays that take place in the completion of the arbitration proceedings, the number of extensions that are obtained either by consent of the parties and through the intervention of the court and the enormous expenses incurred by way of fees payable both to the arbitrators and the counsel. In some cases the arbitration proceedings were pending for a number of years-as long as 8 to 10 years."

1. D.O. No. F. 8(15)/76-L.C. dated 27th July, 1977 from the Secretary, Department of Legal Affairs, Ministry of Law, Justice and Company Affairs, to the Member-Secretary, Law Commission of India (see Appendix).

Arbitration Act, 1940 Back

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