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2005 Supreme(Del) 218

High Court Of Delhi
SUSHIL KUMAR RAUT - Appellant
Versus
HOTEL MARINA - Respondent
F.A.O.(O.S.) : 158 of 2003
Decided On : 02/22/2005

Advocates Appeared:
S.K.MANIKTALA, Sohan Lal Pandhi

Headnote:Arbitration Act, 1940 - Sections 14 and 15 — Parallel arbitration proceedings conducted by two arbitrators separately — The appointing authority as also the appointee both conducting separate proceedings for arbitration — Impasse created by the situation held to be not covered by the provisions of the Act — A retired Judge of Supreme Court appointed to enter upon the reference and to give fresh award in the matter.

KHAN, J.

( 1 ) AN impasse has been created with two arbitrators conducting parallel arbitration proceedings. One is the appointing Authority under the arbitration clause and the other his appointee. The appointing Authority (R-3) has revoked the authority of the appointee ?" (R-3 ). Whether he could do so and who out of the two is the real arbitrator is the question.

( 2 ) THIS interesting question arises in the following facts. The appellant is a builder/contractor whereas respondent No. 1 is a partnership concern. Respondent no. 2 is the appointing authority under the arbitration agreement and respondent No. 3 is the arbitrator appointed by him.

( 3 ) RESPONDENT No. 1 awarded a work contract for its hotel at Agra to be executed by respondent No. 1. The contract contained an arbitration clause which reads as under: ?o18. Settlement of Disputes any dispute between you and Owner s project Manager/resident Engineer regarding true interpretation of this work order/contract or about any other matter, payment etc. will be referred to Mr. R. A. Agrawal, Chief Engineer of the Company for his sole arbitration. He may act himself or may appoint any person to act as a Sole Arbitrator. Decision given by the Arbitration shall be final, conclusive and binding on both the parties. ?

( 4 ) DISPUTES arose between the parties and appellant invoked the arbitration clause by its letter dated 08. 06. 2000. Second respondent, Shri R. A. Agrawal was called upon to act as a sole arbitrator or to nominate and appoint any other person as arbitrator. He appointed respondent No. 3 by letter dated 04. 07. 2000. Respondent no. 3 accepted it and entered the reference. But later respondent No. 2 (appointing authority) cancelled his appointment on 08. 07. 2000 by letter dated 04. 07. 2000. Respondent No. 1 disputed this by his letter dated 11. 07. 2000.

( 5 ) BUT Respondent No. 2 entered the reference all the same on 13. 07. 2000 and directed the parties to file their respective claims. Respondent No. 3 challenged his authority to appoint himself by a communication dated 27. 07. 2000. To break the deadlock, respondent No. 1 filed OMP No. 227/2000 under Section 14 of the arbitration ACT, 1940, seeking termination of the mandate of the appointing Authority (respondent No. 2 ). Appellant contested this, inter alia, on the ground that the remedy available to respondent No. 1 was to file objections against the award of the arbitrator (R-2) under Section 34 of the Act or to question his jurisdiction before him. The appellant also attributed bias to Respondent No. 3 (appointee) who had allegedly direct business links with the Managing Partner of respondent No. 1.

( 6 ) THE learned Single Judge on consideration of the matter accepted the case of Respondent and held:- ?oi am unable to find any provision which specifically empowers the Appointing authority to recall the mandate of a duly appointed Arbitrator as has been attempted to have been done in the present case by Shri R. A. Aggarwal. Shri R. K. Mehra has not withdrawn from office of the Arbitrator for any reason. There is no power contained in the arbitration clause which permits the appointing authority, namely, shri R. A. Aggarwal to recall the appointment. Subsection (2) of Section 15 only clarifies that 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. Had Shri Mehra declined to act, this Section would have come into operation. Since none of the provisions of Section 15 apply, a substitute Arbitrator in the form of Shri R. A. Aggarwal himself could not have assumed the powers of the Arbitral Tribunal. When Section 14 of the Act is adverted to, it will be palpably clear that the mandate of Shri R. K. Mehra has not been withdrawn by any of the events mentioned in that Section. ?

( 7 ) APPELLANT is aggrieved of this and has filed the present appeal to assail this order. As it i




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