The main legal point established in the judgment is that a suit challenging the validity of the arbitration agreement is not maintainable under Section 5 of the Arbitration and Conciliation Act.

Jayant Nath, J.

IA No. 12367/2013 (u/O 39 R 1 & 2)

1. The present application is filed by the plaintiff seeking ex parte injunction to restrain the defendant from pursuing in any manner or taking steps to pursue the arbitration initiated by the defendant before Justice J.D Kapoor (Retd.), Sole Arbitrator.

2. The accompanying suit is filed seeking a declaration that the Arbitration Agreement under the Contract between the plaintiff and the defendant has ceased to exist and is inoperative and that the appointment of the sole arbitrator under the Contract between the plaintiff and the defendant is non-est, null and void. Other connected reliefs are also sought.

3. The defendant was awarded a Contract in May 2010 for execution of works relating to large diameter Circulating Water and other connected work by Jindal Power Ltd. at Raipur in Chhattisgarh. Pursuant to the said order, the defendant awarded to the plaintiff a work order dated 14.05.2010 being work for loading and unloading, shifting, storage at site, fabrication, erection, testing and commissioning of piping, mechanical equipment erection, application of primer & wrapping coating, etc. and other miscellaneous work for a total value of about Rs. 10.15 crores. Subsequently, some amendments were carried out to the original work.

4. The above order contains a dispute resolution clause which provides that in case of any differences between the parties, the same may be referred to the arbitration of the Director-in-Charge of Unitech Machines Ltd. or some other person appointed by him whether or not from the parties concerned.

5. It is stated that on 27.05.2013, the defendant invoked the arbitration clause and appointed Mr. Justice J.D. Kapoor, Former Judge of this High Court as a sole arbitrator. Vide the said communication, it was for the first time informed to the plaintiff that the Directorin-Charge, Unitech Machines Ltd. which is the named officer as the arbitrator in the Arbitration Clause has been re-designated as Chief Executive Officer w.e.f. August 2011. It is further stated that the person occupying the post of CEO, namely, Mr. B.K. Goel was the very same person who raised the dispute and claims and issued the Arbitration Notice and invoked the Arbitration Clause. Various other objections have been taken.

6. The defendant has filed its written statement, though the same is not record but a photocopy of the same has been placed on record. In the written statement it is averred that the change in the nomenclature of the official title was caused due to an internal arrangement of the defendant Company when the incumbent Director-in-charge left the service of the Company and a new incumbent joined the Company who took over the power and responsibilities of the Director-in-Charge but was appointed as Chief Executive Officer. It is averred that the defendant is a private limited company and unlike government departments or PSUs, there is no post creation/abolition. Reliance is placed on a Board Resolution dated 01.08.2011 in which the power to appoint arbitrator as was given to the DIC was then given to the present CEO. It is further stated that the learned Arbitrator, namely, Mr. Justice J.D. Kapoor, Retired Judge of this High Court has already entered into reference and has held a few hearings. The plaintiff has participated in the arbitration proceedings and the objection regarding maintainability of reference is to be raised before the Arbitrator.

7. I have learned counsel for the parties.

8. Learned counsel for the plaintiff has urged only one point i.e. that as per the Arbitration Clause, the Director-in-Charge, Unitech Machines Ltd. is the only person who can be the arbitrator or can nominate some other person to be an arbitrator. He relies on the judgment of the Hon’ble Supreme Court in the case of Newton Engineering and Chemicals Ltd. vs. Indian Oil Corporation & Ors., 2013 (4) SCC 44 to contend that where the post ceased to exist in the Corporation, the arbitra