Back
2021 Supreme(Cal) 308
IN THE HIGH COURT OF CALCUTTA
RAJESH BINDAL, J.
Century Metals Recyling Limited & Anr. - Appellant
Versus
M/s Urgo Capital Limited & Ors. - Respondent
AP 351 of 2021
Decided on : 21-09-2021
For the Appellant :Mr. Deepanjan Dutta, Mr. Yashvardhan Deora and Mr. Amit Tyagi, Advocates
For the Respondent:Mr. Swatarup Banerjee, Mr. Avishek Guha and Ms. Ratnadipa Sarkar, Advocates (VC)
Point of law: Appointment of Arbitrator - Respondent did not have any right even to refer the dispute to CADRE for appointment of an arbitrator for the reason that the respondent is a party interested in the outcome of the dispute.
Headnote:
Arbitration - Arbitration Agreement - Appointment of Arbitrator - Arbitrator appointed by the party to the agreements, whether has to be declared coram non judice and a fresh arbitrator deserves to be appointed -where only one party has the right to appoint sole arbitrator, it’s choice will always have an element of exclusivity in determining or charting the course of dispute resolution. -Whether the arbitration proceedings as initiated by the respondent by referring the dispute to CADRE should be allowed to continue or a fresh arbitrator is to be appointed.
Finding of the Court:
Arbitration clause does not provide for appointment of an Arbitral Tribunal - lender, namely, the respondent has been given right to appoint sole arbitrator at its discretion - respondent did not have any right even to refer the dispute to CADRE for appointment of an arbitrator for the reason that the respondent is a party interested in the outcome of the dispute. It will not matter if the dispute is referred to a sole arbitrator or an institution as it is charting the course for dispute resolution. It is not a case in which Arbitral Tribunal was to be appointed- appointment of CADRE as the institution for resolution of dispute at the sole discretion of the respondent, who is a party to the agreement and interested in its result, cannot be legally sustained. Hence, set aside.
Result: Allowed
ORDER :
1. The present application has been filed by one of the parties to the agreement challenging appointment of arbitrator by the respondent No. 1 and further with the prayer for appointment of an arbitrator to resolve the dispute between the parties.
2. The dispute arises out of a letter of sanction for Supply Chain Finance Facility extended by the respondent No. 1 to the applicant. The agreement was executed by the parties on May 25, 2019. It contains provision for arbitration, in clause 24 thereof. The parties to the agreement namely, the applicant is located in Haryana whereas the respondent No. 1 is in Maharashtra. The aforesaid agreement was renewed on August 13, 2020.
3. It was argued by the learned Counsel for the applicant that it was surprised to receive a communication from Centre for Alternate Dispute Resolution Excellence (CADRE) dated July 17, 2021 intimating that the respondent No. 3 has been appointed as the arbitrator for resolution of dispute between the applicant No. 1 and the respondent No. 1. Time was granted till August 21, 2021 to file response to the statement of claim and documents in support thereof. Relying on a judgment of Hon’ble Supreme Court in Perkins Eastman Architects DPC and Ors. Vs. HSCC (India) Ltd., AIR 2020 SC 59 it was argued that a party to the agreement having interest in the dispute or the outcome thereof is ineligible to appoint an arbitrator. As in the case in hand, the arbitrator has been appointed by the party to the agreements, the same has to be declared coram non judice and a fresh arbitrator deserves to be appointed.
4. On the other hand, learned Counsel for the respondent No. 1 submitted that the present application is barred on account of misjoinder of parties. The arbitrator cannot be impleaded as party to the proceedings. However, still respondent No. 3 has been impeded. He has referred to an order dated April 30, 2007 passed in Ircon Inter. Natnl. Ltd. V. Vinay Heavy Equipments reported as 2007 SCC OnLine SC 4 and in Zonal General Manager, Ircon International Limited vs. Vinay Heavy Equipments (2015) 13 SCC 680. He further submitted that the common application filed under sections 11(6), 12(5) and 14 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the Act’) is not maintainable. Section 12 provides for grounds of challenge before an arbitrator. None of the conditions as laid down in Section 14 exist in the present case. He further referred to Section 11 of the Act which provides that in case more than one institution is appointed to deal with the dispute by way of arbitration, the first one approached shall have the jurisdiction. He further referred to a letter dated September 18, 2020 circulated by the Government of India, Ministry of Law and Justice mentioning the list of institutions offering alternate dispute resolution mechanism. The name of CADRE is mentioned therein.
5. While distinguishing the judgment of Hon’ble the Supreme Court in Perkins Eastman Architects DPC and Ors.’s case (supra), it was submitted that in the case in hand the respondent No. 1 has not appointed the arbitrator rather it has merely referred the case to an institution. He further referred to the judgment in Central Organisation for Railway Electrification vs. ECI-SPIC-SMO-MCML (JV) A Joint Venture Company reported as (2020) 14 SCC 712, stating that it is permissible for the party to the agreement to nominate arbitrator as per procedure laid down in the agreement even though he himself may be ineligible to act as an arbitrator.
6. In response, learned Counsel for the applicant submitted that he is not averse to the Institutional Arbitration, however, the forum cannot be chosen by the respondent No. 1 who is party to the agreement and has interest therein. The judgment in Central Organisation for Railway Electrification’s case (supra) will not come to the rescue of the respondent No. 1 for the reason that in the aforesaid case Arbitral Tribunal was to be appointed in whic
