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M/s. Nandeshwar Roadways & Others v/s SREI Equipment Finance Private Ltd. & Another

    C.O. No. 1344 of 2011 (Appellate Side)
    Decided On, 12 July 2011
    At, High Court of Judicature at Calcutta
    For the Petitioners: D.S. Mallick, B.N. Jaiswal, Advocates. For the Opposite Parties: Satarup Banerjee, Advocate.

Judgment Text
Prasenjit Mandal, J.

Challenge is to the order dated March 16, 2011 passed by the learned Advocate appointed as an arbitrator under Section 16 of the Arbitration and Conciliation Act, 1996.

The question involved in this application is whether the arbitrator named in the agreement can act as the sole arbitrator in a dispute between the parties. The petitioners purchased five vehicles with the finance provided by the opposite party upon certain terms and conditions amongst which there was a clause for arbitration. It was specifically mentioned in the agreement that in case of any dispute or difference arising out of or in connection with the agreement between the parties, any dispute or difference relating to the interpretation of the agreement or any clause thereof shall be referred to the sole arbitrator of Shri Pulin Behari Das with summary powers and the provisions of the Arbitration & Conciliation Act, 1996 and Rules framed thereunder amongst other clauses. It was specifically mentioned that no objection shall be taken on the ground that the arbitrator so appointed, is an employee of the owner or is in any way associated with the owner. The venue of the arbitrary proceedings was also selected. It was indicated in the agreement that the award of the arbitrator shall be final, conclusive and binding on all parties. Subsequently, when the dispute cropped up between the parties and then the opposite party appointed Sri Pulin Behari Das as the sole arbitrator to solve the dispute. The petitioner raised objection against the proceedings of the arbitrator, raising the jurisdiction of the arbitrator and he filed an application before the arbitrator. That application was rejected by the order dated March 16, 2011. Being aggrieved, this application has been preferred.

Upon hearing the learned Counsel for the petitioner and on going through the materials on record I find that the sole arbitrator was not appointed by the Hon’ble High Court, Calcutta in exercising of the jurisdiction under Section 11 of the Arbitration & Conciliation Act, 1996. The Clause 13 of the agreement between the parties clearly lays down that in case of a dispute with regard to the execution of the said agreement, the sole arbitrator named in the agreement shall hold the Tribunal and such decision would he final. The parties have agreed to such terms and conditions. Therefore, there is no scope of avoiding that clause.

Mr. Mallick appearing on behalf of the petitioners refers to the provisions of Section 11 and thus, he mentions that in view of Section 11 of the Act, in case of any dispute, when there is no named arbitrator, the Chief Justice or any designate appointed by him is the sole authority to appoint an arbitrator for holding the Arbitral Tribunal. Thus, he submits that according to the provision of Section 11 of the 1996 Act, when the dispute arose the opposite party should have approached the Hon’ble Chief Justice for appointment of a competent and independent arbitrator to solve the adjudication between the parties. Thereafter, the Hon’ble Chief Justice or any person or any institution designated by him shall take necessary measures for securing the appointment of an arbitrator. He has referred to the provisions of Clause 11(6) of the 1996 Act and thus, he submits that the Chief Justice or any person or institution designated by him is competent to take necessary measures. With due respect to Mr. Mallick, I am of the view that the exact provision will be the to Section 11 sub4 section (2) of the 1996 Act. The parties are free to agree on a procedure for appointing the arbitrator subject to Section 11(6) of the Act.

In the instant case, the parties themselves agreed upon the terms that in case of dispute between the parties to contract the matter shall be settled through the sole arbitrator, namely, Shri Pulin Behari Das. Parties are free to make such an agreement. In the instant case, as per agreement between the parties, the opposite party appointed the sole arbitrator to solve the dispute. Notices were served upon the petitioners before appointment of the sole arbitrator named in the agreement. Thereafter, the letter of reference and also the letter of the learned arbitrator entering into the reference have been served upon the petitioners. In spite of several steps, the petitioners did not give any reply challenging the jurisdiction of the arbitrator or attempting to pay up the claim of the claimant. Then, the petitioners filed an application before the learned Tribunal for revocation of the appointment.

Thus, I find that in spite of service of notices on behalf of the claimants as well as the arbitrator, the petitioners remained inactive meaning thereby, they have waived any objection to the appointment of the sole arbitrator as per agreement. So, I am of the view that the question of revocation of the sole arbitrator does not arise at all as per agreement and conduct of the petitioners. So, the submission of Mr. Mallick for revocation of the appointment or recall of the impugned order cannot be entertained.

According to Section 16 of the 1996 Act, the Arbitral Tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, the learned Tribunal is competent to pass an award and if the party has any grievance against the report of the arbitral award, the remedy lies under Section 34 of the 1996 Act under certain conditions. Mr. Mallick has referred to the decision of Konkan Railway Corporation Ltd. & anr. v. Rani Construction Pvt. Ltd. reported in 2002(2) SCC 388 and submits that according to paragraph no.18 of the said decision, Chief Justice or his designate is entrusted to nominate an arbitrator, if within the period of 30 days no arbitrator is appointed. In the instant case, since the agreement lays down the clause of a named arbitrator to solve the dispute, I am of the view that this decision will not be applicable at all.

Similarly, Mr. Mallick has referred to the decision of Major (Retd.) Inder Singh Rekhi v. Delhi Development Authority reported in AIR 1988 SC 1007 and thus, submits that the belated filing of an application is not a bar and Article 137 of the Limitation Act would be applicable. This decision, I hold, has no relevance at all in the present case.

On the other hand, Mr. Banerjee, appearing on behalf of the opposite party, has referred to the decision of State of Jharkhand Through Executive Engineer, Swarnarekha Multipurpose Project v. R.K. Construction Pvt. Ltd. & ors. reported in 2005(2) Arb. LR 48 (Jharkhand) and thus, he submits that this case has relevance with the decision and the question of jurisdiction must be raised before the arbitrator and not by filing a revisional application under Article

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226 and 227 of the Constitution of India. This decision is not binding but the ratio decided thereon cannot be ignored in consideration of the present situation in the instant case. Having considered the above facts and circumstances, I am of the view that the learned arbitrator has rightly rejected the application for recall of the order of appointment of the arbitrator. I hold that there is nothing to interfere with the impugned order. Accordingly, this revisional application fails to succeed. It is, therefore, dismissed. Considering the circumstances, there will be no order as to costs. Urgent xerox certified copy of this order, if applied for, be supplied to the learned Advocates for the parties on their usual undertaking.