(August 6 , 2001) 2001 (TLS)125255

2001-DLT-94-84 :: 2001-AD (Del)-6-45

TALWAR BROTHERS PRIVATE LIMITED Vs. Punjab State Industrial Development Corporation Limited

SANJAY KISHAN KAUL

( 1 ) THESE three appeals raise common question as regards the scope and effect of Section 11 (2) of the arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act ).

( 2 ) THE disputes between the parties arise out of the lease deed dated 28/10/1993 in respect of premises A-1/26, safdar jang Enclave, New Delhi by the appellant in favour of the respondent. The said lease deed incorporated an arbitration clause. In view of the failure of the respondent to hand over vacant possession in terms of the lease deed despite a letter dated 6/11/1996, the arbitration clause was invoked by the appellant. The arbitrator entered upon reference and published his Award on 28/4/1997 which was subsequently corrected for clerical error vide order dated 29/7/97. The arbitration clause envisaged the appointment of the Arbitrator with notice to the other party and the other party was required to nominate their own arbitrator within 15 days of the service of such notice. The two Arbitrators were required to appoint an Umpire and the place of the arbitration was Delhi. The arbitration clause further provided a consequence of the failure of the other party in appointing his arbitrator as under;

"if, however, the other party does not appoint its Arbitrator within 15 days from the receipt of such notice, the Arbitrator appointed by the party which has already appointed its Arbitrator shall be the sole Arbitrator and his award shall be final and conclusive. "

( 3 ) THE respondent in all the three appeals failed to appoint their Arbitrator in response to the appointment of the Arbitrator by the appellant. The appellant appointed its Arbitrator vide letter dated 6/11//96 and thereafter four registered letters were Issued on 25/11/96, 4/12/1996, 16/12/1996 and 7/1/1997. It was after a lapse of more than 60 days that the appellant on 7. 1. 97 requested the Arbitrator appointed by them to act as the Sole Arbitrator In terms of the arbitration clause.

( 4 ) THE Intimation of the publishing of the Award was sent to the respondent but no objections were filed under section 34 of the Act. The respondent did not comply with the award despite registered notice by the appellant calling upon respondent to do so. These notices were sent on 13/4/1998 and 8/5/1998. Petition was filed by the appellant for the decretal amount of Rs. 15,51,022/22 plus future damages plus Interest at the rate of 2% per annum on the basis of the Award and possession of premises. It was at this stage that the respondent filed objections to the execution of the decree. It may be stated that the premises was vacated on 30/5/1999 during the pendency of the execution petition.

( 5 ) THE Issue which arose before the learned single judge was the effect of such unilateral reference to the arbitrator or the effect of non-appointment of the arbitrator by the other party. The contention before the learned Single Judge by the respondent was that Section 11 of the Act prescribe the procedure for appointment of arbitrator and in view of Section 11 (6) (c), the appellant should have approach the Chief Justice or any person or institution designated by him to take the necessary measure for appointment of the Arbitrator on behalf of the respondent. On the other hand the appellant submitted before the learned Single Judge the reading of Section 11 (6) (c) would show that this was so required to be done unless the agreement on the appointment procedure provide other means for securing the appointment. It was thus the contention of the appellant that the arbitration clause provided an agreement on the appointment procedure which was that the Arbitrator appointed by the first party would act as a sole Arbitrator. The relevant provision of Section 11 is reproduced as under.

"11. APPOINTMENT of arbitrators