High Court Of Madhya Pradesh
D. M. DHARMADHIKARI
SUBHASH PROJECTS AND MARKETING LIMITED - Appellant
Versus
SOUTH EASTERN COALFIELDS LIMITED - Respondents
M. C. C. 828 Of 1996
Decided On : 05/15/1998
ARBITRATION - APPOINTMENT OF ARBITRATOR - AGREED PROCEDURE - CHIEF JUSTICE'S ROLE - SECTION 11 OF THE ARBITRATION AND CONCILIATION ACT, 1996 - INTERPRETATION - Where parties have agreed on a procedure for appointing an arbitrator, the Chief Justice's role is limited to taking necessary measures to enforce that procedure, not to make the appointment directly.
Fact of the Case:
The applicant-company filed an application under Section 11 of the Arbitration and Conciliation Act, 1996, seeking the appointment of a sole arbitrator to resolve disputes with the non-applicant/SECL. The non-applicant/SECL responded by stating that the application was premature as the stage for arbitration had not been reached. During the pendency of the proceedings, the non-applicant/SECL appointed an arbitrator, who issued a notice to the applicant-company and proceeded ex parte to adjudicate the dispute and pass an award.
Finding of the Court:
The Court held that the provisions of Section 11 of the Act do not prohibit a party from appointing an arbitrator in accordance with the arbitration clause, even if the other party has approached the Chief Justice for the appointment of an arbitrator. The Court further held that the Chief Justice's role under Section 11(6) is to take necessary measures to enforce the agreed procedure for appointment of arbitrator, not to make the appointment directly.
Issues: 1. Whether the non-applicant/SECL lost its right to appoint an arbitrator after the applicant-company approached the High Court under Section 11 of the Act. 2. Whether the appointment of an arbitrator by the non-applicant/SECL and the subsequent award were illegal due to the pendency of proceedings under Section 11.
Ratio Decidendi: 1. Section 11(2) of the Act allows parties to agree on a procedure for appointing an arbitrator. In such cases, the provisions of Section 11(3), (4), and (5), which deal with the appointment of arbitrators by the Chief Justice, do not apply. 2. Section 11(6) empowers the Chief Justice to take necessary measures to enforce the agreed procedure for appointment of arbitrator. This does not include making the appointment directly. 3. The appointment of an arbitrator by the non-applicant/SECL and the subsequent award were not illegal merely because they occurred during the pendency of proceedings under Section 11.
Final Decision: The Court dismissed the application, leaving the parties to litigate their rights, if any, in proceedings under Section 34 of the Act.
( 1 ) THIS application has been filed under Sec. 8 read with Sec. 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act of 1996') with a request to the Hon'ble Chief Justice of this Court to appoint a sole arbitrator to decide the disputes between the parties in terms of Clause (9) of the agreement entered into between the parties on 1st of June, 1951 concerning the civil work for providing, supplying and laying 350 mm dia H. S. pipe line for I. W. S. S. Korba, West Area of the South Eastern Coalfields Limited.
( 2 ) THE application under Section 11 of the Act was filed by the applicant-company on 12-12-1996. The non-applicant/secl was noticed and it submitted a reply dated 19-7-1997 filed on 4-8-1997 stating that the approach to this Court for appointment of arbitrator is premature as the stage for arbitration had not then reached. The S. E. C. L. also raised counter-claims against the applicant-company stating that the breach, if any, was on the part of the latter. During pendency of proceedings in this Court, the non-applicant/s. E. C. L. appointed Shri V. K. Tripathi, Chief Mining Engineer (Retd.) of the South Eastern Coalfields Limited, Bilaspur as the sole arbitrator in terms of the arbitration clause in the contract. The sole arbitrator so appointed issued notice to the applicant-company to submit its claim. The applicant-company objected to the appointment and proceedings of the arbitration stating that since the matter was already in the High Court under Sec. 11 of the Act, the arbitrator could not proceed. The sole arbitrator thereafter proceeded ex parte, adjudicated the dispute and made an award on 24-2-1998 which has been filed by the applicant on record along with his application (I. A. No. 1994/98) seeking stay of operation and execution of the award.
( 3 ) ON the abovementioned facts, and the subsequent events resulting into the passing of the arbitration award, learned counsel Shri Ravindra Shrivastava appearing for the applicant-company contends that the non-applicant/s. E. C. L. , on being noticed for appointment of arbitrator, having failed to make the appointment within the notice period, have lost their right to make the appointment after the applicant had already approached the High Court under Section 11 of the Act for appointment of an arbitrator. The contention advanced on the basis of provisions contained in Section 11 of the Act is that where the matter of appointment is sub judice in Court under Section 11 of the Act, the power of the parties to make appointment is lost. It is submitted that any other interpretation would negative the power of the Court to appoint an independent and impartial arbitrator where the parties failed to appoint an arbitrator in accordance with the arbitration clause.
( 4 ) SHRI P. S. Nair, learned counsel appearing for the non-applicant/s. E. C. L. in his reply submitted that the provisions of Section 11 of the Act nowhere prohibit a party to the dispute to appoint an arbitrator in accordance with the arbitration clause irrespective of the fact that one of the parties has already approached the Chief Justice or his designate for appointment of an arbitrator in terms of the said arbitration clause. It is contended that Section 11 envisages several contingencies in different types of arbitration clauses, in the matter of appointment of arbitrator by the parties or through the Chief Justice on a request made to him. It is submitted that where the parties agree upon a particular procedure for appointment of arbitrator and the appointment is so made in accordance with the agreed procedure, merely because one of the parties had earlier approached the Chief Justice is no ground to hold that the arbitration proceedings initiated in accordance with the arbitration clause are completely nullified. It is contended that since now the arbitrator appointed in terms of the arbitration clause has adjudicated upon the dispute and has
Login now and unlock free premium legal research
Login to SupremeToday AI and access free legal analysis, AI highlights, and smart tools.
Login
now!
India’s Legal research and Law Firm App, Download now!
Copyright © 2023 Vikas Info Solution Pvt Ltd. All Rights Reserved.