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2013 Supreme(Bom) 171

High Court of Judicature at Bombay
R.D. DHANUKA
Shane Duff & Others
Versus
Essel Sports Private Limited
Arbitration Application (L) Nos. 49 of 2013, 50 of 2013, 51 of 2013, 52 of 2013, 53 of 2013, 54 of 2013, 55 of 2013, 56 of 2013, 57 of 2013, 58 of 2013, 59 of 2013 & 60 of 2013
Decided on : 22-01-2013

Advocates appeared:
For the Applicants:Pooja Patil along with Salani Shah i/by Fox Mandal Partners, Advocates.
For the Respondents:Hitesh Jain along with Sruti Gupta i/by Almt Legal, Advocates.

Headnote:Arbitration and Conciliation Act, 1996 - Sections 11 and 15(2) - Appointment of substitute arbitrator. - Held, since clause in agreement vested exclusive right in respondent to appoint arbitrator, hence appointment of substitute arbitrator unilaterally by respondent not improper. Under Section 11(6) of the Arbitration Act, 1996, the Hon’ble the Chief Justice or his designate has jurisdiction to make appointment only when a person including an institution, fails to perform any function entrusted to him or it under that procedure.

       The respondent exercised its right to appoint arbitrator under Clause 21 of the agreement and there was no failure on the part of the respondent to appoint substitute arbitrator and therefore, application filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 itself would not be maintainable. No default is committed by the respondent in appointing substituted arbitrator. The substituted arbitrator has been appointed by the respondent under Section 15(2) of the Act on the basis of the agreement entered into between the arties.

       Under Section 11(4) of the Act, the Hon’ble Chief Justice or his designate can appoint arbitrator only if the party fails to appoint arbitrator in accordance with the agreed procedure under Section 11(2) of the Act. In view of the agreement arrived at under Clause 21 of the agreement, the respondent has exercised its right by appointing substitute arbitrator the proceedings under Section 11(4) would not be maintainable. The proceedings under Section 11(6) can be filed only if the parties fail to act as required under the agreed procedure and not otherwise. Unless there is vacancy, the application filed under section 11(6) of Arbitration Act, 1996 is not maintainable.

       Arbitration and Conciliation Act, 1996 - Section 15(2) - Appointment of substitute arbitrator. - Held, appointment of substitute arbitrator by a party in accordance with terms of agreement is valid.

Judgment :

1. By these petitions filed under section 11 and section 15(2) of the Arbitration & Conciliation Act, 1996 (for short hereinafter referred to as Act) the applicants seek an order and direction to substitute the sole arbitrator. The facts of all the aforesaid mattes are identical and the issue involved being common, all the above matters were heard together and are being disposed of by a common order.

2. Both the parties have addressed this court on the basis of the facts in Arbitration (L) No. 49 of 2013 and the same are therefore, summarized as under:

(a) The applicant is engaged in providing physiotherapy, physical fitness/health services etc. for sports items in tournaments/camps. etc. On 23rd January, 2008 the parties entered into ICL Professional Services Agreement (for short referred to as “Agreement”). The agreement was valid for the period of three years. According to applicant, sum of US $ 26,2904 is outstanding and payable by the respondent to the applicant. On 20th October, 2011, the applicant filed Company Petition (13 of 2012) under section 434 of the Companies Act, 1956 in this court against the respondent for winding up. By an order dated 29th June, 2012, this court disposed of the said Company Petition and other similar Company Petitions filed by the other applicants on similar terms. By consent of parties, this court directed the respondent to deposit an amount of Rs.7,13,475/-in this court within the period of six weeks and referred the disputes between the parties which were subject matter of the said petition to the sole arbitration of Dr. Birendra Saraf and directed the learned arbitrator to make endeavour to pass his award within the period of six months from the date of the said order. Pursuant to the said order, the respondents have deposited the amount as directed in this court.

(b) By letter dated 5th October, 2012, the applicant through his advocate addressed a letter to Dr. Birendra Saraf informing him about the order dated 29th June, 2012 passed by this court and requested him to fix preliminary meeting. By letter dated 21st November, 2012, Dr. Birendra Saraf informed the applicant's advocate that he had represented and continues to represent the respondent company before this court and various other forums and requested the applicant to inform if the applicant would have any objection to his acting as arbitrator in the light of the said disclosure. A copy of the said letter was also forwarded to the respondent's advocate.

(c) By letter dated 29th November, 2012 the applicants through his advocate expressed his objection to Dr. Birendra Saraf acting as an arbitrator and requested to take a note of the same and to inform the applicants accordingly. By letter dated 1st December, 2012, Dr. Birendra Saraf informed the parties through their respective advocates that in view of the objection raised by the applicants, vide letter dated 29th November, 2012, he had resigned as Arbitrator in the matters.

(d) By letter 4th December, 2012 the applicant through his advocate, suggested names of five counsel practicing in this court as arbitrator and requested the respondent to give its consent for appointing anyone out of the same as arbitrator in place of Dr. Birendra Saraf.

(e) The respondent through its advocate's letter dated 4th December, 2012 to the applicant's advocate, invited attention of the applicant to clause 21 of the agreement and informed that in the light of clause 21 of the said agreement, the respondent has appointed Justice A.D. Mane, Former Judge of this court as sole arbitrator for the proposed arbitration between the applicant and respondent.

(f) The applicant through his advocate's letter dated 5th December, 2012 informed that the applicant did not consent to the unilateral appointment of Justice A.D. Mane as substituted arbitrator and the applicant was in process of taking out appropriate proceedings for appointment of the substituted arbitrator in accordance with the provisions














































































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