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High Court Of Delhi
MERYFUR INDUSTRIES LIMITED - Appellant
Versus
UNION OF INDIA - Respondent
Decided On : 01/19/1998
ARBITRATION - APPOINTMENT OF ARBITRATOR - FAILURE TO APPOINT WITHIN 15 DAYS - JURISDICTION OF COURT - SECTION 8(1)(B) OF THE ARBITRATION ACT, 1940 - INTERPRETATION - COURT'S POWER TO APPOINT ARBITRATOR - INTENTION OF PARTIES - APPEARANCE BEFORE ARBITRATOR UNDER PROTEST - EFFECT.
Fact of the Case:
Petitioner submitted a tender in response to an invitation by the respondent, which was accepted. A contract was executed containing an arbitration clause. Disputes arose between the parties, and the respondent appointed an arbitrator who later resigned. Petitioner sent a notice under Section 8 of the Arbitration Act to the respondent to appoint another arbitrator, but no arbitrator was appointed within the statutory period of 15 days. Petitioner filed petitions under Section 8 of the Arbitration Act seeking the appointment of an arbitrator.
Finding of the Court:
The court held that the respondent had forfeited its right to appoint an arbitrator due to its failure to do so within 15 days of receiving the petitioner's notice. The court further held that it had the jurisdiction to appoint an arbitrator under Section 8(1)(b) of the Arbitration Act, as the intention of the parties was to resolve disputes through arbitration and not through litigation.
Issues: 1. Whether the respondent forfeited its right to appoint an arbitrator due to its failure to do so within 15 days of receiving the petitioner's notice? 2. Whether the court had the jurisdiction to appoint an arbitrator under Section 8(1)(b) of the Arbitration Act?
Ratio Decidendi: 1. The court relied on the decision in Nandyal Coop. Spinning Mills Ltd. v. K. V. Mohan Rao, where it was held that if no arbitrator is appointed within 15 days from the date of receipt of the notice, the administrative head of the appellant had abdicated himself of the power to appoint arbitrator under the contract. The court gets jurisdiction to appoint an arbitrator in place of the contract by operation of Section 8(1)(a). 2. The court held that it had the jurisdiction to appoint an arbitrator under Section 8(1)(b) of the Arbitration Act, as the intention of the parties was to resolve disputes through arbitration and not through litigation. The court relied on the decision in M/s. Reghunath Singh and Co. v. U. O. I., where it was held that the court had the power to supply the vacancy under Section 8(1)(b) of the Act, unless the arbitration agreement showed that the parties did not intend to supply the vacancy.
Final Decision: The court allowed the petitions and appointed Justice G. C. Jain, retired Judge of the Court, as the arbitrator to adjudicate upon the disputes between the parties.
( 1 ) THIS order will govern the disposal of OMPS No. 76/89, 77/89, 78/89.
( 2 ) OMP 76/89 under Section a of the Arbitration Act was filed inter-alia alleging that in response to an invitation of tender, the petitioner submitted tender which was accepted by the respondent vide rate contract No. ES-3/rc-1432/pvc (Alum)/ Cable/85-86/33/meryfur/1337/coad dated 17th February, -1986 for supply of cables for electric power and lighting in different sizes. Contract in Form No. DGSandd-68 containing arbitration clause No. 24 was executed. Certain disputes arose between the parties and to resolve them the respondent appointed Dr. B. N. Mani as the so to garb arbitrator who entered upon the reference in arbitration case being No. 92-B/88. After Dr. Mani retired from the post of Additional Legal Adviser, he also resigned as arbitrator. Thereafter, petitioner through M/s. Signhania and Company sent a notice under Section 8 of the Act to DGSandd who had to fill up the vacancy under the arbitration clause for appointment of another arbitrator. Despite service of that notice, no arbitrator was appointed within the statutory period of 15 days by DGSandd and as such it had forfeited its right to appoint an arbitrator. It was prayed that an arbitrator be appointed by the Court to adjudicate upon the disputes between the parties.
( 3 ) IN OMP 77/89, petitioner s under which was accepted by the respondent vide rate contract No. ES-3/rc-1430?ugac/85-86/lll/meryfur/1419/coad dated 19th March 1986 was for supply of underground armored PVC insulated and PVC (Sheathed) cables. In OMP 78/89 tender accepted vide rate contract No. ES-3/ RC-1431/pvc (Alum)/cable/85-86/33/meryfur/coad/1368 dated 31st January, 1986 was for supply of non-weather proof unarmored PVC insulated (unsheathed) cables. Averments made in aforesaid two OMPs are identical to that made in OMP 76/89 excepting that the number of arbitration case in OMP 77/89 is 76-B/88 while in OMP 78/89 it is 75-B/88.
( 4 ) IN identical replies filed in the three cases, it is alleged by the respondent that it has already appointed R. K. Gupta, Additional Legal Adviser as the arbitrator, and therefore, the petitions have become infructous. it is denied that the respondent had forfeited its right to appoint arbitrator, as alleged.
( 5 ) IN OMP No. 77/89, O. A Khan, Deputy Director (Supplies) of DGSandd field his affidavit dated 15. 1. 91. It is stated that B. N. Mani, Additional Legal Adviser was working as sole arbitrator for deciding the disputes between the parties and on attaining super annuation he retired in February 1989. In his place, R. K. Gupta was appointed on 10. 8. 89 by DGSandd. Although the petitioner field petitions before the Court for appointment of arbitrator but it has been appearing before R. K. Gupta, arbitrator without any protest. On promotion of R. K. Gupta, C. Achutan was appointed as arbitrator by DGSandd on 31. 10. 90 Petitioner also appeared before the. new arbitrator and never raised any protest before him. Similar is the position in OMPS 76/89 and 78/89 and this affidavit may be read in evidence in those petitions too.
( 6 ) R. L Gupta one of the registered partners of the petitioner in the coutner- affidavit dated 6th May, 1991, has not disputed the factual statement made in the affidavit the factual statement made in the affidavit of O. A. Khan in regard to appointment of R. K. Gupta and C. Achutan as arbitrators on the dates given. However, it is stated that after the filing of the petition the petitioner has been appearing before the arbitrators under protest. Additional affidavit dated 26th May, 1992 was also filed by aforesaid R. L. Gupta wherein he has averred that R. N. Gupta, arbitrator, after having entered upon the reference vide order dated 4. 7. 89, fixed the date of hearing as 24. 7. 89. on 11. 7. 89, petitioner filed an application before him stating that his appointment as arbitrator is invalidy and in view of the pendency of the petition filed u
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