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2022 Supreme(SC) 430

SUPREME COURT OF INDIA
M.R. SHAH, B.V. NAGARATHNA, JJ.
Swadesh Kumar Agarwal - Appellant
Versus
Dinesh Kumar Agarwal & Ors., etc., etc. - Respondents
Civil Appeal Nos. 2935­2938 of 2022
Decided On : 05-05-2022

Advocates Appeared:
For the Appellant :Divyakant Lahoti, Shashank Garg, Parikshit Ahuja, Praveena Bisht, Madhur Jhavar, Vindhya Mehra, Kartik Lahoti, Rahul Maheshwari, Shivangi Malhotra, Advocates.
For the Respondent:Pai Amit, Rajesh Inamdar, Prashant Kumar, Charu Ambwani, Rameshwar Prasad Goyal, Advocates.

The main legal point established in the judgment is that the application under section 11(6) of the Act, 1996 is not maintainable when the sole Arbitrator is appointed by mutual consent and in the absence of a written agreement containing the arbitration clause. Additionally, disputes regarding the termination of the sole Arbitrator's mandate under section 14(1)(a) should be raised before the concerned court, as defined under section 2(e) of the Act, 1996.

Headnote:

Arbitration - Termination of Sole Arbitrator's Mandate - Arbitration and Conciliation Act, 1996

Fact of the Case:

The dispute arose between the parties regarding the partition of properties, which was referred to a sole Arbitrator appointed by the parties themselves. The Arbitrator faced allegations of undue delay in concluding the arbitration proceedings, leading to the termination of the mandate of the sole Arbitrator under section 14(1)(a) of the Act, 1996. The High Court terminated the mandate of the sole Arbitrator and appointed a fresh Arbitrator, while also dismissing the writ petitions challenging the Trial Court's rejection of the application under Order VII Rule 11 of CPC.

Finding of the Court:

The Court found that the application under section 11(6) of the Act, 1996 to terminate the mandate of the sole Arbitrator was not maintainable, as the parties had appointed the sole Arbitrator by mutual consent and in the absence of a written agreement containing the arbitration clause. The Court also held that the dispute regarding the termination of the sole Arbitrator's mandate under section 14(1)(a) should have been raised before the concerned court, and not under section 11(6) of the Act, 1996. The Court directed the concerned court to consider the application under section 14(2) of the Act, 1996 and revive the same, allowing for a fresh adjudication.

Issues: The issues before the Court included the maintainability of the application under section 11(6) of the Act, 1996, the distinction between sections 11(5) and 11(6) of the Act, 1996, and the appropriate forum for raising disputes regarding the termination of the sole Arbitrator's mandate under section 14(1)(a) of the Act, 1996.

Ratio Decidendi: The Court held that the application under section 11(6) of the Act, 1996 was not maintainable in the absence of a written agreement containing the arbitration clause, and that disputes regarding the termination of the sole Arbitrator's mandate under section 14(1)(a) should be raised before the concerned court, as defined under section 2(e) of the Act, 1996.

Final Decision: The Court quashed and set aside the impugned judgment and order passed by the High Court, directing the concerned court to consider the application under section 14(2) of the Act, 1996 and revive the same for fresh adjudication. The appeals challenging the impugned judgment and order passed in W.P. No. 11258/2010 and W.P. No. 11259/2010 were dismissed, and there was no order as to costs.

Judgement Key Points

Key Points: - Application under section 11(6) is not maintainable when the sole arbitrator is appointed by mutual consent without a written agreement (!) (!) (!) . - Disputes regarding termination of the sole arbitrator's mandate under section 14(1)(a) must be raised before the concerned court, not under section 11(6) (!) (!) . - Section 11(5) applies when there is no agreed appointment procedure, whereas section 11(6) requires a written agreement (!) (!) . - The High Court cannot terminate a sole arbitrator's mandate under section 11(6) if the dispute involves section 14(1)(a) grounds (!) (!) . - Once an arbitrator is appointed by mutual consent, the arbitration agreement cannot be invoked a second time (!) (!) . - The trial court was justified in dismissing the application under Order VII Rule 11 of CPC, as such issues are to be decided by the arbitral tribunal under section 13, not the court (!) . - Revival of applications under section 14(2) is directed to ensure parties are not left remediless (!) .

