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Jyoti Sarup Mittal v/s Water and Power Consultancy Services (India) Ltd.

    ARB.P.No.71 of 2005

    Decided On, 13 July 2006

    At, High Court of Delhi


    For the Petitioner: Anusuya Salwan, Advocate. For the Respondent: Pawan Upadhyay, Advocate.

Judgment Text

Vikramajit Sen, J. (Oral)

1. This Petition filed in March, 2005 under Section 11 of the Arbitration and Conciliation Act (hereinafter referred to as ‘the Act') is for the appointment of an Arbitrator. Learned counsel for the Applicant has stressed on sub-Section (6) of Section 11 of the Act. The parties are governed by an Arbitration Clause which, paraphrased, stipulates that in case any disputes arise between them, either party shall forthwith give to the other a written notice of such dispute or differences which shall be referred to the sole arbitration of the C.M.D., WAPCOS.

2. By letter dated 23.3.2004 the Applicant had requested the C.M.D. of the Respondent, who incidentally is also the Sole Arbitrator contemplated in the Arbitration Clause, to send a panel of 4-5 names for approval of one of them for appointment of Arbitrator. However, by a separate letter of even date the Applicant had drawn reference to the aforementioned Clause 79 and had stated that the sole Arbitrator would be the C.M.D., WAPCOS. The Applicant also submitted their disputes/claims under Section 12 of the Act. Thereafter the Applicants continued to agitate their demand for furnishing of four or five names of Arbitrators, whilst reiterating their accusation that the named sole Arbitrator was biased.

3. There appears to be no dispute that the first communication that had been addressed by the Sole Arbitrator viz. the C.M.D., WAPCOS, is dated 12.8.2005, by which the Sole Arbitrator called upon both the parties to appear before him. The contention of learned counsel for the Applicant is that it is this date which must be taken into reckoning so far as the appointment of the Arbitrator or assumption of his duties is concerned; it is the date on which the sole Arbitrator `entered upon the Reference.'

4. Reliance has been placed by learned counsel for the Applicant on the decision in Datar Switchgears Ltd. vs. Tata Finance Ltd., (2000) 8 Supreme Court Cases 151, in which the Supreme Court had not overruled the approach towards the appointment of an Arbitrator in B.W.L. Ltd. vs. M.T.N.L., (2000) 2 Arb. LR 190 : (2000) 85 DLT 84 (Del). The following paragraph of Datar Switchgears has been read out in detail by the learned counsel for the Applicant-

“19. So far as cases falling under Section 11(6) are concerned such as the one before us no time limit has been prescribed under the Act, whereas a period of 30 days has been prescribed under Section 11(4) and Section 11(5) of the Act. In our view, therefore, so far as Section 11(6) is concerned, if one party demands the opposite party to appoint an arbitrator and the opposite party does not make an appointment within 30 days of the demand, the right to appointment does not get automatically forfeited after expiry of 30 days. If the opposite party makes an appointment even after 30 days of the demand, but before the first party has moved the court under Section 11, that would be sufficient. In other words, in cases arising under Section 11(6), if the opposite party has not made an appointment within 30 days of demand, the right to make appointment is not forfeited but continues, but an appointment has to be made before the former files application under Section 11 seeking appointment of an arbitrator. Only then the right of the opposite party ceases. We do not, therefore, agree with the observation in the above judgments that if the appointment is not made within 30 days of demand, the right to appoint an arbitrator under Section 11(6) is forfeited.”

5. The Apex Court has overruled the opinion of the Andhra Pradesh High Court in Sharma and Sons vs. Engineer-in-Chief, (2000) 2 Arb. LR 31 (AP) to the effect that in view of Section 11 (6) read with Section 11 (8) the respondents had forfeited its right to appoint an arbitrator after the expiry of thirty days from the date of the demand for an arbitrator. Datar Switchgears reiterates that the Court has to respect the terms of the contract entered into by the parties and endeavour to give importance and effect to it. When the party has not disputed the arbitration clause, normally he is bound by it and obliged to comply with the procedure laid down under the Clause. It needs to be clarified that it also does not flow from this ruling that the Court cannot or ought not to appoint the person named as the Sole Arbitrator in the contract. Of course, ordinarily the Court may not do so if the bias of that person is palpably present. The discretion of the Court to appoint the named Arbitrator, even post the filing of an application under Section 11 is not foreclosed.

6. In this regard reliance has also been placed on the decision in Batavarlal M. Patel vs. NBCC Ltd., 2004 (3) Arb. LR 97 (Delhi).

7. R.S. Avtar Singh and Co. vs. India Tourism Development Corporation Ltd., AIR 2003 Delhi 249, has been quoted by learned counsel for the Applicant in order to make good her submission that the first and relevant date when the named sole-arbitrator entered upon the Reference is 12.8.2005 since prior thereto no communication had been received by the Applicant. My learned brother Manmohan Sarin, J. had reverted to the decision in Bachhittar Singh vs. State of Punjab, AIR 1963 SC 395, to conclude that the order of appointment of the Arbitrator would be taken to have been made when communicated and received by the Arbitrator and the concerned party. Ms.Salwan has also drawn my attention to Gujarat Water Supply and Sewerage Board vs. Unique Erectors (Gujarat) (P) Ltd., (1989) 1 Supreme Court Cases 532, in which in para 15 the Court computed interest commencement from the date of which the Arbitrator entered upon the reference.

8. These judgments, however, do not persuade me, in the case in hand, to set aside the functioning of the sole Arbitrator. Section 11 comes into play only where an Arbitrator has to be appointed. It would be a contradiction in terms if this section applies to a situation where a Sole Arbitrator is explicitly agreed upon. The argument that the sole Arbitrator could be considered to have started functioning only on the date of which he enters upon the reference is not acceptable. The parties were aware that their claims have to be submitted before the Sole Arbitrator and this was so done by the Applicant itself. So far as the Applicant was concerned it repeatedly remonstrated against the sole Arbitrator continuing with the arbitration on the unsubstantiated grounds that he was biased. In the present case the sole Arbitrator had made a declaration that he has no personal interest in the subject of the dispute pending between the Applicant and Respondent in terms of his letter dated 12th August, 2005. Nothing has been shown to me to convince me of this allegation of bias.

9. From the standpoint and perspective of the Applicant it has already laid the foundation for a possible assault on the Award on the ground of bias in the future. Furthermore, if there is a delay in the proceedings, legal action under other provisions of the Act are available to the Applicant, as has been observed in Batavarlal. In the present lis I would prefer to pursue the path taken by single Judge of this Court in Haryana Telecom Ltd. vs. Union of India, 2003 (Suppl.) Arb. LR 488 (Delhi), wher

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e Section 11 (5) and (6) of the Act have been held to be inapplicable in the event that the named arbitrator was in position as Arbitrator on the date notice ..... demanding appointment of Arbitrator was issued by the Petitioner. 10. Since the Arbitration Clause in the present case envisages the settlement of disputes by a Sole Arbitrator, his jurisdiction would be attracted as soon as a party, in this case the Applicant, submits its Claims before him. If he fails to act in a timely manner, or if he is or he conducts the proceeding with bias that would enable the aggrieved party to ask for his removal. It would not enable such party to invoke Section 11 of the Act. For these reasons, I do not find merit in the application which is rejected. 11. There shall be no orders as to costs.