2007 Supreme(SC) 1057

2007(5) Supreme 934
Supreme Court of india
(From Delhi High Court)
H.K. Sema & Lokeshwar Singh Panta, JJ.
Union of India — Petitioner
versus
M/s Bharat Battery Manufacturing Co. (P) Ltd. — Respondent
Appeal (Civil) 3692 of 2007
[Arising out of SPL (P) No. 19881 of 2006)
Decided on : 13-08-2007

important point
Once Section 11(6) petition is filed before the Court, seeking appointment of an arbitrator, the power to appoint an arbitrator in terms of arbitration clause of the agreement ceases.

Headnote:(a)Arbitration and Conciliation Act, 1996 – Section 11(8) – Once Section 11(6) petition is filed before the Court, seeking appointment of an arbitrator, the power to appoint an arbitrator in terms of arbitration clause of the agreement ceases. (Para 9)

       (b)Arbitration and Conciliation Act, 1996 – Section 11(8) – In view of the Appellant failing to appoint sole arbitrator within 30 days of invoking of the arbitration clause by the respondent, provisions of Section 11(8) of the Act do not get attracted – Appointment of sole arbitrator after filing of application u/s 11(6) is not permissible. (Para 9, 15 and 16)

       (2006) 2 SCC 638 – Relied upon.

       (2004) 10 SCC 504; (1992) 3 SCC 608 – Distinguished.

       Facts of the case :

       In response to an invitation to tender inquiry No. A.M-5/RC-14100105/072003/ WT/ BTYS/ Defence/ 2003-04/ 75 for supply of battery secondary lead acid, an offer dated 7.10.2002 was submitted which was revised by letter dated 8.4.2003. On the basis of the revised offer dated 8.4.2003 a rate contract No. AM-5/RC-14100105/ 072003/ WT/ BTYS/ DEF/ 2003-04/ 75/ BHARAT/ COAC/ 185 dated 5.5.2003 for the period 5.5.2003 to 16.3.2004 was executed between the appellant and the respondent. Clause 12 of rate contract entered into between the parties contained a price variation clause. As the variation factor of the batteries, on account of fluctuation of lead price had not been incorporated, the respondent made a request to the appellant to incorporate the same. The respondent herein also requested the appellant to issue amendment towards rate of sales tax. It appears that the said request was complied with almost after one year by a letter dated 2.7.2004. However, it is alleged that during the pendency of the rate contract, the appellant issued a supply order No. 01/ RC/Z9/BTY/ 047/ BHARAT/ 2004-05 dated 16.3.2004 for supply of 19,021 batteries. The respondent herein supplied the same to the appellant. The respondent also submitted detailed calculation of unit price of battery as per price variation clause and the photocopies of Hindustan Zinc Price Circular. It is contented that although the appellant continued to receive the batteries but did not issue the amendment with respect to price variation clause for the quarter April to June, 2004, July to September 2004, October to December 2004, January to March 2005, April to June 2005, July to September 2005, October to December 2005 and January to March 2006. As the appellant did not issue the amendment with respect to price variation clause, nor settled the dispute, which had arisen between the parties, the respondent sent a notice under Section 11 of Arbitration and Conciliation Act, 1996 on 7.6.2005. Through the said notice the respondent demanded that the appellant either issue the necessary amendments on account of price variation with respect to the above mentioned quarters or appoint an arbitrator within 30 days. The notice dated 7.6.2005 was acknowledged by the appellant vide acknowledgement slip bearing No. 26110 dated 9.6.2005. Having not complied with the notice, another notice dated 2.1.2006 was issued by the respondent invoking the arbitration agreement and seeking appointment of arbitrator. The second notice was also acknowledged by the appellant by slip no. 33190 dated 3.1.2006.

       Despite the aforesaid notices and the receipt thereof, the appellant neither resolved the disputes between the parties nor appointed an arbitrator within 30 days from the receipt of the request to do so, compelling the respondent to file a petition under Section 11(6) of the Act on 30.3.2006.

       Clause 24 of the agreement deals with the arbitration between the parties.

       Findings of the Court:

       The order of appointment of Dr. Gita Rawat by the appellant as a sole arbitrator dated 15.5.2006 after filing of application u/s 11(6) was passed without jurisdiction.

       Result : Appeal dismissed.