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High Court Of Himachal Pradesh
M.SRINIVASAN
HIMACHAL BUILDERS - Appellant
Versus
COSMO FERRITES LTD. - Respondent
Arb. Petition No. 18 of 1997
Decided On : 08/01/1997
{'KEYWORD': 'ARBITRATION - APPOINTMENT OF ARBITRATOR - LIMITATION', 'SUBJECT': 'Appointment of Arbitrator under the Arbitration and Conciliation Act, 1996 - Applicability of Limitation', 'ACT SECTION LIST': 'Arbitration and Conciliation Act, 1996 - Sections 1, 11, 21, 43, 85'}
Fact of the Case:
Parties had an arbitration agreement in 1986. A dispute arose, and the petitioner applied for the appointment of an arbitrator under the Arbitration Act, 1940. Arbitrators were appointed, but one resigned. The other arbitrator expressed inability to proceed without a third arbitrator. After the Arbitration and Conciliation Ordinance, 1996 came into force, the petitioner wrote to the respondent suggesting the appointment of a sole arbitrator or two arbitrators, one from each party. The respondent appointed an arbitrator, and the petitioner appointed another. The arbitrators could not agree on a third arbitrator. The petitioner approached the court for the appointment of a third arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996.
Finding of the Court:
The court held that the provisions of the Arbitration and Conciliation Act, 1996 applied to the proceedings as the parties had agreed to its applicability. The application for the appointment of a third arbitrator was not barred by limitation as it was filed within one year from the date of the appointment of arbitrators under the new Act.
Issues: 1. Whether the provisions of the Arbitration and Conciliation Act, 1996 applied to the proceedings. 2. Whether the application for the appointment of a third arbitrator was barred by limitation.
Ratio Decidendi: 1. The court held that the parties had agreed to the applicability of the Arbitration and Conciliation Act, 1996 by their conduct. The petitioner had expressly drawn the respondent's attention to the provisions of the new Act, and the respondent had appointed an arbitrator under the new Act without demur. 2. The court held that the application for the appointment of a third arbitrator was not barred by limitation as it was filed within one year from the date of the appointment of arbitrators under the new Act.
Final Decision: The court appointed a third arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996.
M Srinivasan, C. J—There was an agreement between the parties dated 21-3-1986 in which there was an arbitration clause. When dispute arose between the parties the petitioner applied to this court under sections 8 and 20 of the Arbitration Act, 1940 for appointment of an arbitrator. That was taken on file as C S No 33 of 1991 By order dated 5 3-1993 this Court directed the parties to appoint their respective arbitrators. Pursuant thereto the petitioner appointed one Shri S. K. Saini as an Arbitrator The respondent appointed one Shri C. N Kaushal as its Arbitrator. Soon after the appointment of Mr Kaushal, he sent a communication on 8 10 1993 that due to personal reasons he was unable to devote time to deal in the said case and, therefore, he resigned from the office of Arbitrator and requested the termination of his name That was sent to the Registrar and copies were marked to the respondent and the Arbitrator appointed by the petitioner, Mr S. K. Saini. According to the petitioners they did not receive the said communication from Mr Kaushal It is not clear whether Mr Saini received the communication of Mr. Kaushal On 19-10-1993. Mr Saini wrote a letter to both the parties in which he had stated that an umpire should be appointed by the court and the parties may take necessary steps to get the umpire appointed. He had stated very clearly that he cannot enter upon reference unless umpire was appointed by the court as it was essential to appoint the umpire.
2. There was a lull in the matter for about nearly three years thereafter. In June, 1996 petitioners Advocate sent a letter by registered post to the respondent in which the prior history was stated upto the date of the letter dated 19-10-]993 sent by Mr. Saini. After referring to that the letter says that the Arbitration Act, 1940 stands repealed by section 85 of the Arbitration and Conciliation Ordinance, 1996 with effect from 25-M 996 and, therefore, the prior actions stood automatically anulled. In para 6 it was stated as follows : "6. That in the matter of this dispute, proceedings have not started in the circumstances explained hereinabove. Therefore the composition of the Arbitral Tribunal is now required to be settled in light of sections 10 and 11 of the Ordinance. My client suggests that a Sole Arbitrator may be appointed by mutual consent, which will be conducive to the early settlement of the dispute In case the appointment of Sole Arbitrator is not agreeable to you, my client is not averse to the appointment of two Arbitrators one to be nominated by either party. Your attention is invited to section 11 (4) of the Ordinance according to which the Arbitrator has to be appointed within 30 days from the date of receipt of this request, failing which, the appointment shall be made on the request of my client by the Honble Chief Justice of H P« High Court or any person or institution designated by him "
3. In reply thereto the respondent sent a letter on 22 7-1996 stating that Mr. Kaushil had already sent his resignation by a letter dated 8-10-1993 addressed to the Registrar of this Court, In the last paragraph it is stated as follows : "For the foregoing reason and in compliance of the orders of the Honble High Court of H P., we propose the name of the following person for the purpose of settle intent of dispute under Arbitration Act; Mr. Ramesh Malhotra, C/o M/s Q.D. Techno Pvt Ltd., M/19, Shopping Centre, Greater Kailash, Part II, NEW DELAI—110-048"
4: The petitioner sent a letter dated 5-8-1992 appointing one A, K. Ummat as its Arbitrator under section I! of the Arbitration and Conciliation Ordinance, 1996. In that letter it was also staged that the petitioner was not aware of the resignation of Mr Kaushal which took place in 1993. It was added that the petitioner was all the time led to believe that Mr. Kaushal was in position and the other Arbitrator Mr. Saini continued to pursue the appointment of umpire with him unfruitful.
5, The Arbitrator appointed by
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