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High Court Of Delhi
INTERNATIONAL SECURITY AND INTELLIGENCE AGENCY LIMITED - Appellant
Versus
MUNICIPAL CORPORATION OF DELHI - Respondent
Decided On : 02/01/1996
ARBITRATION - APPOINTMENT OF ARBITRATOR - SECTION 8 OF THE ARBITRATION ACT - INTERPRETATION - COURT'S JURISDICTION TO APPOINT ARBITRATOR - ARBITRATOR'S NEGLECT OR REFUSAL TO ACT - APPOINTMENT OF ARBITRATOR BY COURT AFTER NOTICE TO PARTIES - ARBITRATION AGREEMENT PROVIDING FOR APPOINTMENT OF ARBITRATOR BY CONSENT OF PARTIES - FAILURE OF PARTIES TO CONCUR IN APPOINTMENT - COURT'S POWER TO APPOINT ARBITRATOR.
Fact of the Case:
A dispute arose between the petitioner and the respondent Municipal Corporation of Delhi under a contract for slum development. The petitioner served a notice on the respondent to appoint an arbitrator in terms of the arbitration agreement, but the respondent failed to do so. The petitioner then filed a petition under Sections 5, 8(b), and/or 20 of the Arbitration Act for revoking the authority of the named arbitrator and for appointment of an independent arbitrator.
Finding of the Court:
The court held that the respondent's failure to appoint an arbitrator within fifteen days from the date of receipt of the petitioner's notice amounted to neglect or refusal to act as an arbitrator, and therefore, the court had jurisdiction to appoint an arbitrator under Section 8(1)(a) of the Arbitration Act. The court also held that the appointment of an arbitrator by the respondent after the filing of the petition did not render the petition infructuous, as the petitioner had already acquired a right to have an arbitrator appointed by the court.
Issues: 1. Whether the respondent's failure to appoint an arbitrator within fifteen days from the date of receipt of the petitioner's notice amounted to neglect or refusal to act as an arbitrator, giving the court jurisdiction to appoint an arbitrator under Section 8(1)(a) of the Arbitration Act? 2. Whether the appointment of an arbitrator by the respondent after the filing of the petition rendered the petition infructuous.
Ratio Decidendi: 1. The court relied on the Supreme Court's decisions in Nandyal Co-operative Spinning Mills Limited v. K. V. Mohan Rao and G. Rama Chandra Reddy and Co. v. Chief Engineer, M. E. S. Madras, which held that if an arbitrator neglects or refuses to act, or fails to appoint an arbitrator within fifteen days from the date of receipt of a notice from a party, the court has jurisdiction to appoint an arbitrator under Section 8(1)(a) of the Arbitration Act. 2. The court held that the appointment of an arbitrator by the respondent after the filing of the petition did not render the petition infructuous, as the petitioner had already acquired a right to have an arbitrator appointed by the court.
Final Decision: The court allowed the petition, revoked the authority of the arbitrator appointed by the respondent, and appointed a new arbitrator to decide the disputes between the parties.
( 1 ) AN agreement No. B-167/dir (A) dated 7th June, 1989 was entered into between the petitioner and the slum wing of Delhi Development Authority. The slum wing of Delhi Development Authority was subsequently transferred to Municipal Corporation of Delhi and the said contract was ratified by the respondent Corporation aswell. Certain disputes under the contract had arisen between the partics which in terms of Clause 16 of the agreement were liable to be referred to an Arbitrator. By notice dated 26th September, 1994 the petitioner cald upon the respondent to appoint an Arbitrator in terms of the agreement between the parties and refer the disputes to him for adjudication. Despite service of notice, the Arbitrator was not appointed and as such the present petition was filed under Sections 5, 8 (b) and/or 20 of the Arbitration Act for revoking the authority of the named Arbitrator and for appointment of an independent Arbitrator for adjudication of the disputes as set forth in Annexure P-2 to the petition.
( 2 ) ON being served with the summons of the suit, the respondents filed its reply on 7th July, 1995. It was stated in the said reply that since after the filing of the suit, by order dated 15th May, 1995 all disputes/claims mentioned in the suit have been referred to Shri R. S. Yadav, Superintending Engineer (Planning), Slum and JJ Department as the Sole Arbitrator to decide the disputes and make his award regarding the disputes which had been raised by the petitioner. It was, therefore, stated that the petition had become infructuous and was liable to be dismissed.
( 3 ) THE petitioner not being satisfied with the appointment of Shri R. S. Yadav as an Arbitrator, is seeking to proceed with the petition. Challenge to the appointment of Mr. R. S. Yadav has been made on two grounds, namely, (1) after service of notice under Section 8, respondent cannot appoint an Arbitrator and in any case the Arbitrator has failed to use all reasonable despatch in entering upon and proceeding with the reference; and (2) the matter was to be referred to the sole arbitration of Commissioner (Sandjj), Delhi Development Authority or a person nominated by him and as the appointment had been made by the Director (Sandjj), the same cannot be in terms of the arbitration agreement.
( 4 ) TO appreciate the contentions of the parties, it will be useful to quote the arbitration agreement which is as under :
"in case of any dispute, regarding interpretation of above terms and conditions of contract and their non-implementation of any other matter, incidental there-to, covered in this agreement, the matter will be referred to the sole arbitration of Commissioner (Sandjj) DDA or person nominated by him whose decision shall be final and binding on both the parties. "
( 5 ) THE contention of Mr. Mehra, learned Counsel for the petitioner that the appointment of Mr. R. S. Yadav is not in terms of the arbitration agreement, in my opinion, is without any basis. Under the agreement, no doubt, the appointment was required to be made by the Commissioner (Sandjj), Delhi Development Authority. However, on transfer of the slum wing from Delhi Development Authority to Municipal Corporation of Delhi, the designation of the Commissioner was changed to Director (Sandjj ). Mr. Manjeet Singh who was earlier the Commissioner (Sandjj) Delhi Development Authority on its transfer to Municipal Corporation of Delhi became Director (Sandjj ). In my opinion, therefore, in case the appointment of Mr. R. S. Yadav is otherwise valid no objection thereto can be taken on the ground that the same has not been made by the Commissioner (Sandjj ).
( 6 ) THE only question, therefore, which remains for consideration is whether the Arbitrator had acted with reasonable despatch in entering upon and proceeding with the reference and whether after the service of notice under Section 8, the respondent cannot make appointment of an Arbitrator.
( 7 ) IN Puran Chand v. H. P. Forest Co
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