2008 Supreme(Del) 996
HIGH COURT OF DELHI
THE HONOURABLE MR. JUSTICE RAJIV SAHAI ENDLAW
Deepashree
Versus
Sultan Chand
Arb. A. No. 516 of 2007
Date of Judgment : 22-09-2008
For the Appearing Parties:Nandini Gidwaney, Rakesh Sachdeva, Advocates.
Headnote:Arbitration and Conciliation Act, 1996
Sections 11 & 10(2) - An agreement for arbitration--Petition for appointment of Sole Arbitrator to adjudicate the claims and counter claims--Parties having failed to agree on a Sole Arbitrator, the cause of action had accrued to the applicant to approach under Section 11(6) of the Act--An arbitrator appointed to adjudicate the dispute.
RAJIV SAHAI ENDLAW, J.
(1) APPLICATION is filed u/s. 11 of the Arbitration and Conciliation Act, 1996, for appointment of Arbitrator. The relationship between the applicant and the respondent is of an author and a publisher. The agreement dated 1. 8. 2008 between the parties contains an arbitration clause as under : "if and when any dispute arises between the parties as to the meaning, interpretation or on implementation of these terms, such dispute shall be referred to the arbitration of two Arbitrators, one to be appointed by the publishers and the other by the author/s. "
(2) DISPUTES and differences have arisen between the parties, the applicant vide legal notice dated 13. 3. 2007 to the respondent nominated Justice a. P. Chaudhary, retired, as the Sole Arbitrator and called upon the respondent to within 30 days consent to his appointment. The respondent sent reply dated 7. 4. 2004 refusing to concur in the appointment of Sole Arbitrator and relying on arbitration clause in the agreement nominated Mr. S. S. Budhiraja, Advocate as the Arbitrator. The applicant thereafter moved the present application.
(3) THE counsel for the applicant has argued that claims of the applicant against the respondent are small, the applicant is an Academician and cannot afford lengthy/costly arbitration, appointment of two arbitrators i. e. one by each party and which would also entail appointment of third Arbitrator will be onerous on the claimant. Reliance was placed on Sri Venkateswara Construction company Vs. Union of India, AIR 2001 Andhra Pradesh 284, where an agreement for arbitration by two Arbitrators was construed as an agreement for reference to a sole Arbitrator.
(4) PER contra, the counsel for the respondent has argued that the agreement between the parties was for appointment of one Arbitrator by each of the parties and, thus the question of appointment of Sole Arbitrator as suggested by the applicant did not arise; the applicant cannot be permitted to rewrite the terms of the agreement; that the applicant having not followed the agreed procedure of nominating her Arbitrator and the respondent having nominated its Arbitrator, there was no cause of action for applying u/s 11 and the petition was liable to be dismissed. Reliance was also placed on Narain prasad Lohia Vs. Nikunj Kumar Lohia, 2002, 3 SCC 572.
(5) IN Sri Venkateswara Construction Company, cited by the applicant, there is hardly any discussion for construing an agreement of arbitration by two arbitrators as of arbitration by Sole Arbitrator. On the contrary in Narain prasad Lohia cited by the counsel for the respondent, the Apex Court has in para 17 laid down as under :
17. We are also unable to accept Mr. Venugopal's argument that, as a matter of public policy, Section 10 should be held to be non-derogable. Even though the said Act is now an integrated law on the subject of arbitration, it cannot and does not provide for all contingencies. An arbitration being a creature of agreement between the parties, it would be impossible for the legislature to cover all aspects. Just by way of example Section 10 permits the parties to determine the number of arbitrators, provided that such number is not an even number. Section 11 (2) permits parties to agree on a procedure for appointing the arbitrator or arbitrators. Section 11 then provides how arbitrators are to be appointed if the parties do not agree on a procedure or if there is failure of the agreed procedure. A reading of Section 11 would show that it only provides for appointments in cases where there is only one arbitrator or three arbitrators. By agreement parties may provide for appointment of 5 or 7 arbitrators. If they do not provide for a procedure, then Section 11 does not contain any provision for such a contingency. Can this be taken to mean that the agreement of the parties is invalid. The answer obviously has to be in the negative. Undoubtedly the procedure provided in Section 11 will mutatis muta