What is the applicability of section 11(6) of the Arbitration and Conciliation Act, 1996 when the sole arbitrator is appointed by mutual consent without a written arbitration agreement?

What is the appropriate forum to raise disputes concerning termination of a sole arbitrator's mandate under section 14(1)(a) of the Act?

What is the distinction between section 11(5) and section 11(6) of the Act in the context of appointing a sole arbitrator?


JUDGMENT :

M.R. Shah, J.

The present appeals arise out of impugned common judgment and order dated 07.09.2017 passed by the High Court of Madhya Pradesh Principal Seat at Jabalpur in Arbitration Case (AC) No. 29/2015 and in Writ Petition Nos. 11258/2010 and 11259/2010 and the order dated 17.11.2017 passed in Review Petition No. 655/2017, by which, the High Court in exercise of powers under section 11(6) of the Arbitration and Conciliation Act, 1996(hereinafter referred to as the Act, 1996) has terminated the mandate of sole Arbitrator appointed by the parties themselves and has substituted the sole Arbitrator and has appointed a fresh Arbitrator on the ground that the mandate of the sole Arbitrator stood terminated in view of section 14(1) (a) of the Act, 1996. This is on the basis that there was undue and unreasonable delay in proceeding with the arbitration proceeding by the Sole Arbitrator. By the impugned judgment and order, the High Court has also confirmed the order passed by the learned Trial Court dismissing the application filed under Order VII Rule 11 of Code of Civil Procedure (CPC) preferred by the appellant herein.

2. The facts leading to the present appeals in a nutshell are as under: -

2.1 That a dispute between the parties which as such is a family dispute for partition of the properties arose. It was referred to the sole Arbitrator. The learned Arbitrator was appointed as a sole Arbitrator by the parties themselves on 04.08.2008. The learned Arbitrator directed the parties to appear on 14.03.2009 for deciding the pending applications. On the request of the parties, the Arbitrator adjourned the hearing on 30.03.2009. No proceedings were undertaken on 30.03.2009 due to the fact that the sole Arbitrator was not available in town. Respondent No. 1 and 3 herein - parties to the arbitration proceedings revoked the mandate of the sole Arbitrator vide letters dated 11.07.2009. The letters were replied to by the sole Arbitrator. Thereafter, respondent No. 1 and 3 herein, parties to the arbitration proceedings filed applications under section 14(1)(a) of the Act, 1996 before the concerned Court (District Court) to terminate the mandate of the sole Arbitrator on the ground of delay in concluding the arbitration proceedings. The appellant herein filed an application under order VII Rule 11 of CPC for dismissal of the said applications under section 14 of the Act, 1996, submitting that there was no delay at all on the part of the sole Arbitrator and therefore, there was no question of terminating the mandate of sole Arbitrator under section 14(1)(a) of the Act, 1996. Vide order dated 15.07.2010, the learned Trial Court dismissed the application filed under order VII Rule 11 of CPC preferred by the appellant herein.

2.2 Feeling aggrieved by the order passed by the learned Trial Court, rejecting the application under order VII Rule 11 of CPC, the appellant herein preferred present writ petition Nos. 11259/2010 and 11258/2010 before the High Court and pending the applications under section 14(1) (a) of the Act, 1996 one of the parties - Dinesh Kumar Agarwal preferred an arbitration case before the High Court under section 11(6) of the Act, 1996 and requested to terminate the mandate of the sole Arbitrator and to appoint a fresh Arbitrator. By the impugned judgment and order, the High Court has allowed Arbitration Case No. 29/2015 and has observed and held that there was undue and unreasonable delay on the part of the sole Arbitrator in concluding the arbitrating proceedings and his mandate stood terminated under section 14(1)(a) of the Act, 1996. Consequently, the High Court has appointed a fresh Arbitrator. By the impugned judgment and order, the High Court has also dismissed the writ petitions preferred by the appellant herein, in which the appellant challenged the order passed by the learned Trial Court rejecting the application under Order VII Rule 11 of CPC.

2.3 Feeling aggrieved and dissatisfied with the impugned common judg


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