Back
IN THE HIGH COURT OF DELHI AT NEW DELHI
Navin Chawla, J.
M/s Vindhya Vasini Construction Co. – Appellant
Versus
M/s Bharat Heavy Electricals Ltd. – Respondent
Arb.P. 1298 of 2022
Decided On : 10-05-2023
Arbitration Agreement - Appointment of Arbitrator - Arbitration and Conciliation Act 1996 - Section 11(6)
Fact of the Case:
The petitioner filed a petition seeking appointment of an Arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996, for adjudicating disputes arising from a Work Order. The respondent opposed the appointment, citing the unambiguous Arbitration Agreement that specified the sole authority of the Head TBG, BHEL, Noida or his nominee to act as an Arbitrator.
Finding of the Court:
The Court found that the Arbitration Agreement clearly stated that if the Head TBG or his nominee could not act as an Arbitrator, the matter would not be referred to Arbitration at all. The Court held that the Agreement reflected the conditional acceptance of Arbitration by the respondent and, in the absence of an express waiver by the petitioner, the Arbitration Agreement would cease to operate if the nominee of the Head TBG could not act as an Arbitrator.
Issues: The issues involved the interpretation and enforceability of the Arbitration Agreement, the conditional acceptance of Arbitration, and the voluntariness of Arbitration as an alternate dispute resolution mechanism.
Ratio Decidendi: The Court emphasized the importance of party autonomy in arbitration, stating that without an arbitration agreement, parties cannot be compelled to arbitration. It held that the parties are bound by the entire arbitration clause and not only a part thereof. The Court also highlighted the distinction between different types of arbitration agreements and their survival in case of failure to appoint an arbitrator as per the agreed procedure.
Final Decision: The petition was dismissed, leaving it open to the petitioner to avail the legal remedy in accordance with the law.
JUDGMENT
Navin Chawla, J. (Oral)--This petition has been filed under Section 11(6) of the Arbitration and Conciliation, 1996 (hereinafter referred to as the `Act.) seeking appointment of an Arbitrator for adjudicating the disputes that have arisen between the parties in relation to the Work Order dated 10.03.2016 for receipt of equipment/material at site, unloading, inspection, verification, storage, up keeping during storage, erection, testing, commissioning and handing over of 400/220KV substation at Unchahar in Uttar Pradesh, placed by the respondent on the petitioner.
2. The Arbitration Agreement between the parties is contained in Clause 23 of the Work Order, which is reproduced hereinbelow:
"23.0 ARBITRATION:
23.1 Except where otherwise provided for in the contract all questions & disputes relating to the meaning of the specification designs drawings and instruction herein before mentioned and as to the quality of workmanship or materials used on the work or as to any other question, claim, right, matter or thing whatsoever in any way arising out of or relating to the contract, designs, drawings specifications, estimates, instructions, orders of these conditions or otherwise concerning the works, of the execution or failure to execute the same whether arising during the progress of the work or after the completion or abandonment thereof shall be referred to the sole arbitration of the Head TBG, BHEL, Noida and if the Head TBG is unable or unwilling to act to the sole arbitration of some other person appointed by the Head TBG willing to act as such arbitrator. A party wishing to commence arbitration proceeding shall invoke Arbitration Clause by giving 60 days notice to the other party. The notice invoking arbitration shall specify all the points of disputes with details of the amount claimed to be referred to arbitration at the time of invocation of arbitration and not thereafter.
There will be no objection if the arbitrator so appointed is an employee of BHEL and he had to deal with the matters to which the contract relates, in the course of his duties. The arbitrator to whom the matter is originally referred being transferred or vacating his office or being unable to act for any reason such Head TBG as aforesaid at the time of such transfer vacation of office or inability to act shall appoint (see note) another person to act as arbitrator in accordance with the terms of the contract such person shall be entitled to proceed with the reference from the stage at which it was left by his predecessor. It is also a term of this contract that no person other than a person appointed by such Head TBG as aforesaid should act as arbitrator and if for any reason that is not possible the matter is not to be referred to arbitration at all, in all cases where the amount of the claim dispute is Rs.50,000/- (Rupees fifty thousand) and above the arbitrator shall give reasons for the award. The provisions of Indian Arbitration and Conciliation Act 1996 or any statutory modification or re-enactment thereof and the rules made thereunder and the time being in force shall apply to the arbitration proceeding under this clause.
It is a term of the contract that the party involving arbitration shall specify the dispute or disputes to be referred to arbitration under this clause together with the amounts claimed in respect of each dispute.
The arbitrator may from time to time with consent of the parties enlarge the time for making and publishing the award.
The work under the contract shall, if reasonably possible, continue during the arbitration proceedings and no payment due or payable to the contractor shall be withheld on account of such proceedings.
The Arbitrator shall be deemed to have entered on the reference on the date he issues notice to both the parties fixing the date of the first hearing.
The Arbitrator shall give a separate award in respect of each dispute or difference referred to him.
The Venue of arbitration shall be at New Delhi.
The awar
The court emphasized the necessity for impartiality in arbitration, ruling that automatic appointments of arbitrators undermined the arbitration clause, rendering the award invalid.
Appointment of arbitrator by designation is permissible. Arbitration clauses in government contracts providing that an employee of the department will be the sole arbitrator are neither void nor unen....
The court can appoint an independent arbitrator when the designated arbitrator has a conflict of interest, emphasizing the need for impartiality in arbitration proceedings.
The main legal point established in the judgment is that the appointment of an arbitrator must be in accordance with the law, and if found to be invalid, the court has the jurisdiction to set it asid....
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
