2002 Supreme(SC) 991

2002(7) Supreme 113
SUPREME COURT OF INDIA
R.C. Lahoti, J.
M/s. Grid Corporation of Orissa Ltd. -Petitioner
versus
M/s. AES Corporation & Ors. -Respondents
Arbitration Petition No.......of 2002
(D.No. 3059 of 2002)
Decidefd on 1-10-2002
Counsel for the Parties :
For the Petitioner : G.L. Sanghi, Sr. Advocate, Raj Kumar Mehta, Ms. M. Sarada, Ms. Suman Kukreti, Advocates.
For the Respondents : P. Chidambaram, Sr. Advocate, Ms. Pallavi S. Shroff, T. Srinivasa Murthy, Advocate. for M/s Suresh A. Shroff & Co., Advocates.

VERY IMPORTANT POINT
A conjoint petition under Section 11(6) and Section 16 of the Arbitration and Conciliation Act, 1996 would not lie. Nor S. 11(6) petition alone would be an appropriate remedy in the facts of the case. The same is thus dismissed.

Headnote:(i) Arbitration and Conciliation Act, 1996-Petition under Section 11(6) and Section 14-Principal relief sought for in the petition is "appoint the third and presiding arbitrator to constitute the arbitral Tribunal to adjudicate upon the disputes and differences between the parties"-Whether such a joint petition maintainable? (No).

       Held : Let it be stated at the very outset that a conjoint petition under Section 11(6) and Section 14 of the Act would not lie for the simple reason that the petition under Section 11(6) is to be heard and decided by the Chief Justice or any person or institution designated by him while a petition under Section 14 of the Act lies to the Court. With the decision of the Constitution Bench in Konkan Railway Corporation Ltd. & Anr. v. Rani Construction Pvt.Ltd., (2002) 2 SCC 388, it is settled that the Chief Justice or his designate does not discharge any judicial function under Section 11(6). The Chief Justice or his designate, though a Judge, does not sit as a Court. The two fora, contemplated by Section 11(6) and Section 14(2) are different, and therefore, no single forum can grant such reliefs as are contemplated by the two provisions. (Para 2)

       (ii) Arbitration and Conciliation Act, 1996-Section 11(6)-Petition to appoint the third and presiding arbitrator to constitute the arbitral Tribunal to adjudicate upon the disputes and differences between the parties-No deficiency found in the constitution of the arbitral tribunal attributable to any of the parties or their arbitrators-Result-Petition under Section 11(6) is not an appropriate remedy-The same is dismissed.

       Held : Whether the appointment of the third arbitrator should necessarily be done by the two appointed arbitrators by sitting together and in writing? Are they required to consult the parties too, while doing so, or at lease, to put the parties on previous notice? Primarily it is for the parties to agree upon a procedure for appointing the arbitrator or arbitrators. Failing such agreement, sub-section (3) of Section 11 of the Act provides that in an arbitration with three arbitrators, each party shall appoint one arbitrator, and the two appointed arbitrators shall appoint the third arbitrator who shall act as the presiding arbitrator. The law nowhere contemplates such appointment being necessarily in writing. The requirement of the law is that there should be an appointment and the appointment should be by the two appointed arbitrators. (Para 18)

       In my opinion, it is not necessary within the meaning of Section 11(3) that the presiding arbitrator must be appointed by the two appointed arbitrators in writing nor it is necessary that the two appointed arbitrators must necessarily sit at one place, deliberate jointly and take a decision in the presence of each other in regard to the appointment of the presiding arbitrator. It is enough if they have actually consulted or conferred with each other and if both or any of them communicates to the parties the appointment of the presiding arbitrator as having taken place by the joint deliberation of the two. It is clearly spelled out from the correspondence between the two arbitrators reproduced hereinabove that the two arbitrators had agreed on principle that the third arbitrator shall be of a nationality different from the one to which either of the parties belongs. They had also agreed upon the appointment of Mr. Williams. The communication of such appointment though made by Mr. Donovan is on behalf of himself and Mr. Verma. The correctness of such consultation having preceded the appointment is not doubted in the correspondence and has also not been disputed by the learned senior counsel for the petitioners during the course of hearing. Mr. Verma s protest to appointment of Mr. Williams was based on re-consideration of the issue, that is, on second thoughts. The practice adopted by the two arbitrators is consistent with the practice of International Commercial Arbitration and conducive to the convenience of the parties and also saves them from avoidable expenditure. When an effective consultation can be achieved by resort to electronic media and remote conferencing it is not necessary that the two persons required to act in consultation with each other must necessarily sit together at one place unless it is the requirement of law or of the ruling contract between the parties. The appointment need not necessarily be by a writing signed by the two arbitrators; it satisfies the requirement of law if the appointment (i) has been actually made, (ii) is preceded by such consultation as to amount to appointment by the two, and (iii) is communicated. It is not essential to the validity of the appointment that the parties should be consulted, or involved in the process of appointment or given a previous notice of the proposed appointment. (Para 23)

       The next question is : whether it can be said that Mr. K.B. Verma while agreeing for appointment of Mr. Williams as third arbitrator was under a mistake as to Indian law, and if so, then its effect? There is no quarrel with the abovesaid proposition. Yet, there is nothing wrong in the two arbitrators having formed an opinion in consultation with each other that a person of third nationality would be preferable as presiding arbitrator. The submission based on "mistake of law" doctrine is unwarranted and besides the point. (Para 24)

       Held finally : Once the arbitral tribunal has come into existence, as it has - in my opinion in the facts and circumstances of the case, a petition under Section 11(6) of the Act is not an appropriate remedy which the petitioners have chosen. None of the grounds contemplated by clauses (a), (b) and (c) of sub-section (6) of Section 11 exists. There is no deficiency in the constitution of the arbitral tribunal attributable to any of the parties or the arbitrators. There is no occasion for filing a request petition under Section 11(6) of the Act. The petition is dismissed. (Paras 25 & 26)