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1999 Supreme(Del) 91
High Court Of Delhi
ABB ABL LIMITED - Appellant
Versus
CEMENT CORPORATION OF INDIA - Respondent
ORIGINAL MISCELLANEOUS PETITION 183 of 1997
Decided On : 02/01/1999
A.M.SANGHVI, BHARAT SANGAL, Manjula Gupta, P.K.Bansal, R.P.BHATT
Headnote:Arbitration Act, 1940 - Section 9 — Failure to appoint arbitrator by one party — The arbitrator appointed by other party can act as sole arbitrator.
Section 9 — Failure to appoint arbitrator by one party — The court has power to condone delay.
Held:
It is required to be seen whether sufficient cause has been shown by the petitioner to allow further time to the petitioner to appoint an Arbitrator or for such orders as it thinks fit. It may be mentioned that proviso to Clause (b) of Section 9 though docs not talk of limitation but when it enables that defaulting party to seek remedy occasioned on account of his failure to make the appointment within 15 days which the legislature has allowed him for appointing Arbitrator after the receipt of the notice but proviso really enables the court to condone delay on the analogy of Section 5 of Limitation Act. While setting aside the appointment of sole arbitrator, this court is supposed to see whether there is any justification for setting aside the appointment on equitable grounds to promote the cause of justice, equity and good conscience. The appointment of the sole arbitrator should ordinarily be set aside in case of delays of few weeks if this court is satisfied that the defaulting party had not been obstructive or evasive and had acted with due diligence, and further that undue hardship would be caused if the extension is not granted.
Arbitration and Conciliation Act, 1996 - Section 21 — Request for appointment of arbitrator — Oral request made prior to commencement of facts — Provisions of the Act have no application.
Section 21 does not require that request should be made expressly in writing. This was a request by conduct of the parties and it has to be understood in that manner. Had it been essential that request should be in writing to the petitioner, then the word "written" should have found place in Section 21 before the word "request". The moment it is held that the arbitration proceedings commenced in terms of Section 21 as far back as lst/2nd, August 1995, the Arbitration Act, 1996 which is to be deemed to have come into force on 25th January 1996 shall become inapplicable and the matter could proceed only in terms of Arbitration Act, 1940.
( 1 ) THE above numbered OMP seeks (i) quashing appointment of Shri A. K. Sinha, respondent No. 2 as the sole arbitrator by the Cement Corporation of India (CCI for short) by letter dated 24/6/1997; (ii) quashing either the present arbitration proceedings; or in the alternative, to proceed with the arbitration along with Shri A. K. Oza, respondent No. 3 as duly appointed Arbitrator by the petitioner.
( 2 ) THE relevant facts are as under:
2. 1 The parties entered into a contract relating to supply of plant and machinery and erection and commissioning of the clinkerisation package for one million tonnes for its Tandur project in Andhra Pradesh on 14th March 1985. This was awarded to the petitioner and in that connection the parties entered into an arbitration agreement in following terms: "45. 0 ARBITRATION 45. 1 If any dispute or difference of any kind whatsoever arise between the Purchaser and Supplier arising out of Contract for the performance of the works, whether during the progress of the works or after its completion or whether before or after the termination or breach of contract, and the Purchaser and Supplier fail to settle amicably, the dispute shall be referred to the Arbitrator - one Arbitrator nominated by each party and the Arbitrators in turn shall approach Indian Council of Arbitrators for appointment of an umpire within 30 (thirty) days of the appointment of last Arbitrator. (Emphasis supplied)
( 3 ) SOME disputes arose between the parties on account of alleged non-payment by respondent and consequently on 12th February 1987 on account of the non-payment under the Agreement dated 14/3/1985, the petitioner company invoked arbitration under the aforesaid clause 45 but ultimately abandoned for Arbitrators failed to appoint Umpire. The petitioner company encountered severe financial crunch. The company was declared sick. The petitioners rejuvenated the same and it ceased to be a sick industry in terms of order dated 7/2/1997 passed by the BIFR. The petitioner company was trying to settle all the outstanding disputes as per BIFR scheme. The petitioner received from the Cement Corporation of India a letter invoking the arbitration clause 45 of the Agreement dated 14/3/1985, nominating Shri A. K. Sinha, Director, CCI as their arbitrator under the provisions of Arbitration Act, 1940. Another letter dated 31/5/1997 or 2/6/1997 was received from the CCI stating that if the petitioner failed to appoint their arbitrator within 15 clear days from receipt of the said notice dated 28/4/1997 then the arbitrator appointed by the respondent company would act as sole arbitrator in terms of Section 9 sub-clause (b) of Arbitration Act, 1940. By letter dated 24/6/1997 despite protests and request to give them more time to consider the appointment of arbitrator, the CCI appointed Shri A. K. Sinha as the sole arbitrator on the plea that the petitioner had not appointed any arbitrator on their behalf. He would enter upon reference and make the award as sole arbitrator under the provisions of clause (b) of Section 9 of the Arbitration Act, 1940. This appointment of Shri A. K. Sinha as the sole arbitrator is being challenged by the petitioner company on the ground that the Arbitration and Conciliation Act of 1996 came into force w. e. f. 16th August 1997 and by virtue of Section 85, Arbitration Act 1940 stands repealed. The matter would not be governed by the Arbitration Act 1940 any more. It is further submitted that the new Act does not make any provision of the nature of the provisions of Section 9 (b) of the Arbitration Act, 1940. In fact, in terms of sub-section (6) of Section 11 of the 1996 Act, in the event of failure to reach an agreement expected of them, the parties have to approach the Hon ble Chief Justice or any person or institution designated by him for appointment of arbitrators. The petitioner appointed Shri A. K. Oza as their arbitrator. The petitioner claims that both the parties should be directed to
