IMPORTANT POINT
(1) Appointment of sole Arbitrator – Issue of res judicata does not arise for consideration in a Section 11 of Arbitration and Conciliation Act, 1996 proceeding.
(2) Principles of Order 23 Rule 1 of CPC prohibiting institution of fresh proceeding on same cause of action without seeking leave of court to file a fresh application, would apply to proceeding under Section 11(6) of Act.

JUDGMENT

ALOK ARADHE, J.

1. Leave granted.

2. This appeal arises from the order dated 08.11.2024 passed by the Punjab and Haryana High Court (High Court) whereby application filed by the respondent under Section 11 of the Arbitration and Conciliation Act, 1996 (Act) was allowed and sole arbitrator was appointed. In order to appreciate the challenge laid by the appellant to the impugned order, it is necessary to set out relevant facts which are stated hereinafter.

3. The parties jointly participated in an auction conducted by Jammu & Kashmir Bank for auction of 550 marlas of land situated in Hoshiarpur, Punjab (‘the Hoshiarpur Land’). The primary bid in respect of said land was made through respondent’s firm M/s. Aastha Trading Company. A new entity, namely M/s. JMD Special Steel Pvt. Ltd., in which both the parties were directors, was utilized for funding and registration purposes. A loan of Rs. 4.30 crores was obtained from HDFC Bank by mortgaging various properties. A Tripartite Agreement dated 20.03.2013 was executed between the appellant, the respondent and HDFC Bank to regulate the loan liability and to facilitate release of the mortgaged properties.

4. On 02.04.2013, the parties executed three agreements to resolve disputes relating to ‘the Hoshiarpur Land’ and other joint ventures. The substance of the three agreements is as follows: -

(i) Agreement 1: The appellant was required to execute a sale deed in respect of 8 Kanal Land in favour of respondent on or before 05.04.2014, upon its release from HDFC Bank.

(ii) Agreement 2: The joint ventures between the parties except ‘the Hoshiarpur Land’ stood dissolved. The mortgaged properties were to be released in favour of appellant’s entity for a sum of Rs. 3.75 crores.

(iii) Agreement 3: The appellant was to hold 16.5 % shares in ‘the Hoshiarpur Land’ with a separate agreement to govern its settlement.

5. Clause 6 of the aforesaid agreements contains an arbitration clause. The respondent invoked the arbitration clause by a notice dated 06.05.2015 and subsequently filed an application under Section 11 of the Act seeking appointment of an arbitrator. The High Court, by order dated 27.11.2015, appointed Justice M.S. Sullar, as sole Arbitrator, who later recused himself. Thereafter, Justice V.K. Jhanji was appointed on 12.08.2016. Allegations of bias were raised by the respondent on 10.02.2017, leading to arbitrator’s recusal on 11.02.2017. Subsequently, Justice Aftab Alam, was appointed as sole Arbitrator, on 01.09.2017.

6. Competing claims were made before the sole Arbitrator, by both parties. On 10.02.2018, the respondent was granted a final opportunity to file his statement of claim, failing which the proceedings were liable to be closed. The respondent filed his claim on 16.03.2018, seeking recovery of Rs.4.16 crores. The appellant filed his statement of defence, followed by a rejoinder from the respondent.

7. On 13.05.2019, the respondent and his counsel failed to appear before the sole Arbitrator. Despite adjournment and a failed mediation attempt, the respondent ceased participation in the proceedings and, on 13.07.2019, sent an email to the sole Arbitrator alleging bias. Further, allegations were raised on 14.08.2019 along with an indication to appoint another arbitrator. The Arbitrator declined this request and proceeded with the arbitration. By communication dated 29.08.2019, respondent refused to accept arbitrator’s authority and stated that he would not participate further. He remained absent on 03.10.2019.

8. The respondent filed a civil suit seeking mandatory injunction seeking termination of Arbitrator’s mandate. The sole Arbitrator passed an award on 30.06.2020 observing that claims were intertwined and overlapping. The Arbitrator decreed the claim of appellant and dismissed the claim of respondent. While noting the power to terminate proceedings for non-prosecution, the Arbitrator granted a final opportunity to revive its claim by giving three months time to file an ame