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2017 Supreme(HP) 348
IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA
Vivek Singh Thakur, J.
HCL Infotech Limited – Petitioner
Versus
HPSEB and Another – Respondents
Arbitration Case No. 17 of 2017
Decided On : 04-05-2017
For the Petitioner: Shri Suneet Goel.
For the Respondents: Mr. J.S. Bhogal with Mr. Satish Sharma.
Parties are free to determine the number of arbitrators and agree on the procedure for appointing the arbitrator, including the appointment of a Sole Arbitrator with mutual consent.
Headnote:
Arbitration - Appointment of Sole Arbitrator - The court found that despite the arbitration agreement specifying a three-member Arbitral Tribunal, the parties were free to determine the number of arbitrators and to agree on the procedure for appointing the arbitrator, including the appointment of a Sole Arbitrator with mutual consent. The court's decision was influenced by the interpretation of Sections 10 and 11 of the Arbitration and Conciliation Act, 1996, and the judgment in National Aluminium Co. Ltd. vs. Metalimpex Ltd. (2001) 6 SCC 372.
Fact of the Case:
A dispute arose between the petitioner company and the respondents regarding the entitlement to avail concessional rates of tax, leading to a demand for C-Form or the payment of differential tax. The petitioner invoked the arbitration clause in the agreement and sought the appointment of an arbitrator.
Finding of the Court:
The court found that the parties had mutually consented to appoint a single member Arbitral Tribunal and appointed a retired Justice as the Sole Arbitrator to adjudicate the matter.
Issues: The main issue was the appointment of a Sole Arbitrator in a dispute arising from the entitlement to concessional rates of tax.
Ratio Decidendi: The court's decision was based on the interpretation of Sections 10 and 11 of the Arbitration and Conciliation Act, 1996, which allowed the parties to determine the number of arbitrators and agree on the procedure for appointing the arbitrator.
Final Decision: The court appointed a retired Justice as the Sole Arbitrator with the consent of the parties to adjudicate the matter.
Vivek Singh Thakur, J.
1. This petition has been filed under sub-section (6) of Section 11 of the Arbitration and Conciliation Act, 1996 (for short ‘Act’) for appointment of Sole Arbitrator in terms of Clause 8.2 of GCC agreement and Clause 8.2 (a) of SCC agreement.
2. In pursuance to tender floated by respondents for supply of various power related equipments under R-APDRP (Restructured-Accelerated Power Development Reform Program) in order to reduce AT&C losses, petitioner company was appointed as IT Implement Agency (ITIA) on the rates, terms and conditions mentioned in Letter of Award (LoA) dated 30.8.2010 (Annexure P-2).
3. A dispute with respect to entitlement of petitioner to avail concessional rates of tax has arisen between parties as petitioner is claiming its entitlement for concessional rate of tax and is demanding the statutory C-Form under CST Act, whereas, respondents, on the basis of clarification issued by Excise and Taxation Department, have rejected the request of petitioner. Petitioner company is demanding C-Form or the differential tax to the tune of Rs. 1.56 crore with interest thereon, whereas respondents are denying their liability to issue C-Form or to pay differential tax. Both parties are relying upon terms of contract between them. It is claimed by petitioner that due to failure of respondents’ board to issue C-Form, petitioner has been burdened with additional tax liability and therefore, respondent is liable to compensate petitioner for additional tax liability along with incidental and ancillary claims and costs related thereto.
4. For resolving aforesaid dispute, petitioner company invoked the arbitration clause contained in Clause 8.2 (a) of the SCC of agreement in terms of Clause 8.2 of the GCC and issued a notice dated 22.9.2015 seeking the appointment of arbitrator by proposing the name of its nominee arbitrator, as according to agreement, the Arbitral Tribunal shall consist of three Arbitrators, out of which each party shall nominate an Arbitrator and two nominated Arbitrators shall mutually agree and nominate a third Presiding Arbitrator. The respondents had to resolve issue within 28 days from the date of notice, but on failure to act upon the notice, petitioner company has approached this Court by invoking Section 11 of Arbitration and Conciliation Act 1996 with prayer to appoint nominee Arbitrator on behalf of respondents board or in alternative to appoint a Sole Abitrator.
5. Arbitration agreement envisages two Arbitrators, one each to be appointed by petitioner and respondent, who in turn have to nominate a third Presiding Arbitrator.
6. Section 10(1) of the Act provides that parties are free to determine the number of Arbitrators provided that such number shall not be an even number. However, Sub-section 2 of this Section lays down that failing the determination referred to in sub-section (1), the Arbitral Tribunal shall consist of a sole arbitrator.
7. Section 11(2) of the Act provides that subject to sub-section (6), the parties are free to agree on a procedure for appointing the arbitrator or arbitrators. Sub-section (6) of Section 11 of the Act provides that where, under an appointment procedure agreed upon by the parties, a party fails to act as required under that procedure, a party may request the Supreme Court or as the case may be, the High Court or any person or institution designated by such Court, to take necessary measure unless the agreement on the appointment procedure provides other means for securing the appointment.
8. In present case, respondents have failed to nominate Arbitrator in pursuance to notice issued by petitioner company. Petitioner company has prayed for nomination of Arbitrator on behalf of respondents and in alternative for appointment of Sole Arbitrator.
9. Learned counsel for the respondents under instructions of his client submits that in order to reduce the cost of arbitration proceedings and to save public money, respondents have agreed to the p
