Mr. R.Abhinav, learned counsel for the Petitioner.
Mr.B.K.Sridhar, learned counsel for the Respondent.
The petition is admitted for hearing. With the consent of the learned Counsel for the parties, the same is heard finally.
2. By means of this petition under Section 11(5) of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as 'the Act', for short), the petitioner inter alia seeks for constitution of Arbitral Tribunal in pursuance of the Agreement dated 30.03.1990 executed between the parties.
3. The facts giving rise to the filing of this petition are briefly stated that the parties had entered into a Dealership Agreement on 30.03.1990. Clause-68 of the aforesaid Agreement contains the arbitration clause which reads as under:-
"68. Any dispute or difference of any nature whatsoever or regarding any Right, Liability, Act, Omission or Account of any of the parties hereto arising out of or in relation to this agreement shall be referred to the Sole Arbitration of the Managing Director of the Corporation or of some officer of the corporation who may be nominated by the Managing Director. The dealer will not be entitled to raise any objection to any such Arbitrator on the ground that the Arbitrator is an Officer of the Corporation or that he has to deal with the matters to which the contract relates or that in the course of his duties as an Officer of the Corporation he had expressed views n all or any of the matters in dispute or difference. In the event of the Arbitrator to whom the matter is originally referred being transferred or vacating his office or being unable to act for any reason the Managing Director as aforesaid at the time of such transfer, vacation of office of inability to Act, shall designate another person to act as Arbitrator in accordance with the terms of the agreement such person shall be entitled to proceed with the reference from the point at which it was left by his predecessor. It is also a term of this contract that no person other than the Managing Director or a person nominated by such Managing Director of the Corporation as aforesaid shall act as Arbitrator hereunder. The award of the Arbitrator so appointed shall be final, conclusive and binding on all parties to the agreement, subject to the provisions of the Arbitration Act, 1940 or any statutory modification of or re-enactment thereof and the Rules made thereunder and for the time being in force shall apply to the arbitration proceedings under this clause.
4. Thus, from Clause-68, it is evident that the parties had agreed that the arbitration shall be conducted with any statutory modification or reenactment thereof and the Rules made thereunder and for the time being in force shall apply to the arbitration proceedings under the clause.
5. The petitioner gave a Notice on 31.01.2017. The Respondent responded to the aforesaid Notice by submitting a reply on 20.03.2017 and stated that the claim of the petitioner seeking appointment of an Arbitrator is not maintainable. In the aforesaid factual background, the petitioner has approached this Court by way of present petition.
6. Learned counsel for the petitioner submitted that in view of Section 85(2)(a) of the Act, petitioner invoked the provisions of the Act as the parties under Clause-68 of the Agreement had agreed that if there is any re-enactment or modification, the same shall apply to the arbitration proceedings in respect of the dispute between the parties. In support of the aforesaid submission, reliance has been placed on the following decisions of the Hon'ble Apex Court;
(i) MMTC Ltd., vs. Sterlite Indistries (India) Ltd, (1996) 6 SCC 716,
(ii) Thyssen Stahlunion GMBH vs. Steel Authority of India Ltd., (1999) 9 SCC 334 and
(iii) Shetty s Constructions Co. Pvt. Ltd. Vs. Konkan Railway Construction, (1998) 5 SCC 599.
7. On the other hand, learned counsel for the Respondent submitted that the amendment which was made in the Arbitration and Conciliation Act, 1996, is prospective in nature and therefore, the same does not apply to the fact situation of the case and the dispute has to be adjudicated by the Managing Director of the Respondent-company.
8. By way of rebuttal, learned counsel for the petitioner submitted that the petitioner's claim is against the Managing Director and he cannot be permitted to judge his own cause.
9. I have considered the submissions made by the learned counsels for the parties and I have perused the records.
10. Section 85(2)(a) of the Act, reads as under:-
" 85. Repeal and Saving. - (1) The Arbitration (Protocol and Convention) Act, 1937 (6 of 1937), the Arbitration Act, 1940 (10 of 1940) and the Foreign Awards (Recognition and Enforcement) Act, 1961 (45 of 1961) are hereby repealed.
(2) Notwithstanding such repeal, -
(a) the provisions of the said enactments shall apply in relation to arbitral proceeding which commenced before this Act came into force unless otherwise agreed by the parties but this Act shall apply in relation to arbitral proceedings which commenced on or after this Act comes into force."
11. Thus, it is evident that if arbitration proceedings had commenced, after the enactment of the Act and the parties have agreed to refer the dispute under the 1996 Act, they can take recourse to the provisions of the 1996 Act. The reference in this connection may be made to the decision of the Hon'ble Apex Court in the case of Shetty's Constructions Co.Pvt. Ltd. (supra).
12. In the instant case, there is a need to appoint an independent Arbitrator, as the petitioner has made the allegations against the Managing Director of the Respondent-company itself. It is well settled in law that a person cannot be permitted to judge his own cause. In the facts and circumstances of the case, it is not necessary for this Court to consider the question, whether or not, the provisions of the 1996 Act as amended by Arbitration and Conciliation (Amendment) Act, 2015, apply to the fact situation of the case.
13. In view of the three Judges Bench decision of the Hon'ble Supreme Court in the case of 'M/S. DEEP TRADING COMPANY VS M/S. INDIAN OIL CORPORATION & ORS., (2013) AIR SC 1479', wherein by taking into account Section 8 of the Act, the Hon'ble Supreme Court has held that where a party fails to act under the agreed procedure for appointment of an Arbitrator, such a party forfeits the right to appoint the Arbitrator and in view of Section 11(8) of the Act, appoint an independent Arbitrator.
14. In view of the aforesaid law laid down by the Hon'ble Supreme Court, I deem it appropriate to appoint an independent Arbitrator to adjudicate the dispute arisen between the parties.
15. Accordingly, at this stage, learned counsels for the parties have jointly submit that Mr.H.S.Ramanna, Retired District Judge, to be appointed as a sole Arbitrator to adjudicate the dispute between the parties.
16. In view of the preceding a
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nalysis, the petition filed by the petitioner under Section 11(6) of the Act succeeds and is hereby allowed. In view of the aforesaid submissions and as prayed by the learned counsels for the parties, Mr. H.S.Ramanna, Retired District Judge is appointed as sole Arbitrator to adjudicate the dispute between the parties. A copy of this order be dispatched to the Arbitration Centre, Khanija Bhavan, Bengaluru, for necessary action in that regard. Learned counsel for the petitioner to also approach the Arbitration Centre with the relevant papers to be filed therein. The learned Arbitrator appointed herein shall thereupon enter reference and proceed with the matter in accordance with law and the Rules governing the Arbitration Centre. Accordingly, petition is disposed of.