2000 Supreme(Del) 208

High Court Of Delhi
B.W.L.LIMITED - Appellant
Versus
M.T.N.L.AND OTHER - Respondent
A.A. 45 of 1998
Decided On : 02/23/2000

Headnote:Arbitration & Conciliation Act, 1996 - Section 11 — Appointment of arbitrator — Failure to appoint the arbitrator despite notice amounts to abdication of power — The Court has jurisdiction to appoint the arbitrator Held: In the present case over a year has elapsed since the demand for Arbitration was raised. The Respondents have failed to make the appointment of the Arbitrator on the grounds that it had the unfettered rights to unilateratly decide to recover liquidated damages and that this right would not have to await the decision or imprimatur of the Arbitrator. Section 11 of the Arbitration and Conciliation Act clearly stipulates that if a party fails to appoint an Arbitrator within thirty days from the receipt of a request to do so from the other party, the appointment shall be made by the Court. I had specifically sought a clarification from Learned Counsel for the Respondents as to whether a demand for liquidated damages had been addressed by them to the Petitioner. All that was shown to me was a letter in which, for allowing an extension of time to the Petitioner, the Respondents had stated that liquidated damages were claimable. It could have been appreciated if the Respondents, had arrived at a decision in regard to the justification of imposition/recovery of liquidated damages intra-departmentally. Even if this issue is to be considered as a non-arbitrable dispute, it does not lead to the conclusion that it can be automatically taken by the Respondents, in flagrant violation of the avdi alteram partrem rule. I cannot convinced that there is any justification for the interpretation of the clause relied upon by the Respondents to warrant a unilateral decision, without even affording the party so affected with an opportunity of being heard. Clause of this nature, variously referred to an exclusion or exemption or exceptional clauses, merely substitute the decision making power on such issues to a person (usually an officer or nominee of the Drafter of the exclusion clause) other than the Arbitrator. It does not dispense with the rules of natural justice, of enjoining this officer/nominee from hearing the other side. It certainly cannot be interpreted in so draconian a manner as to empower a deduction without even a semblance of exercise of mind. It has now become common place for persons who have retained this power of appointment of an Arbitrator, not to act at all or to act with such obduracy as to render an Arbitration clause totally meaningless. The vehemence with which the present Petition was opposed, often caused me to forget that it was only the appointment of an Arbitrator to adjudicate upon the claims raised by both parties and not the disposal of Objections, that was in debate. After hearing lengthy arguments it would be an abdication of judicial duly if the Respondents were still permitted to make an appointment of the Arbitrator. The State is expected to act without arbitrariness and with fairness and in furtherance of the well-being of its citizens. It is also expected to know the law, especially as laid down by the Supreme Court. It cannot be excused if its action tantamount to emasculating the laws - i.e. of expeditious disposal of disputes through arbitration. Apart from the logistic considerations i.e., encouraging vexatious and obdurate failure to act in accordance with an in confirmity with the contact between the parties, there is one further consideration which has persuaded me to make an appointment of an independent person as an Arbitrator. The decision to oppose the present Petition has been taken by the very officer who is to act as the Arbitrator. He has already taken a view in the case and has issued instructions and then action for their implementation. The preponderance of likelihood is that he or his nominee would uphold his view. Having already decided held that the Department is justified in claiming liquidated damages, and having declined the Petitioners request for the appointment of an Arbitrator, there is a strong pervading risk that a fair decision would not be rendered. Since this Officer also have the power to nominate an Arbitrator, presumably also in service, it is quite possible that his bias would permit to his nominee. Justice has not only to be done but must also appear to be done. As observed above had the Respondents agreed to appoint an Arbitrator, albeit after some delay, I would have not felt compelled to appoint an Arbitrator de horn the Arbitration Clause. The decision of the Apex Court in Rajans case would not have application to the present circumstances in view of the recalcitrant refusal of the Respondent to make an appointment of an Arbitrator.