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IN THE HIGH COURT OF JHARKHAND AT RANCHI
SUJIT NARAYAN PRASAD, J.
Empire Industries Limited – Appellant
Versus
Hindustan Copper Limited through its Chairman Cum Managing Director – Respondent
Arbitration Application No. 20 of 2022
Decided on : 01-09-2022
Arbitration - Appointment of Sole Arbitrator - The court exercised its power under Section 11(6) of the Arbitration and Conciliation Act, 1996 to appoint an arbitrator in a dispute arising from a purchase order. The arbitration clause in the contract provided for the appointment of a sole arbitrator by the Chairman cum Managing Director of HCL or any officer nominated by them. As no arbitrator had been appointed despite a request, the court appointed Hon’ble Mr. Justice R.K. Merathia (Retd.), High Court of Jharkhand as the arbitrator for resolution of the dispute.
Fact of the Case:
The petitioner, a public limited company, participated in a tender floated by the respondent and was issued a Purchase Order. The petitioner completed supplies and submitted an invoice, but the respondent failed to pay the balance amount. Dispute arose when the respondent rejected the supplied materials and invoked the Bank Guarantee furnished by the petitioner. The petitioner invoked the arbitration clause in the Purchase Order but the respondent failed to act, leading to the petitioner approaching the court for the appointment of an independent arbitrator.
Finding of the Court:
The court found that no arbitrator had been appointed despite the request made by the petitioner, and therefore exercised its power under Section 11(6) of the Arbitration and Conciliation Act, 1996 to appoint an arbitrator, considering Clause 16 of the contract. Hon’ble Mr. Justice R.K. Merathia (Retd.), High Court of Jharkhand was appointed as the arbitrator for resolution of the dispute.
Issues: The main issue was the failure to appoint an arbitrator despite the invocation of the arbitration clause in the Purchase Order, leading to the petitioner seeking the court's intervention for the appointment of an independent arbitrator.
Ratio Decidendi: The court's decision was influenced by the provisions of Clause 16 of the contract, which provided for the appointment of a sole arbitrator by the Chairman cum Managing Director of HCL or any officer nominated by them. As no arbitrator had been appointed despite the request made by the petitioner, the court exercised its power under Section 11(6) of the Arbitration and Conciliation Act, 1996 to appoint an arbitrator.
Final Decision: The court allowed the arbitration application and appointed Hon’ble Mr. Justice R.K. Merathia (Retd.), High Court of Jharkhand as the arbitrator for resolution of the dispute.
JUDGMENT :
The instant application under Section 11(6) of the Arbitration & Conciliation Act, 1996 has been filed seeking a direction for appointment of sole Arbitrator for resolution of dispute in view of arbitration clause as contained under Clause 16 of the Purchase Order dated 17.01.2017.
2. The brief facts of the case, as per the pleading made on behalf of the petitioner-applicant, reads as under:
The petitioner/applicant is a public limited company incorporated under the Companies Act. The respondent-Hindustan Copper Limited (HCL) floated tender to make blowing system of the converter economical, in which, the petitioner participated and declared successful. Pursuant thereto, the respondent issued Purchase Order dated 17.01.2017. In terms of Purchase Order, the petitioner-company completed supplies and submitted invoice amounting to Rs. 10,92,43,873.72 including GST. The respondent-HCL paid a sum of Rs. 5,20,27,121.86 during the period March, 2018 to June, 2018, however, balance bill amount was never paid by the respondent-HCL.
It is the case of the petitioner that the present application is necessitated in view of dispute which arose out of letter dated 13.11.2021 whereby and whereunder the respondent-HCL rejected the supplied materials against above referred purchase order and the petitioner has been advised for replacement of rejected materials as per Clause 21 and 22 of the General Terms and Conditions, to which, the petitioner replied vide letter dated 30.12.2021 requesting to withdraw letter dated 13.11.2021 and further not to take any coercive action against the petitioner company. But the respondent invoked the Bank Guarantee furnished by the petitioner at the time of award of work.
It is the further case of the petitioner/applicant that efforts to amicable settlement of dispute between the parties failed as such the petitioner invoked arbitration clause 16 of the Purchase Order but the respondent failed to act in terms of the notice invoking arbitration and as such the petitioner has approached this Court for appointment of independent arbitrator.
3. No objection has been raised on behalf of respondent in allowing this application. However, he seeks leave of this Court to take all the points before the sole arbitrator.
4. This Court has heard the learned counsel for the parties, perused the documents available on record, more particularly, Arbitration Clause 16, which reads as under:
a. There shall be no objection to any such appointment that the arbitrator appointed is an officer of the Company or that he had to deal with the matter to which this contract relates or that in the course of his duty as such officer he had expressed views on all or any of the matters in disputes or difference. No person other than Chairman cum Managing Director or his nominee can act as arbitrator. The venue of Arbitration shall be Ghatshila only.
b. The award of the Arbitrator shall be final and binding on the parties of this agreement.
c. Subject to the above, the provisions of Arbitration & Conciliation Act, 1996 and of all the rules there under and all statutory modifications thereof shall process in to Arbitration proceedings and shall be dee
The main legal point established in the judgment is the court's power to appoint an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 when no arbitrator has been appointed ....
The court has the authority to appoint a new arbitrator to adjudicate disputes when the earlier arbitrator withdraws from the proceedings, and the petitioner would suffer prejudice without a new arbi....
The court has the authority to appoint a sole arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 when the parties fail to agree on the appointment.
The main legal point established in the judgment is that due to the amendment in the Arbitration and Conciliation Act, 1996, it is no longer permissible for a party or its official to act as an Arbit....
The court's authority to appoint a sole arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996.
Strict enforcement of arbitration agreement and the law does not permit either party to act as an arbitrator or appoint the arbitrator to arbitrate on the disputes.
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