BHARAT WIRE ROPES LTD. vs UNION OF INDIA

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2012 Supreme(All) 1340

[2012(5) ADJ 644]
ALLAHABAD HIGH COURT
BEFORE : PANKAJ MITHAL, J.
BHARAT WIRE ROPES LTD. ....Applicant
Versus
UNION OF INDIA AND OTHERS ....Respondents
(Arbitration and Conciliation Application No. 64 of 2011, decided on 17th May, 2012)

Advocates:
Counsel :
Govind Krishna for the Applicant; Govind Saran and Navneet Chandra Triparthi for the Respondents.

Headnote:(A) Arbitration and Conciliation Act, 1996—Sections 11 and 10—Appointment—Arbitrator—Power of Chief Justice or designated Judge by him—Under agreement there is an arbitration clause—To resolve dispute raised by either of party—In present case dispute had arisen with regard to supplies made, delay in making supplies and non-payment of material supplied—Writ petition in connection with non-payment of dues—High Court found there is a clause for arbitration in agreement—Petitioner relegated to remedy of approaching High Court under Section 11 for appointment of an arbitrator—Whereas authorities refused to refer dispute/claims raised by petitioner to arbitrator—On ground that on examination by competent authority, claims are not acceptable—Existence of arbitration clause not disputed—Once authority refuses to appoint arbitrator—He losses said power—And then Chief Justice or person or institution designated by him alone acquire power to appoint an arbitrator in terms of Section 11(8) —In present case arbitration clause in agreement does not provide for any particular qualification for appointment of an arbitrator—Except that he should be gazetted railway officer—Arbitrator is not named in agreement—No particular qualification provided in agreement—Then, an independent and impartial arbitrator has to be appointed. [Paras 17, 19, 20, 22 and 23]
       (B) Arbitration and Conciliation Act, 1996—Section 11—Appointment—Arbitrator—Power of Chief Justice—Or person designated by him—Nature of—He has to act independently and judicially—And he is not to simply perform administrative functions of authority under agreement. [Para 17]
       (C) Arbitration and Conciliation Act, 1996—Section 11 (8)—Arbitrator—Appointment of—Choice of—Power of Chief Justice or a person designated by him—Specifically when a person not named in arbitration clause—In term of Section 11 (8) which gives a discretion to Chief Justice/his designate to choose an arbitrator suited to meet requirement of a particular case. [Para 19]
       (D) Arbitration and Conciliation Act, 1996—Section 11—Appointment—Arbitrator—Arbitration whether binding—Arbitration is a binding voluntary alternative dispute resolution process by a private forum—Chosen by parties. [Para 20]

JUDGMENT

Hon’ble Pankaj Mithal, J.—Heard Shri Govind Krishna and Sri Navneet Tripathi, learned counsel for the parties.

2. Petitioner was issued a purchase order on 13.1.2009 for the supply of Hard Drawn Round Copper Dropper Wire of 5 mm diameter. It was followed by an agreement. The relevant extract of the terms and conditions of the said contract have been filed as Annexure-CA-1. The agreement contained an arbitration clause for referring the disputes arising out of the above purchase order/agreement to the Arbitrator designated.

3. In connection with the above purchase order/agreement a dispute had arisen with regard to supplies made, delay in making the supplies and the non payment of the material supplied.

Petitioner in connection with the non-payment of dues for the supply made in pursuance of the above purchase order/agreement filed writ petition No. 38790 of 2011 before this Court. It was disposed of vide judgment and order dated 8.8.2011 observing that the Court is satisfied on the submission of the respective parties that there is a clause for arbitration in the agreement. Thus, the Court relegated the petitioner to the remedy of approaching this Court under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘Act’) for appointment of an Arbitrator and for seeking any interim relief, if necessary, before the appropriate Court.

4. The authorities have refused to refer the disputes/claims raised by the petitioner to the Arbitrator on the ground that on examination by the competent authority the claims are not acceptable.

The Arbitration Clause reads as under :

2900. Arbitration

(a) “In the event of any question, dispute or difference arising under these conditions called special conditions of contact, or in connection with this contract (except as to any matters the decision of which is specially provided for by these or the special conditions) the same shall be referred to the sole arbitration of a gazetted Railway Officer appointed to be the arbitrator by the General Manager in the case of contracts entered into by the Zonal Railways and production units by any member of the Railway Board in the case of contracts entered into by the Railway Board and by the Head of the organization in respect of contracts entered into by the other Organizations under the Ministry of Railways. The Gazetted Railway Officer to be appointed as arbitrator however will not be one of those who had an opportunity to deal with the matters to which the contract relates or who in the course of their duties as railway servant have expressed views on all or any of the matters under dispute or difference. The award of the arbitrator shall be final and binding on the parties to this contract.

(b) In the event of the arbitrator dying, neglecting or refusing to act or resigning or being unable to act for any reason, or his award being set aside by the Court for any reason, it shall be binding for the authority appointing the arbitrator to appoint another arbitrator in place of the outgoing arbitrator in the matter aforesaid.

(c) It is further a term of this contract that no person other than the person appointed by the authority as aforesaid should act as arbitrator and that if for any reason that is not possible, the matter is not to be referred to ‘arbitration’ at all.

(d) The arbitrator may from time to time with the consent of all the parties to the contract enlarge the time for making the award.

(e) Upon every and any such reference the assessment of the cost incidental to the reference and award respectively shall be in the discretion of the arbitrator.

(f) Subject as aforesaid, the Arbitration Act, 1940 and the rules thereunder and any statutory modifications thereof for the time being in force shall be deemed to apply to the arbitration proceedings under this clause.

(g) The venue of arbitration shall be the place from which the acceptance note is issued or such other place as the arbitrator at his discretion m

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2012 Supreme(All) 1340

[2012(5) ADJ 644]ALLAHABAD HIGH COURTBEFORE : PANKAJ MITHAL, J.BHARAT WIRE ROPES LTD. ....ApplicantVersusUNION OF INDIA AND OTHERS ....Respondents(Arbitration and Conciliation Application No. 64 of 2011, decided on 17th May, 2012)

Cases Referred (5)

[2012(5) ADJ 644]
ALLAHABAD HIGH COURT
BEFORE : PANKAJ MITHAL, J.
BHARAT WIRE ROPES LTD. ....Applicant
Versus
UNION OF INDIA AND OTHERS ....Respondents
(Arbitration and Conciliation Application No. 64 of 2011, decided on 17th May, 2012)