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IN THE HIGH COURT OF JHARKHAND AT RANCHI
Sujit Narayan Prasad, J.
M/s Central Coalfields Limited - Applicant
Versus
Eastern India Powertech Ltd. (previously Known as DLF Power Company Limited) - Respondent
Arbitration Application No.14 of 2019
Decided On : 24-11-2022
ARBITRATION - APPOINTMENT OF ARBITRATOR - SUBSTITUTE ARBITRATOR - DEATH OF SOLE ARBITRATOR - MAINTAINABILITY OF APPLICATION UNDER SECTION 11(6) OF THE ARBITRATION AND CONCILIATION ACT, 1996 - INTERPRETATION OF SECTION 15(2) OF THE ACT - APPLICABILITY OF JUDGMENTS OF THE HON'BLE APEX COURT IN YASHWITH CONSTRUCTIONS (P) LTD. (SUPRA), NATIONAL HIGHWAYS AUTHORITY OF INDIA (SUPRA), ACC LIMITED (SUPRA), SHAILESH DHAIRYAWAN (SUPRA), HUAWEI TECHNOLOGIES CO. LTD. (SUPRA), RAJASTHAN SMALL INDUSTRIES CORPN. LTD. (SUPRA) AND THE JUDGMENT OF THE ANDHRA PRADESH HIGH COURT RENDERED IN THE CASE OF HEMANT B. PRASAD & ANR. (SUPRA) - HELD, APPLICATION UNDER SECTION 11(6) OF THE ACT, 1996 IS MAINTAINABLE FOR APPOINTMENT OF SUBSTITUTE ARBITRATOR.
Fact of the Case:
The petitioner/applicant filed an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act, 1996) for appointment of a substitute arbitrator for redressal of dispute in relation to an agreement dated 08.02.1993 executed between the petitioner and the respondent. The brief facts of the case, as per the pleading made in the application, which required to be enumerated reads as under :-The Board of Coal India Limited (hereinafter referred as ‘CIL’) has taken a decision for taking an attempt to meet shortage of power through Captive Power Plants (CPP) using washery rejects. These power plants were to be based on Fluidized Bed Combustion (FBC) technology and through contracts entrepreneurs and as such, the entrepreneurs were invited to establish 5 CPPs.In furtherance of such decision, an agreement was executed on 08.02.1993 between Coal India Limited and the respondent who at the relevant time was known as D.L.F. Power Company Ltd. with respect to setting up of 10 MW Power Stations on a ‘built own and operate principle at Rajrappa and Gidi in Hazaribagh area of M/s Central Coalfields Limited’.The agreement contains a provision as under Clause 2.6 of the Power Agreement dated 8th February, 1993, which reads as under:- “2.6 In the event of any dispute arising out of or in relation to this agreement the same shall be referred to the sole arbitration of an arbitrator mutually acceptable to the CIL and DPCL as per the provisions of Arbitration Act, 1940.” The dispute having been arose in between the parties but having not been settled and as such, request for appointment of Arbitrator has been made in view of Clause 2.6 of the Agreement but the same having not been acted, an application was filed before this Court under Section 11(6) of the Act, 1996 for appointment of Arbitrator. The Arbitrator was appointed by this Court vide order dated 07.04.2017 passed in Arbitration Application No.05 of 2016 by appointing Hon’ble Mr. Justice S.B. Sinha, (now deceased) a retired Judge of the Hon’ble Supreme Court as an Arbitrator to resolve the dispute between the parties.The arbitration proceeding commenced and was continued where the parties had appeared and filed their respective pleadings but due to death of Hon’ble Mr. Justice S.B. Sinha, an occasion has arisen for appointment of a new Arbitrator (substituted) for adjudicating the dispute between the parties.Therefore, the instant application has been filed for a direction to appoint an independent Arbitrator to resolve the dispute arisen between the petitioner/applicant and the respondent.
Finding of the Court:
The Court held that the application under Section 11(6) of the Act, 1996 is maintainable for appointment of substitute arbitrator. The Court further held that the interpretation of Section 15(2) of the Act, 1996 is that where the mandate of an arbitrator terminates, a substitute arbitrator shall be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced. The Court also held that the judgments of the Hon'ble Apex Court in Yashwith Constructions (P) Ltd. (supra), National Highways Authority of India (supra), ACC Limited (supra), Shailesh Dhairyawan (supra), Huawei Technologies Co. Ltd. (supra), Rajasthan Small Industries Corpn. Ltd. (supra) and the judgment of the Andhra Pradesh High Court rendered in the case of Hemant B. Prasad & Anr. (supra) are not applicable in the facts of the given case.
Issues: 1. Whether on the death of sole Arbitrator in course of pendency of the arbitration proceeding, the subsequent application under Section 11(6) of the Act, 1996 is straightaway maintainable before this Court or not? 2. Or the petitioner/applicant is required to follow the mandate of agreement which was followed at the time of appointment of Arbitrator at the initial stage?
