2010 Supreme(AP) 255
IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD.
B. SESHASAYANA REDDY, J.
Nirma Cerglass Technics (P) Ltd., rep. by its Director, Sri Khaja M.M.K., Hyderabad - Appellant
Versus
International Advanced Research Centre for Power Metullergy and New Materials (ARCI), an Autonomous R & D Centre of Department of Science and Technology, rep. by its Director, Government of India, Hyderabad and others - Respondent
Arbitration Application No. 113 of 2009
Decided on 01-04-2010.
Mr. Rakesh Sanghi, Advocate for the Applicant.
Mr. M.S. Ramachandra Rao, Advocate for Respondent Nos. 1 to 3.
None appeared for Respondent No.4.
Headnote:A) ARBITRATION AND CONCILIATION ACT, 1996, Sections 14 (2) and 15 (2) - Scheme for appointment of Arbitrators, Para 3 (1)(c) - Arbitration Agreement, Article 21:- Application for appointment of substitute arbitrator can not be allowed where the original arbitrator appointed resigned on the only ground of non-co-operation by the applicant since nobody can take advantage of his own faults.
B) CONSTITUTION OF INDIA, Article 136 – Dismissal order of a special leave petition cannot be taken into account on the grounds of doctrine of merger.
This is an application filed by M/s. Nirma Cerglass Technics (P) Ltd., a company registered under the Companies Act, 1956 under sub-section (2) of Section 14 read with sub-section (2) of Section 15 of the Arbitration and Conciliation Act, 1996 and para 3 (1) (c) of the scheme for appointment of Arbitrators seeking substitute Arbitrator in place of Prof. R.Kumar, retired Dean, Department of Chemical Engineering, Indian Institute of Science, Bangalore.
2. Background facts in a nutshell are:
The applicant is a Private Limited Company incorporated under the provisions contained in the Indian Companies Act, 1956 and is engaged in manufacturing and marketing of scientific devices and equipments. The 1st respondent-International Advanced Research Centre for Power Metullergy and New Materials (for short" ARCI") is a society registered under the Societies Registration Act XXI of 1860. S.V. Joshi-2nd respondent is an Associate Director and Dr. G. Sundararajan-3rd respondent is the Director of the 151 respondent-Society. 'ARCI' carries out research work for the development of a number of scientific products useful to persons in different walks of life. It is one of the Premier Scientific Research Institutes of the Government of India. It is substantially financed by the Ministry of Science and Technology, Union of India. The applicant company has been in the business of manufacturing and marketing various kinds of catalytic converters. The applicant had entered into an agreement on 18-6-1999 with the 151 respondent for transfer of technology of certain scientific equipment, which is generally used and installed in automobiles for controlling emission level. The agreement dated 18-6-1999 contained a procedure for settlement of disputes arising between the parties as to construction, interpretations, effect and implication of any of the Articles of the Agreement. Article 21 of the agreement clause reads as hereunder:-
"Article 21: Arbitration
If any dispute or difference arising between the parties hereto as to construction, interpretations, effect and implication of any of the Articles of this agreement, such disputes or differences shall be referred to the sole arbitration of Secretary, Department of Science and Technology, Government of India".
3. It appears the applicant secured a soft loan of Rs.75 lakhs from Technology Information, Forecasting and Assessment Council (TIFAC) of the Department of Science and Technology, Government of India under an agreement dated 5-10-2000 and established production facilities in a shed rented on the 1st respondent's premises. Some disputes cropped up between the applicant company and the 1st respondent-ARCI with regard to efficiency of the technology transferred by the 151 respondent-ARCI. According to the applicant company, the technology transferred by the 1st respondent-ARCI did not work well and had failed. The applicant company lodged report with S.H.O., P.S., Pahadi Shareef, Cyberabad against respondents 1 to 3. Basing on the report lodged by the applicant-company, the Station House Officer, Pahadi Shareef P.S., registered a case in Crime No.481 of 2007 for the offences under Sections 406, 418, 420 and 120-B of IPC and issued F.I.R. The police, after due investigation, filed a charge sheet before the II Metropolitan Magistrate, Ranga Reddy at L.B. Nagar, Respondents 2 and 3 filed Criminal Petition No. 7901 of 2008 to quash the proceedings in Crime No. 481 of 2007. The said petition ended in dismissal by order dated 17-3-2008. Thereupon, respondents 2 and 3 carried the matter to the Supreme Court and the matter is stated to be pending in the Supreme Court, vide S.L.P. (Crl.) No.2517 of 2009.
4. Since the Secretary, Government of India, has been chosen to be the Arbitrator, the applicant company lodged a claim before the Secretary, Department of Science and Technology on 30-12-2007. Simultaneously, the applicant company also moved an application under sub-section (2) of Section 13 of the Arbitrati