The judgment established that the vacancy caused by a named arbitrator declining to accept the appointment can be supplied under section 11(6) and sections 14 and 15 of the Arbitration and Conciliation Act, 1996.

1. The arbitration petition has been filed under section 11 of the Arbitration and Conciliation Act, 1996.

2. The question that falls for consideration is whether the 1996, Act prohibits absolutely the appointment of a substitute arbitrator when an arbitrator named in the arbitration agreement refuses or is for any reason unable to act even if the agreement does not show that it was intended that the vacancy should not be filled. I have answered the question in the negative.

3. The parties entered into an M.O.U. dated 16.4.2007. Clause (viii) thereof contains an arbitration agreement which reads as under :-

“viii). In case of any dispute between the parties the same shall be resolved through arbitration by appointment of an Arbitral Tribunal consisting of three arbitrators out of which Retd. Justice Mr.B.C. Gadgil would be the arbitrator appointed by party of the third part and Mr.S.L. Deshpande, Advocate would be the arbitrator appointed by party of the first and second part and the two above named arbitrators would appoint the Presiding Arbitrator to constitute the Arbitral Tribunal of three arbitrators. The entire proceedings will be done as per the provisions of Arbitration and Conciliation Act, 1996. The venue of arbitration would be at Nashik.”

4. By a letter dated 6.12.2007, one of the named arbitrators stated that he would not be able to act as the arbitrator in the matter. The petitioners by a letter dated 8.1.2008 nominated one Ajay Suhas Misar, an advocate, as an arbitrator in place of the named arbitrator, and requested the said new arbitrator and the other named arbitrator to appoint a presiding arbitrator and proceed with the reference. By a letter dated 11.1.2008, the other named arbitrator also stated that he would not be able to act as an arbitrator in the matter.

5. The petitioners thereafter filed an application under section 9. In the affidavit in reply the respondents contended that the arbitration clause had become infructuous as the arbitrators named in clause (viii) had stated that they were unable to act as arbitrators in the matter. It is in these circumstances that the petition is filed.

6. Mr.Vajani submitted that the named arbitrators having refused to act as arbitrators, the arbitration agreement is exhausted. He submitted that under the 1996, Act there is an absolute bar to a Court substituting an arbitrator in the place of an arbitrator named in the arbitration agreement.

7. The submission is not well founded. Sections 14 and 15 are a complete answer to this submission and 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 the 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 agrees 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 sub-section (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 the arbitrator being replaced.

(3) Unless otherwise agreed by the parties, where an arbitrator is replaced under sub-section (2), any hearings previou