Ratio Decidendi: The Court held that the application under Section 11(6) of the Act, 1996 is maintainable for appointment of substitute arbitrator. The Court further held that the interpretation of Section 15(2) of the Act, 1996 is that where the mandate of an arbitrator terminates, a substitute arbitrator shall be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced. The Court also held that the judgments of the Hon'ble Apex Court in Yashwith Constructions (P) Ltd. (supra), National Highways Authority of India (supra), ACC Limited (supra), Shailesh Dhairyawan (supra), Huawei Technologies Co. Ltd. (supra), Rajasthan Small Industries Corpn. Ltd. (supra) and the judgment of the Andhra Pradesh High Court rendered in the case of Hemant B. Prasad & Anr. (supra) are not applicable in the facts of the given case.
Final Decision: The Court allowed the application and appointed Hon’ble Mr. Justice (Retd.) Kurian Joseph, Former Judge of the Hon’ble Supreme Court, to act as Arbitrator for resolution of dispute between the parties.
JUDGMENT :
The instant application has been filed under Section 11(6) of the Arbitration and Conciliation Act, 1996, (hereinafter referred to as the Act, 1996) for appointment of an Arbitrator (substitute) for redressal of dispute in relation to an agreement dated 08.02.1993 executed between the petitioner and the respondent.
2. The brief facts of the case, as per the pleading made in the application, which required to be enumerated reads as under :-
The Board of Coal India Limited (hereinafter referred as ‘CIL’) has taken a decision for taking an attempt to meet shortage of power through Captive Power Plants (CPP) using washery rejects. These power plants were to be based on Fluidized Bed Combustion (FBC) technology and through contracts entrepreneurs and as such, the entrepreneurs were invited to establish 5 CPPs.
In furtherance of such decision, an agreement was executed on 08.02.1993 between Coal India Limited and the respondent who at the relevant time was known as D.L.F. Power Company Ltd. with respect to setting up of 10 MW Power Stations on a ‘built own and operate principle at Rajrappa and Gidi in Hazaribagh area of M/s Central Coalfields Limited’.
The agreement contains a provision as under Clause 2.6 of the Power Agreement dated 8th February, 1993, which reads as under:-
The dispute having been arose in between the parties but having not been settled and as such, request for appointment of Arbitrator has been made in view of Clause 2.6 of the Agreement but the same having not been acted, an application was filed before this Court under Section 11(6) of the Act, 1996 for appointment of Arbitrator. The Arbitrator was appointed by this Court vide order dated 07.04.2017 passed in Arbitration Application No.05 of 2016 by appointing Hon’ble Mr. Justice S.B. Sinha, (now deceased) a retired Judge of the Hon’ble Supreme Court as an Arbitrator to resolve the dispute between the parties.
The arbitration proceeding commenced and was continued where the parties had appeared and filed their respective pleadings but due to death of Hon’ble Mr. Justice S.B. Sinha, an occasion has arisen for appointment of a new Arbitrator (substituted) for adjudicating the dispute between the parties.
Therefore, the instant application has been filed for a direction to appoint an independent Arbitrator to resolve the dispute arisen between the petitioner/applicant and the respondent.
3. Mr. Amit Kumar Das, learned counsel appearing for the petitioner/applicant has submitted that since the arbitrator already appointed, namely, S.B. Sinha, has died in course of pendency of the arbitration proceeding and as such, in view of the provision as contained under Section 15(2) of the Act, 1996, a substitute Arbitrator is required to be appointed so as to resolve the dispute and therefore, the instant application has been filed.
Learned counsel for the petitioner/applicant in order to buttress his argument has relied upon the following judgments, i.e.,
(i) ACC Limited Vs. Global Cements Limited, [(2012) 7 SCC 71]
(ii) Global Cements Ltd. Vs. Associated Cement Companies Ltd., [2012 SCC Online Bom. 712]
(iii) Ramjee Power Construction Ltd. Vs. Damodar Valley Corporation, [2009 SCC Online Cal 321]
(iv) M/s. Tirath Ram Sumer Kumar Vs. Rakesh Kumar Mishra and Another, [2017 0 Supreme (All) 15]
(v) Mohan Balkrishna Lulla Adult Vs. Shailesh Dharyavan, [2015 SCC Online Bom. 5772]
(vi) Ignatius Tony Pereira Vs. Pifran Sanjivan Fernandes, [2016 SCC Online Bom. 5470]
(vii) San-A Tradubg Co. Ltd. Vs. I.C. Textiles Ltd., [(2012) 7 SCC 192]
4. Plea inter-alia in the counter affidavit has been taken by raising the issue of maintainability of the instant application on the ground of being in contravention of Section 15(2) of the Act, 1996.
It has been stated t
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