The Delhi High Court has rejected the Metals and Minerals Trading Corporation (MMTC) plea for the appointment of an arbitrator in a dispute involving its private vendor engaged in the export of gold jewellery on the grounds of long delay in impleading the legal representatives after the death of vender.

Justice Prathiba M Singh, in a judgment on Wednesday, said no arbitrator could now be appointed on the grounds that MMTC’s claim stood extinguished as it took four years in impleading the legal representatives of the late respondent (L C Madan) in the proceedings.

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Addressing the question framed by the bench as to whether the proceedings against Madan’s legal representatives stood abated, Justice Singh, noting that the last hearing of the first tribunal constituted in 1997 took place on September 12, 2005 in 2005 and even after being informed of Madan’s death on September 2010, MMTC took no steps till 2014 nor did it file application for impleading the legal heirs of late Madan.

Noting the “long and chequered history” of the arbitration proceedings, in the matter, which had started way back in 1997, Justice Singh said, “The proceedings which commenced in 1997 have not concluded and the Petitioner (MMTC Ltd) is now praying for appointment of another Arbitrator for constitution of the Tribunal. In the opinion of this Court, the claims of the Respondent that the proceedings stood abandoned and extinguished between 2010 to 2014 as also MMTC’s conduct thereafter would be the correct position in law as the limitation provided in Order XXII would be squarely applicable to the facts and circumstances of this case.”

In a dig at MMTC, she said, “This is a 9-year period during which the Petitioner took no steps either to activate the Arbitral Tribunal for concluding the hearings prior to the demise of the Respondent or even, thereafter, between 2010 to 2014 for impleading the legal representatives of the Respondent (late Madan).”

The MMTC had engaged late Madan as associate in its business of exporting gold jewellery and pursuance to February 23, 1993, agreement extended Packing Credit Limit of Rs. 40 Lacs and further sanctioned a Packing Credit Limit of 8 kg Gold. The same were further extended, which were to be paid after raising invoices.

The transactions continued till dispute arose involving the non-payment of certain invoices leading to the appointment of two arbitrators in 1997. The matter was at the stage of final arguments around 12th September, 2005, after which the Tribunal did not hold any hearings for reasons that are not available on record.

In February 22, 2010, Madan passed away and this information reached MMRC on September 10, 2010, in some other proceedings. But it was not until 2014, that MMTC chose to implead the legal representatives of later Madan in the arbitration proceedings. And this was clearly time barred.

Asserting that the proceedings stood abated due to long delay on the part of the MMTC in impleading the legal heirs in the mater, the legal representatives if late Madan said that the MMTC had information about the death of Madan on September, 10, 2010 but took no steps till 2014 to implead them. The legal representatives contended that under Order XXII Rule 4 CPC, the application for substitution of legal heir’s ought to have been filed within 90 days after information was received.

Addressing the “sole” ground of the MMTC Ltd that the lawyer appearing for the respondent had given the consent for appointing a nominee Arbitrator cannot take away the legal consequence of non-impleadment of legal representatives, extinguishment of the rights of the Petitioner and abatement of the proceedings. Even after 2014, no steps were taken for impleadment of legal representatives till the filing of the present petition.

Observing that the arbitral proceedings are meant to be conducted in an expeditious manner and parties are expected to take necessary steps in a diligent manner, Justice Prathiba M. Singh said, “MMTC being a corporate entity, having the legal resources, ought to have taken steps. It cannot keep the family of a deceased business associate embroiled in litigation indefinitely and forever. “

She further said, “Moreover, in the opinion of this Court, an arbitration which commenced way back in 1997 cannot be allowed to be prolonged for such a long time. It was up to the claimant/ Petitioner to avail of its remedies in accordance with law to ensure that the arbitral proceedings conclude expeditiously. The legal representatives of the deceased Respondent cannot be left with the hanging sword of an arbitral proceeding, especially, in the facts and background set out above.”