2007 Supreme(SC) 290

2007(8) Supreme 751
Supreme Court of india
(From Bombay High Court)
P.K. Balasubramanyan & V.S. Sirpurkar, JJ.
C.M.C. Ltd. — Petitioner
versus
Unit Trust of India & Ors. — Respondents
Civil Appeal No. 1119 of 2007
(Arising out of SLP (C) No. 69 of 2004)
Decided on : 01-03-2007

important point
Merely because a writ petition was maintainable does not mean that the Court has to interfere even in matters where the Court has restricted jurisdiction and there is no injury of any kind to the appellant.

Headnote:(a)Constitution of India – Article 226 – In matters where the Court has restricted jurisdiction and in the absence of any injury of any kind to the appellant, the Court may refuse to interfere – Merely because a writ petition was maintainable does not mean that the Court has to interfere. (Para 5)

       (b)Arbitration and Conciliation Act, 1996 – Section 11(6) – Courts have restricted jurisdiction and the decisions were taken to be administrative decision – Supreme Court declaring decisions u/s 1(6) being judicial decisions – Appeal against decisions u/s 1(6) are not maintainable. (Para 5)

       JT 2005 (9) SC 219 – Relied upon.

       (c)Rules of the Indian Council of Arbitration – Rule 4(c) – Rule 4(c) does not preclude the parties from having a different procedure for appointment of an arbitrator – The arbitration agreement did not contemplate the appointment of the arbitrator to be as per the Rules of the Indian Council of Arbitration or only from the panel of arbitrators maintained by the Council – Hence respondent No.1 was not bound to invoke the Rules of the Council to put in motion an effective machinery for arbitration. (Paras 4 and 7)

       (d)Arbitration and Conciliation Act, 1996 – Section 11(6) – On a true construction of the arbitration agreement, it becomes obvious that the parties retained in themselves the right to name an arbitrator of their own, who in turn had to name a Presiding Arbitrator so as to constitute an Arbitral Tribunal – The power to appoint arbitrator has not been ceded to the Indian Council of Arbitration – Parties also agreed that thereafter the arbitration proceedings shall be conducted in accordance with the Rules prescribed by the Indian Council of Arbitration – Thus the provision that the proceedings shall be conducted in accordance with the Rules prescribed by the Indian Council of Arbitration does not in any manner militate against the retention of the power by the parties of appointing an arbitrator or constituting an Arbitral Tribunal – No infirmity in the impugned High Court judgment. (Para 9)

       (2004) 13 SCC 630; JT 2003 (5) SC 480 – Distinguished.

       (e)Judicial Interpretation – Only if there exists any inconsistency between the two provisions the Courts would be called upon to undertake the existence of reading down one or ignoring one as ineffective or inconsistent and giving effect to the other. (Para 9)

       Facts of the case:

       1.The appellant and respondent NO.1 entered into an agreement dated 23.10.1992 for a Technology Upgrade Project of the latter. The said agreement contained an arbitration clause.

       2.Disputes arose between the parties. On 16.5.2002, respondent no. 1 issued a notice invoking the arbitration clause and calling upon the appellant to refer the dispute and differences to be settled through arbitration in terms of the arbitration agreement. Respondent NO.1 named an arbitrator with the suggestion that he may be accepted as the sole arbitrator. The appellant regretted its inability to act on the basis of the notice issued by respondent no.1.

       3.Respondent no. 1 thereupon moved the Chief Justice of the High Court under Section 11 (6) of the Arbitration and Conciliation Act, 1996.

       4.The appellant resisted the application essentially pleading that the Rules of the Indian Council of Arbitration and the mandate thereof had not been complied with by the applicant before the Chief Justice and that the arbitration clause had not been properly invoked and there is no failure on the part of the appellant herein to act in accordance with the procedure accepted by the parties. No occasion had therefore arisen for the Chief Justice to appoint an arbitrator in terms of Section 11 (6) of the Act.

       5.The appellant as directed by the court had named an arbitrator without prejudice to its contentions and it is common ground before us that the said two arbitrators have also’ named the Presiding Arbitrator and an Arbitral Tribunal had come into existence, but subject to the decision in this appeal filed by the appellant.

       Findings of the Court:

       High Court rightly held that the parties did not cede their right to appoint arbitrator and respondent was right in invoking the arbitration.

       Result : Appeal dismissed.