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2010 Supreme(Bom) 789

2010(4) ALL MR 568
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
F. I. REBELLO & R. V. MORE, JJ.
Khorshed E. Nagarwalla
Vs.
Daryus Soley Panthakey
Appeal No.235 of 2010 IN Arbitration Petition No.128 of 2010 15th June, 2010.

Advocates Appeared:
Mr. CHIRAG SUKH i/b. M/s. Bilawala & Co., for the Appellant.

Headnote:Arbitration and Conciliation Act (1996), S.11:- In case of death or refusal of the arbitrator appointed by the court to proceed on arbitration, the procedure stipulated under sub-section 6 of the Act shall be followed because the power vested under the Act is a judicial power, but not administrative in nature.

Judgment

F. I. REBELLO, J.:- The application was moved under section 9 of the Arbitration and Conciliation Act, 1996 (for short "the said Act"). An objection was raised that the named arbitrator who was the sole arbitrator had expired and that the respondent was not willing to continue with the arbitration after the death of named arbitrator. A learned Judge after considering the various contentions was pleased to hold that on the death of arbitrator and in the absence of parties agreeing to appoint another arbitrator, there would not be an arbitration agreement and consequently no relief can be granted. A alternative plea was made on behalf of the petitioner that the suit should be revived. The learned Judge was pleased to grant liberty to take appropriate steps and/or proceedings in accordance with law for restoration of the suit. It is this order which is the subject matter of the present proceedings.

2. Arbitration clause reads thus:

"1. By consent, the dispute in the suit between the Plaintiff and Defendant is referred to the Arbitration of the Sole Arbitrator Shri. A. B. Palkar (Retired Judge Bombay High Court).

2. Parties shall file all pleadings before the Sole Arbitrator.

3. The order of status quo shall be maintained in respect of the subject property viz., Najoo Villa, standing in Plot No.643 at Parsi Colony, Dadar, Mumbai as per the Appellate Order dated 6th July, 2004 passed in Appeal No.401 of 2004 and shall continue until final disposal/termination of the arbitration proceedings and for a period of 8 weeks thereafter."

3. It is thus clear that though initially there was no arbitration agreement, the parties in the suit by signing the minutes of order, which contains an arbitration clause agreed for arbitration and further named arbitrator. The question for consideration before us is whether if the named an arbitrator expires, the arbitration clause itself gets invalidated and/or does not survive and as such the Chief Justice or his designate under section 11 of the said Act cannot fill the vacancy occasioned by the death of the sole arbitrator. The issue as to whether, under section 9 of the said Act, this issue can be gone into is considered in the law declared by the Supreme Court in M/s. S.B.P. and Co. Vs. Patel Engineering Ltd. and another, reported in 2005(8) SCC 618. The scheme of the Arbitration and Conciliation Act, 1996 would require that there be an arbitration agreement providing for appointment of arbitrator/arbitrators which will constitute the arbitral tribunal, which must be constituted by odd number of arbitrators. In the instant case we have a sole arbitrator. Two relevant provisions of the Arbitration and Conciliation Act, 1996 are Sections 14 & 15 read as under :

"14. Failure or impossibility to act.- (1) The mandate of an arbitrator shall terminate if -

(a) he becomes de jure or de facto unable to perform his functions or for other reasons fails to act without undue delay : and

(b) he withdraws from his office or the parties agree to the termination of his mandate.

(2) If a controversy remains concerning any of the grounds referred to in clause (a) of sub-section (1), a party may, unless otherwise agreed by the parties, apply to the Court to decide on termination of the mandate.

(3) If, under this section or sub-section (3) of section 13, an arbitrator withdraws from his office or a party agreed to the termination of the mandate of an arbitrator, it shall not imply acceptance of the validity of any ground referred to in this section or subsection (3) of section 12.

15. Termination of mandate and substitution of arbitrator. - (1) In addition to the circumstances referred to in section 13 or section 14, the mandate of an arbitrator shall terminate -

(a) where he withdraws from office for any reason : or

(b) by or pursuant to agreement of the parties.

(2) Where the mandate of an arbitrator terminates, a substitute arbitrator shall be appointed according to the rules that were applicable to the appointment of t












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