Karnataka High Court
J.L.PRASAD - Appellant
Versus
GENERAL MANAGER, SOUTHERN RAILWAY, chennai - Respondent
Decided On : 09-28-01
Civil Miscellaneous Petition : 45 of 2000
ARBITRATION - Appointment of Arbitrator - Arbitration and Conciliation Act, 1996 [Section 11] - Summary of Acts and Sections: Section 11 of the Arbitration and Conciliation Act, 1996 - The court discussed the limited scope of a petition under Section 11, the agreed procedure for appointing arbitrators, and the interpretation of sub-section (6) of Section 11. The court emphasized the enforcement of the agreed appointment procedure and the role of the Chief Justice in securing the appointment. The judgment highlighted the significance of language used in sub-sections (4), (5), and (6) of Section 11 and referred to relevant case law to support its interpretation.
Fact of the Case:
The petitioner completed work for the respondent and sought arbitration for disputes arising from the contract. The respondent resisted the petition, arguing that the claims were not tenable, time-barred, and not arbitrable. The court's analysis focused on the limited scope of Section 11 of the Arbitration and Conciliation Act, 1996, and the agreed appointment procedure for arbitrators.
Finding of the Court:
The court found that the disputes should be referred to arbitration as per the agreed procedure for appointing arbitrators, emphasizing the administrative nature of Section 11 and the role of the Chief Justice in enforcing the appointment procedure.
Issues: The issues revolved around the tenability, admissibility, maintainability, and arbitrability of the claims, as well as the interpretation of the arbitration agreement and the procedure for appointing arbitrators.
Ratio Decidendi: The court's decision was based on the interpretation of Section 11 of the Arbitration and Conciliation Act, 1996, and the agreed appointment procedure for arbitrators, emphasizing the enforcement of the appointment procedure and the role of the Chief Justice in securing the appointment.
Final Decision: The petition was allowed in part, and the disputes were directed to be referred to arbitration by an Arbitral Tribunal with three arbitrators, in accordance with the agreed procedure for appointing arbitrators.
( 1 ) PETITIONER claims that the respondent [southern Railway] entrusted the work of "bangalore City - Mysore conversion from MG to BG - earthwork in forming bunds and cutting and construction of bridges for the proposed diversion of track from Ch. No. 19350 to 21690 [km 19/7-8 to 21/11-12] between Kengeri and Hejjala stations - Detour No. 1" to the petitioner under agreement dated 14-8-1987, subject to the annexed general conditions. The petitioner claims Clause 63 of the General Conditions provide for settlement of disputes by arbitration.
( 2 ) THE petitioner alleges that the work was completed by him on 31-3-1991; that the respondent committed several breaches of contract and thus became liable to pay compensation for the losses suffered by the petitioner; that petitioner issued a notice dated 13-9-1997 calling upon the respondent to settle the claims or in the alternative appoint an arbitrator for adjudication of disputes arising on account of non-settlement of his claims; and that there was no response. As there was no response, petitioner has filed this petition under Section 11 of the Arbitration and Conciliation Act, 1996 ('act' for short) seeking appointment of a sole arbitrator from among the panel of arbitrators of Indian Council of Arbitration, New Delhi or any one from the list enclosed to the petition.
( 3 ) THE respondent has resisted the petition on several grounds: that the claims are not tenable and without basis; that the claims are hopelessly barred by limitation; and that they are not arbitrable. The respondent, however, does not dispute the existence of the arbitration agreement between the parties.
( 4 ) THE scope of a petition under Section 11 of the Arbitration and Conciliation Act, 1996 [for short, the "act"] is limited. It deals with appointment of arbitrator or Arbitral Tribunal and nothing more. The function of the Authority exercising power under Section 11 is administrative and not judicial. Therefore, if existence of arbitration agreement is admitted, the limited functions under Section 11 is to appoint an arbitrator/arbitral Tribunal. While exercising jurisdiction under Section 11 of the Act, it is not for the Authority to decide whether the disputes are arbitrable or not; but to appoint an arbitrator and leave it to the arbitrator to decide about the arbitrability or maintainability of the disputes vide Konkan Railway Corporation Limited and Others v M/s. Mehul Construction Company.
( 5 ) IN view of above, the several contentions raised by the respondent, regarding tenability, admissibility, maintainability and arbitrability including the ground of limitation are all matters to be raised before and decided by the arbitrator/s. Hence, this petition will have to be allowed.
( 6 ) AT this juncture, the learned Counsel for the petitioner submitted that the petitioner issued a notice dated 13-9-1997 seeking reference of the disputes to arbitration under Clause 63 of the General Conditions of Contract; that the said notice was served on the respondent on 15-9-1997; that the respondent did not, within thirty days from the date of receipt of said notice, take steps to appoint an arbitrator in accordance with the arbitration clause; and therefore it should be held that the arbitration procedure prescribed under the arbitration agreement (Clause 63) no longer applies and the power under Section 11 should be exercised by appointing an independent arbitrator, by ignoring the appointment procedure prescribed in Clause 63.
( 7 ) ON the other hand, learned Counsel for the respondent submits that if an arbitrator is to be appointed, such appointment should be only in accordance with the appointment procedure agreed between the parties and not otherwise.
( 8 ) FOR convenience, the relevant portions of the arbitration agreement between the parties (Clause 63 of the General Conditions of Contract) are extracted below:" (1) In the event of any dispute or difference between the parties hereto
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