The main legal point established in the judgment is that the procedure for amicable settlement as provided in the arbitration clause was merely directory, and the respondent's failure to nominate an arbitrator within 30 days of the demand resulted in the forfeiture of their right to appoint an arbitrator.

JAYANT NATH, J.

IA No.4378/2017 (exemption)

Allowed subject to all just exceptions.

ARB.P. 243/2017

1. This petition is filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act) seeking appointment of an arbitrator on behalf of the respondent. Some of the salient facts as stated in the petition are that the respondent issued a tender dated 29.04.2011 for design, engineering, etc. of equipment/items for extension of its 765/400 KV Angul Pooling Station (Power Grid) complete in all respects along with metering yard and civil work etc.

2. On 21.07.2011, the bid of the petitioner was accepted and a letter of intent was entered into between the parties envisaging the scope of work @ Rs. 18,81,00,000/-. On 17.09.2011, two separate orders were placed by the respondent. It is the case of the petitioner that on 02.06.2014, the work under the contract was completed to the respondent’s satisfaction.

3. Disputes having arisen between the parties, the petitioner on 02.01.2017 invoked the arbitration clause and nominated Mr.Justice Vikramjit Sen (Retd.) as an arbitrator in accordance with the terms of the contract. The case of the petitioner is that despite receipt of notice dated 02.01.2017 invoking the arbitration clause and lapse of 30 days period during which, as per the arbitration clause, the respondent was requested to resolve the disputes, the respondent failed to resolve the disputes. Thereafter another 30 days lapsed but the respondent took no steps to appoint their Arbitrator.

4. The respondent have filed their affidavit in opposition. It is their contention that in terms of clause 11 and 14 of the Contract the parties have to first endeavour to resolve all the disputes amicably between themselves arising in connection with the contract and in case any of the disputes remain unresolved within 30 days of the matter being raised by either party, either party may refer the disputes for settlement through arbitration. It is urged that by the same notice, the petitioner sought resolution of the disputes and also sought invocation of the arbitration clause prematurely. Hence, it is pleaded that the petition of the petitioner is premature.

5. I have heard learned counsel for the parties.

6. Learned counsel for the petitioner relying upon the Judgment of the Supreme Court in the case of Datar Switchgears Ltd. vs. TATA Finance Ltd., (2000) 8 SCC 151 has reiterated that the respondent having failed to nominate their arbitrator as required and are now disqualified from doing so and this court may appoint the arbitrator on behalf of the respondent. Reliance is also placed on the judgment of the Supreme Court in the case of Visa International Ltd. v. Continental Resources (USA) Ltd., (2009) 2 SCC 55 and judgment of this court in the case of Ravinder Kumar Verma v. BPTP Ltd., 2015 (147) DRJ 175.

7. Learned counsel for the respondent has opposed the petition. She has reiterated her contention as stated in the reply, namely, that the invocation is premature. It is urged that the procedure as prescribed in the arbitration clause has not been followed. It is urged that even after notice dated 02.01.2017 and filing of the present petition on 11.04.2017, there has been continuous efforts by the parties to settle the matter and meetings have taken place on 16.02.2017 and 18.04.2017. Reliance is also placed on a communication dated 01.05.2017 which was sent by the petitioner where the petitioner have taken a stand that in view of the order of this court dated 13.04.2017, they were attempting to reach an amicable settlement. The communication notes that if the respondent does not come with mutually acceptable terms before 30.05.2017, the petitioner will not entertain any further communication or proposal. It is pleaded that the settlement talks were going on and hence, it is urged that invocation of the arbitration clause by the petitioner is premature and the present petition is not maintainable. It i