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IN THE HIGH COURT OF JUDICATURE AT MADRAS
ABDUL QUDDHOSE, J.
M/s. K.S. and Company, Rep. by its Managing Partner, Mr.K. Sundaresan - Appellant
Vs.
Union of India - Respondent
Arb.O.P.(Com. Div.) No.46 of 2025
Decided On : 01-04-2025
(A) Arbitration and Conciliation Act, 1996 - Section 11 and Section 21 - Appointment of Arbitrator - Dispute arose from an agreement dated 09.08.2019 containing an arbitration clause - Petitioner invoked arbitration by notice on 21.06.2024, but no response was received from the respondent - Respondent contended that conciliation mechanism under Article 26.2 of the agreement was not adhered to - Court found that petitioner had complied with conciliation requirements and that the respondent ignored requests for conciliation - Court appointed an arbitrator as per the arbitration clause. (Paras 1-14)
Facts of the case:
The petitioner filed a petition under Section 11 of the Arbitration and Conciliation Act seeking the appointment of an arbitrator due to a dispute arising from an agreement dated 09.08.2019. The petitioner invoked the arbitration clause but received no response from the respondent regarding conciliation attempts.
Findings of Court:
The court determined that the petitioner had satisfied the requirements for invoking arbitration and that the respondent's failure to respond to conciliation requests justified the appointment of an arbitrator.
Issues: The main issues were whether the conciliation mechanism was adhered to and if the petition for arbitration was maintainable.
Ratio Decidendi: The court ruled that the petitioner had complied with the conciliation mechanism as per the agreement and that the lack of response from the respondent warranted the appointment of an arbitrator.
Result: Petition allowed; arbitrator appointed.
ORDER :
ABDUL QUDDHOSE, J.
This petition has been filed under Section 11 of the Arbitration and Conciliation Act, 1996 seeking for appointment of an Arbitrator by this Court.
2. There seems to be a dispute between the petitioner and the respondent arising out of the agreement dated 09.08.2019. The said agreement contains an arbitration clause. The petitioner has invoked the arbitration clause by issuing notice to the respondent on 21.06.2024 in compliance with Section 21 of the Arbitration and Conciliation Act. No reply has been received from the respondent to the said arbitration invocation notice. Since there was no consensus between the parties with regard to the name of the arbitrator, the petitioner has filed this petition under Section 11 of the Arbitration and Conciliation Act.
3. A counter affidavit has been filed by the respondent before this Court contending that the dispute resolution mechanism stipulated in the terms and conditions of the agreement dated 09.08.2019 has not been adhered to by the petitioner. According to the respondent, before initiating arbitration, the petitioner will have to comply with the conciliation mechanism provided under Article 26.2 of the agreement dated 09.08.2019.
4. However, the learned counsel for the petitioner would submit that only due to the fact that the respondent did not respond to the various notices sent by the petitioner seeking for conciliation as per the conciliation mechanism provided under Article 26.2 of the agreement dated 09.08.2019, the petitioner was constrained to file this petition under Section 11 of the Arbitration and Conciliation Act seeking for appointment of an arbitrator by this Court. According to the petitioner, they have complied with all the requirements of conciliation as per Article 26.2 of the agreement dated 09.08.2019.
5. The learned counsel for the petitioner also drew the attention of this Court to the letters dated 16.11.2023, 07.02.2024 and 29.02.2024 sent by the petitioner to the respondent requesting the respondent to come for conciliation. According to the petitioner, despite sending those letters requesting the respondent to come for conciliation as per Article 26.2 of the agreement dated 09.08.2019, the respondent has failed to respond to those letters.
6. The learned counsel for the respondent would reiterate the contents of the counter filed before this Court and would submit that since conciliation mechanism has not been adhered to as per the agreement dated 09.08.2019, the present petition is not maintainable.
7. However, as seen from the communication dated 09.07.2024 sent by the Divisional Engineer, National Highways, Madurai, to the Superintending Engineer, National Highways Circle, Madurai, the aforesaid letters sent by the petitioner have been referred to in the said communication dated 09.07.2024 which will prove that despite requests made by the petitioner for conciliation, the said requests were ignored by the respondent.
8. On the last hearing date, i.e., on 26.03.2025, the learned standing counsel for the respondent sought further time to get instructions with regard to the aforementioned letters sent by the petitioner, which have been relied upon by the learned counsel for the petitioner for the purpose of satisfying the requirements of conciliation mechanism as provided under Article 26.2 of the agreement dated 09.08.2019.
9. Today, the learned standing counsel appearing for the respondent would refer to the subsequent letter dated 13.12.2024 sent by the petitioner to the respondent agreeing to go for conciliation. However, the learned counsel for the petitioner would submit that the letter referred by the learned standing counsel for the respondent dated 13.12.2024 is the reply sent by the petitioner and it was not a consent given by the petitioner for agreeing to go for fresh conciliation. She would also submit that eventhough the petitioner's representative had logged-in through video conferencing on the scheduled date and time,
The court affirmed that failure to respond to conciliation requests allows for the appointment of an arbitrator under the Arbitration and Conciliation Act, 1996.
The existence of an arbitration clause allows a party to seek court assistance for appointing an arbitrator when no consensus exists, with other disputes to be resolved by the arbitrator.
Court held that under Section 11 of the Arbitration and Conciliation Act, an arbitrator can be appointed when an arbitration clause exists and procedural requirements are met.
The Conciliation process mentioned in the Contract was not mandatory and could not affect the petitioner's right to invoke the Arbitration Agreement, especially when there was justified urgency to pr....
The conciliation process in the contract agreement was not mandatory, and non-compliance did not bar the petitioner from invoking arbitration.
The court must appoint an arbitrator when parties do not reach consensus despite an existing arbitration clause as stipulated under the Arbitration and Conciliation Act, 1996.
The existence of arbitration clauses in interlinked contracts suffices for appointing an Arbitrator, and procedural missteps do not bar relief if entitlement is established.
The main legal principle established in the judgment is the court's authority to appoint an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 when a dispute arises and no arbi....
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