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2010 Supreme(All) 3433

[2011(1) ADJ 349]
ALLAHABAD HIGH COURT
BEFORE : FERDINO I. REBELLO, C.J.
M/s. S.K. AND ASSOCIATES AND ANOTHER ….Petitioners
Versus
INDIAN FARMER AND FERTILIZERS COOPERATIVE LTD., PHOOLPUR, ALLAHABAD AND ANOTHER …Respondents
(Civil Misc. Arbitration Petition No. 73 of 2009,
decided on 28th September, 2010)

Advocates:
Counsel :
P.K. Ganguly and Rajeev Gaur for the Petitioners; Ashwani Kumar Mishra for the Respondents.

Headnote:Arbitration and Conciliation Act, 1996—Sections 32(c), 14, 25, 11(6), 34, 43, 2(e)—Arbitration proceeding—Termination—What is remedy to a aggrieved party—And an order pased under Section 32(2)(c)—Whether can be subject-matter of an application under Section 11(6) read with Section 14 of Act—In instant case, Arbitrator has not withdrawn from proceedings, but rather terminated proceedings—That cannot be decided under Section 14(2)—And Section 11 also not applicable—Thus, not open to Court under Section 11(6) to nominate another Arbitrator—Therefore, an order terminating proceedings, which does not result in award, can be subject-matter of challenge under Article 226 of Constitution—But, in certain circumstances can still give rise to initiation of de novo arbitration proceeding provided action is within limitation—In case of termination, not open to Chief Justice or his delegate to exercise powers under Section 11(6)—And as regards challenge under Section 14 of Act, it will have to be before Court, and not Chief Justice, or his delegates—Therefore, to substitute, or name of a new Arbitrator, cannot be ordered by Court, as Arbitrator terminated proceedings—However, open to petitioners to avail remedy, if available in law, including Article 226 of Constitution. [Paras 5, 20, 22 and 23]

       

JUDGMENT

Hon’ble Ferdino I. Rebello, C.J.—The petitioners were claimants in arbitration proceedings. The learned Arbitrator, by his order dated 19.12.2008, terminated the arbitral proceedings in Arbitration Case No. 1 of 2007. The petitioners approached this Court contending that as the sole Arbitrator has terminated the proceedings, the Court may be pleased to appoint a new Arbitrator to meet the ends of justice. The application is moved under Section 11 (6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the ‘’Act’).

2. A few facts, from the record of the proceedings and relevant for consideration, may be noted. There was an agreement between petitioner No. 1 and respondent No. 1, which contains an arbitral clause. Dispute arose between the parties. The petitioners filed a writ petition before this Court being Writ Petition No. 26226 of 2001 for non-payment of its dues on which order dated 25th July, 2001 was passed by this Court, which reads as under :

“In view of the aforesaid agreement, the petitioner can give notice to the respondents in writing for appointment of the arbitrator indicating the dispute and its nature as provided in the agreement, on giving such notice respondents shall appoint an arbitrator.”

The respondent No. 1, by its letter dated 18th June, 2002 proposed appointment of Justice S.P. Goel (retired Judge) as the sole Arbitrator. The petitioners expressed some reservations. The matter was brought to this Court in Arbitration Petition No. 22 of 2005, and by order dated 1.12.2006 this Court appointed Justice V.P. Goel (retired) as the sole Arbitrator.

3. According to the petitioners, various hearings took place and the matter reached a stage, where Ranjan Dwivedi (DW1), Joint General Manager (P&A) of respondent No. 1 was under cross-examination. According to the petitioners, the cross-examination of the said witness was prolonged and the petitioners’ counsel was not being permitted to cross-examine the witness. There are several other allegations. Reference is made to what transpired on 19.12.2008. The petitioner No. 2, on 1.1.2009 sent an application to the sole Arbitrator requesting him not to hear Arbitration Case No. 1 of 2007 and another matter being Arbitration Case No. 2 of 2007. According to the petitioners, he received an order dated 19.12.2008 which was dispatched by Speed Post on 6.1.2009. The facts narrated in the petition, according to the petitioners, give rise to justifiable doubt as to the independence and impartiality of the sole Arbitrator. Moreover, after the sole Arbitrator had terminated the proceedings in Arbitration Case No. 1 of 2007, there existed no occasion to the sole Arbitrator to continue with the hearing in respect of Arbitration Case No. 2 of 2007 and another case being Arbitration Case No. 3 of 2007. Accordingly, the prayer is to appoint another sole Arbitrator in Case No. 1 of 2007 in terms of Section 14 read with Section 11 (6) of the Act.

4. At the hearing of this petition, it has been strenuously argued on behalf of the counsel for the petitioners that a vacancy has arisen and on account of that, it is open to this Court to appoint another Arbitrator in Arbitration Case No. 1 of 2007.

On the other hand, on behalf of contesting respondent No. 1, it is submitted that the sole Arbitrator has terminated the proceedings under Section 32 (2) (c) of the Act. There are, therefore, no pending arbitration proceedings and the question of appointing an Arbitrator in non-pending proceedings does not arise. It is, therefore, submitted that the petition be dismissed.

5. The question for consideration would be -

(1) What is the remedy to a party, who is aggrieved by termination of arbitration proceedings under Section 32 (2) (c) of the Act?

(2) Can an order passed under Section 32 (2) (c) be the subject matter of an application under Section 11 (6) read with Section 14 of the Act?

6. The learned Arbitrator, by his order, was pleased to observe that the counsel f

























































































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