IMPORTANT POINT
Section 11(5) of Act, 1996 cannot be invoked unless one party to arbitration agreement makes a request to the other party to appoint an arbitrator and that party fails to do so within 30 days.

JUDGMENT

J.S.KHEHAR, J.

1. Leave granted.

2. The respondent-M/s AK & I Advertising Pvt. Ltd. and the appellants were admittedly in a contractual relationship wherein the respondent was assigned with the responsibility of handling advertisement work of the appellants. According to the agreement between the parties, the payment mechanism settled between the parties required the respondent to raise bills with supporting vouchers within 15 to 30 days of the publication of the advertisement. The bills were to be honoured within 55 days of the date of publication and/or telecast of the advertisement. It is also not a matter of dispute, that Clause 11 of the contract contemplated, that disputes and differences arising between the parties in connection with their contractual obligations would be referred to an arbitrator as agreed to by the parties. And that, the dispute would be settled in consonance with the provisions of the Indian Arbitration Act.

3. It is also not a matter of dispute, that consequent upon differences arising between the parties, the contract was eventually terminated by the appellants in December, 2006. After the termination of the contract, the respondent -M/s AK & I Advertising Pvt. Ltd issued a letter requiring the appellants to clear the outstanding dues, which were quantified at Rs.3,17,82,789/-, and in addition thereto, interest on delayed payment till 31.12.2006. After the receipt of the aforesaid communication, the appellants released an amount of Rs.71,58,100/-, and a further amount of Rs.60,00,000/-, totalling in all Rs.1,31,58,100/- (less TDS of Rs.4,12,678/-).

4. For recovering the remaining principal amount claimed by the respondent as also the interest component, the respondent-M/s AK & I Advertising Pvt. Ltd approached the Indian Newspaper Society (hereinafter referred to as `the INS') for intervening between the parties for settling their dispute. During the course of the negotiations, the appellants, through a communication dated 24.06.2007, offered a full and final settlement of Rs.99,50,000/- (which included Rs.92,00,000/-towards the principal amount and Rs.7,50,100/-towards interest). This offer was made towards a full and final settlement of all pending dues between the parties. In the ongoing negotiations, a meeting was arranged by the then Deputy Secretary of the INS, where both the parties participated on 10.07.2007. Thereafter, on 23.07.2007, the appellants paid a sum of Rs.92,24,206/-and described the same as -“towards full and final settlement”.

5. It is the contention of the learned counsel for the appellants, that on 25.06.2007, the Chairman of the INS advised the parties to have their dispute amicably settled through arbitration. And for the said purpose, to nominate an arbitrator. Even thereafter, through an another communication dated 06.08.2007, the Chairman of the INS again sought the consent of the rival parties for appointment of an arbitrator, with reference to the above subject.

6. Since the parties could not agree to settle their dispute by way of arbitration, the respondent approached the High Court of Delhi by filing Arbitration Petition No.16 of 2011, under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as `the Act'). The prayer made in the above petition was for appointment of an arbitrator with reference to monetary obligations arising out of their contractual obligations. This prayer made before the High Court by the respondent, was accepted through the impugned order dated 10.05.2011. The High Court disposed of the above petition by appointing Mr. Ashwini Mata, Senior Advocate, as the sole arbitrator to adjudicate the dispute between the parties. While appointing the arbitrator, the High Court left open all objections including the objections raised by the appellants, that the claim raised by M/s AK & I Advertising Pvt. Ltd was barred by limitation. The High Court also determined the fee payable to the arbitrator.

7. During the course of