(1.) THIS is an application under Section 11 (6) of the Arbitration and Conciliation Act, 1996 (hereinafter to be referred to as 'the Act') for appointment of Arbitrator.
(2.) THE applicant was contractor in the Work of Indoor Museum at Indira Gandhi Rashtriya Manav Sangrahalaya Phase I Package II at Bhopal. This company was awarded this contract by the non-applicant. Dispute arose between the parties regarding payment of certain bills. Clause 3. 54. 1 of the agreement incorporates the arbitration clause. It is as under:-" except where otherwise provided for in the contract all questions and disputes relating to the meaning of instructions hereinbefore mentioned or as to any other question, claim, right, matter of anything whatsoever, in any arising out of or relating to the contract, specifications, estimates, instructions, orders or these conditions or otherwise concerning the works, or these execution or failure to execute the same whether arising during the progress of the work or after completion of abandonment thereof or any matter directly or indirectly connected with this agreement shall be referred to the sole arbitration of the Managing Director of IRCON and if the M. D. is unable or unwilling to act as such, then, the matter shall be referred to sole arbitration of such other person appointed by the Managing Director, IRCON, willing to act as such an Arbitrator. There will be no objection, if the Arbtirator, so appointed is an employee of IRCON provided that the person shall not have been directly connected with the execution of the work of the project. In case the Arbitrator so appointed is unable to act for any reason, the Managing Director, IRCON, in the event of such inability, shall appoint another person to act as Arbitrator in accordance with the terms of the contract. Such person shall be entitled to proceed with the reference from the stage at which it was left by his predecessor. It is also a term of this contract that no person other than a person appointed by Managing Director, IRCON as aforesaid should act as Arbitrator. " The applicant sent letter dated 7-6-2003 to the non-applicant for appointment of Arbitrator in terms of the arbitration clause mentioned above. The Managing Director of the non-applicant Company appointed Shri S. P. Mehta, Retired General Manager, Northern Railways as an Arbitrator as per letter dated 18-8-2003 (Annexure R-2). The Arbitrator fixed the preliminary hearing on 27-9-2003 as per letter dated 26-8-2003. This application for appointment of Arbitrator was submitted on 23-6-2003. It is thus clear that the Arbitrator has been appointed by non-applicant Company after the submission of the application under Section 11 (6) of the Act.
(3.) SECTION 11 (6) of the Act is as under:-
" (6) Where, under an appointment procedure agreed upon by the parties:- (a) a party fails to act as required under that procedure; or (b) the parties, or the two appointed Arbitrators, fail to reach an agreement expected of them under that procedure; or (c) a person, including an institution, fails to perform any function entrusted to him or it under that procedure, a party may request the Chief Justice or any person or institution designated by him to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment. (4.) THE above provision has been interpreted by the Supreme Court in Datar Switchgears Ltd. v. Tata Finance Ltd. , (2000) 8 SCC 151 : 2000 Arb. W. LJ. 689 (SC), in which it has been held that 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.
(5.) IN the present case the application under Section 11 (6) of the Act has been submitted on 23-6-2003 and the non-applicant Company has appointed the Arbitrator after that date by letter dated 18-8-2003 (Annexure R-2). In such a situation an Arbitrator can be appointed by me as a designate of the Chief Justice. However, an independent person has already been appointed by the non-applicant Company as Arbitrator, therefore, I am also of the view that Shri S. P. Mehta should act as Arbitrator. The words "to take the necessary measure" used in Section 11 (6) of the Act enable me to appoint a person as Arbitrator who has been nomina
Please Login To View The Full Judgment!
ted in terms of the arbitration clause if his appointment is considered just and proper. The applicant in the present case has suggested the name of some other person to act as Arbitrator but in view of the fact that Shri S. P. Mehta has already been appointed as Arbitrator by the non-applicant Company and I also think that he can act as an independent and impartial Arbitrator, therefore, I do not think it proper to appoint another person as Arbitrator. The appointment of Shri S. P. Mehta will be deemed to be an appointment under Section 11 (6) of the Act.