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2007 Supreme(SC) 453
SUPREME COURT OF INDIA
A.K. Mathur & Tarun Chatterjee
Ace Pipeline Contracts Private Limited-PETITIONER
VERSUS
Bharat Petroleum Corporation Limited-RESPONDENT
Appeal (civil) 1783 of 2007
[ ARISING OUT OF S.L.P.(C) NO.6073 OF 2006]
DECIDED ON : 04/04/2007
Under Section 11(6) of the Arbitration and Conciliation Act, 1996, the 30-day limitation for appointing an arbitrator does not apply. The right to appoint under an agreed procedure is not forfeited after 30 days but persists until the party moves the court for appointment.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Sections 11(4), 11(5), and 11(6) - Appointment of Arbitrator - Time limit for appointment - The statutory period of thirty days mentioned in Sub-sections (4) and (5) of Section 11 is not applicable to Sub-section (6). In cases where the parties have agreed upon a procedure for appointment, the right to appoint an arbitrator is not automatically forfeited upon the expiry of thirty days from the date of demand; rather, the right continues until the requesting party moves the court under Section 11 seeking the appointment of an arbitrator.
(B) Arbitration - Independence and Impartially - When parties enter into an agreement with a specific appointment procedure, they cannot subsequently challenge the appointment on the ground of lack of impartiality if the appointment follows the agreed terms. Any allegation of bias or malice can be agitated subsequent to the award under Section 34 of the Act.
Facts of the case:
Under a contract for laying a pipeline, an arbitration clause stipulated that disputes would be referred to a sole arbitrator appointed by a designated authority within the respondent corporation, who could nominate any officer of the corporation. The appellant requested that a retired judge be appointed to ensure independence. The respondent subsequently nominated an officer of the corporation as the sole arbitrator. The appellant approached the high court under Section 11(6) of the Act, contending that the respondent had lost the right to appoint an arbitrator after the expiry of thirty days from the date of the request. The high court dismissed the application, finding that the appointing authority had acted with due dispatch.
Findings of Court:
The court found that the thirty-day limitation period is only provided under Sub-sections (4) and (5) of Section 11 and is not mentioned in Sub-section (6). Since the appointment was made by the respondent before the appellant filed the application under Section 11(6), the appointment was valid.
Issues: Whether the thirty-day limitation period prescribed in Sections 11(4) and 11(5) of the Arbitration and Conciliation Act, 1996, applies to the appointment procedure agreed upon by parties under Section 11(6) of the Act.
Ratio Decidendi: The court ruled that for cases falling under Section 11(6), there is no prescribed time limit in the Act for the appointment of an arbitrator. The right of the opposite party to make an appointment is not forfeited after thirty days of demand but continues until the party seeking appointment files an application before the court. Thus, the thirty-day limit cannot be read into Section 11(6) by analogy from other sub-sections.
Result: Appeal dismissed.
Legal Category Hierarchy
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arbitration and conciliation
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appointment of arbitrator
- procedure under section 11
- time limit for appointment
- grounds for objection to arbitrator
- court's power to appoint arbitrator
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appointment of arbitrator
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practice and procedure
- arbitration
JUDGMENT:
A.K.MATHUR, J.
Leave granted.
This appeal is directed against the order dated 18.1.2006 passed by learned Single Judge of the High Court of Delhi in Arbitration Petition No.181 of 2005 whereby learned Single Judge dismissed the application for appointment of Arbitrator. Hence, the
present appeal against the aforesaid order.
Brief facts which are necessary for disposal of this appeal are that an application styled under Section 11(5) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act) was moved by the Ace Pipeline Contracts Private Limited, the appellant herein, for appointing a retired Judge of the Supreme Court of India to adjudicate the claims and disputes between the parties arising out of the contract between the parties dated 10.06.2002. The said contract pertained to the laying down of a pipeline and associated facilities for Section-1 [Manmad in Maharashtra to M.P. Border near (Shirpur)] for Mumbai-Manmad Pipeline Extension Project of the respondent- Bharat Petroleum Corporation Limited (hereinafter referred to as BPCL). The main issue was with regard to interpretation of Clause 91 of the contract which pertains to appointment of arbitrator. Clause 91 of the contract reads as under :
"91. ARBITRATION
All disputes or differences whatsoever which shall at any time arise between the parties hereto touching or concerning the works or the execution or maintenance thereof under this Contract or the right touching or concerning the works or the execution or the maintenance effect thereof or to the rights or liabilities of the parties or arising out of or in relation thereto whether during or after completion of the contract or whether before or after determination foreclosure or breach of the Contract (other than those in respect of which the decision of any person is by the Contract expressed to be final and binding)
shall after written notice by either party to the Contract to the other of them and to the Appointing Authority be referred for adjudication, to a sole Arbitrator to be appointed as hereinafter provided.
a.Any dispute or difference of any nature whatsoever any claim, cross-claim, counter-claim or set off of the Corporation against the Vendor 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 Director (Marketing) of the Corporation or of some officer of the Corporation who may be nominated by the Director (Marketing). The Vendor 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 dealt 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 on all or any other 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 Director (Marketing) as aforesaid at the time of such transfer, vacation of office or inability to act may in the discretion of the Director (Marketing) designate another person to act as Arbitrator in accordance with the terms of the agreement to the end and intent that the original Arbitrator shall be entitled to continue the arbitration proceedings notwithstanding his transfer or vacation of office as an Officer of the Corporation if the Director (Marketing) does not designate another person to act as arbitrator on such transfer, vacation of office or inability of original arbitrator. Such persons 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 Director (Marketing) or a person nominated by such Director (Marketing) of the Corporation as aforesaid shall act as an Arbitrator hereunder. The award of the Ar
