2015 Supreme(Del) 74
High Court of Delhi
V. KAMESWAR RAO, J.
M/s. Lanco Infratech Limited – Appellant
Versus
M/s. Hindustan Construction Company Limited – Respondent
ARB. P. 11 of 2015
Decided on: 19-01-2015
Advocate Appeared
For the Petitioner:Sandeep Sethi, Sr. Advocate with Dhruv Madan, Advocate.
For the Respondent:Rajiv Nayar, Sr. Advocate with Ananya Kumar, Advocate.
The issue of jurisdiction cannot be questioned and examined in the proceedings under Section 11(6) of the Act.
Headnote:
Arbitration & Conciliation Act - Appointment of Arbitrator - Clause 67.3 - [FACT OF THE CASE] It is the case of the petitioner that disputes arose between the parties and the respondent invoked the arbitration clause for settlement of the disputes. The petitioner failed to appoint its arbitrator within the stipulated time, leading to the appointment of an arbitrator by the Institute of Engineers (India). [FINDING OF THE COURT] The court found that the petition under Section 11(6) of the Act was not maintainable as the issue of jurisdiction cannot be questioned and examined in the proceedings under Section 11(6) of the Act. [ISSUES] The main issue was the maintainability of the petition under Section 11(6) of the Act. [RATIO DECIDENDI] The court held that the parties have to challenge the constitution of the Arbitral Tribunal before the Tribunal itself, and not under Section 11(6) of the Act. [FINAL DECISION] The petition was dismissed. No costs.
1. In this petition under Section 11(6) of the Arbitration & Conciliation Act, 1996 (“Act? in short), the petitioner has sought the following reliefs:-
“(i) Allow the present application and confirm the appointment of Hon’ble Mr. Justice R.C. Chopra (Retd.), Ld. Arbitrator on behalf of the petitioner to resolve the disputes between the parties; and/or
(ii) Pass a direction for appointment of a Presiding Arbitrator to preside over the Arbitral Tribunal; and
(iii) Pass a direction cancelling the appointment of Shri Amiya Kumar Mohanty, FIE by the Institute of Engineers (India) as the nominated arbitrator on behalf of the petitioner company;
(iv) Pass such other or further order(s) as this Court deems fit and proper in the facts of the present case.”
Facts:
2. It is the case of the petitioner that it had entered into an agreement with the respondent for civil works of power house, transformers and butterfly valve caverns and switchyard of Teesta-VI Hydroelectric Project, Sikkim and other contract for civil works for various tunnels viz. main access tunnels, ventilation tunnels, escape tunnels, bus duct tunnels, pressure tunnels, tail race tunnels and twin head race tunnels from R.D 10370 upto junction with the bottom of serge tunnels including aid tunnels near Subinkhore of Teesta VI, Hydroelectric Project both dated 25.06.2008. The contract agreement under clause 67 stipulated a procedure that need to be followed in the event of disputes and differences that arise between the parties. Sub Clause 67.3 reads as under:-
“Any dispute in respect of which the client and the contractor have failed to reach at an amicable settlement pursuant to sub-clause 67.1, shall be finally settled by arbitration as set forth below. The arbitral tribunal shall have full power to open-up, review and revise any decision, opinion, instruction, determination, certificate or valuation of the Engineer.
(1) A dispute with an Indian contractor shall be finally settled by arbitration in accordance with the Indian arbitration & conciliation act, 1996, or any statutory amendment thereof. The arbitral tribunal shall consist of 3 arbitrators, one each to be appointed by the client and the contractor. The third arbitrator shall be chosen by the two arbitrators so appointed by the Parties and shall act as presiding arbitrator. In case of failure of the two arbitrators, appointed by the parties to reach upon arbitrator appointed subsequently, the presiding arbitrator shall be appointed by the president of institution of engineers (India). For the purposes of this sub-clause, the term “Indian contractor” means a contractor who is registered in India and is a juristic person created under Indian law as well as a joint venture between such a contractor and foreign contractor.
(2) Arbitration may be commenced prior to or after completion of the works, provided that the obligations of the client, the engineer, and the contractor shall not be altered by reason of the arbitration being conducted during the progress of the works.
(3) If one of the parties fail to appoint its arbitrator in pursuance of sub-clause (1) above, within 30 days after receipt of the notice of the appointment of its arbitrator by the other party, then the president of institution of engineers (India), shall appoint the arbitrator. A certified copy of the order of the president of institution of engineers (India), making such a appointment shall be furnished to each of the parties.
(4) Arbitration proceedings shall be held at New Delhi, India, and the language of the arbitration proceeding and that of all documents and communications between the parties shall be English.
(5) The decision of the majority of arbitrators shall be final and binding upon both parties. The cost and expenses of arbitration shall be borne in such a manner as determined by the arbitral tribunal. However, the expenses incurred by each party in connection with the preparation, presentation, etc of its proceedings as also the fees