MADHYA PRADESH HIGH COURT AT JABALBUR BENCH
Rajendra Menon, J.
National Council of Y.M.C.of India and Another - Appellant
Versus
Sudhir Chandra Datt - Respondent
Arbitration Case No. 34-2012
Decided On : 12-09-2012
Arbitration - Constitution of Arbitral Tribunal - Arbitration and Conciliation Act, 1996, Section 11 (6)
Fact of the Case:
The applicant sought the constitution of an Arbitral Tribunal under Section 11 (6) of the Arbitration and Conciliation Act, 1996. The dispute arose from an agreement regarding the development of a property, where the non-applicant was alleged to have breached the agreement by selling flats and making constructions contrary to the terms.
Finding of the Court:
The court considered several legal questions, including the permissibility of substituting the original arbitrator, the validity of an arbitration agreement with an even number of arbitrators, and the nature of the dispute. It held that the arbitration agreement with an even number of arbitrators was not invalid and that the dispute could be resolved through arbitration. The court appointed a retired judge as the arbitrator to adjudicate the dispute.
Issues: (i) Permissibility of substituting the original arbitrator (ii) Validity of an arbitration agreement with an even number of arbitrators (iii) Nature of the dispute and the appropriate remedy
Ratio Decidendi: The court held that an arbitration agreement with an even number of arbitrators is not invalid and can be given effect to. It also determined that the dispute, though involving technicalities, could be adjudicated through arbitration, and appointed a retired judge as the arbitrator.
Final Decision: The court appointed a retired judge as the arbitrator to adjudicate the dispute between the parties.
Seeking constitution of an Arbitral Tribunal by invoking the jurisdiction of this Court under Section 11 (6) of the Arbitration and Conciliation Act, this application has been filed.
2. Facts in a nutshell necessary for deciding of the controversy indicates that the applicant/association are the exclusive owners of Nazul Plot No. 7/1, Block No. 2, Civil Line, Jabalpur admeasuring 78,600 sq. ft. Parties in question entered into an agreement on 23-4-1996 vide Annexure A-1 and a supplementary agreement (Annexure A-2) on 26-6-2005. In accordance to the aforesaid agreements, the applicant issued a power of attorney in favour of the non-applicant, who was given right to develop and make construction on the area in question in accordance to the terms and conditions of the agreement, even though in the original agreement (Annexure A-1), there was no arbitration clause but in the supplementary agreement (Annexure A-2), dated 26-6-2005, there is Arbitration Clause 15, which reads as under:-
"15. In case of any dispute between the parties with regard to the quality of construction, fixtures, accessories etc., the option and suggestion of the technical representative of the Party Nos. 2 and 3 shall be binding on the Party No. 1 if, it is not according to the specification provided by Party No. 1. However, in case of any dispute both the parties will appoint one Arbitrator each and their decision is final and binding on both the parties. If the President of the National Council of YMCA's of India fails to appoint an Arbitrator, then the parties to this supplementary agreement will be free to invoke the remedy under Arbitration and Conciliation Act, 1996."
According to the applicant, the power of attorney was executed by the applicant in favour of non-applicant and by misusing the power of attorney, non-applicant had played fraud with the applicant, in as much as 34 flats constructed have been alienated to various individuals contrary to the agreement. Accordingly, contending that the non-applicant has breached the condition of the agreement, a dispute arose between the parties and therefore, a legal notice was sent by the applicant to the non-applicant on 24-5-2010 vide Annexure A-3. In the legal notice sent, the applicant had pointed out various irregularities committed in the matter of making construction, allotment of flats and office space to various individuals contrary to the agreement. When the aforesaid legal notice was sent, the non-applicant invoked the arbitration clause and sent a letter (Annexure A-4) on 4-6-2010 and appointed one Anind Choudhary as his Arbitrator and requested the applicant to nominate their Arbitrator as per the agreement. It is therefore, clear that the non-applicant invoked the arbitration clause on the ground that a dispute has arisen between the parties. When the applicant did not appoint Arbitrator in accordance with the arbitration agreement, i.e., as per Clause 15, the non-applicant approached this Court in a proceedings under Section 11 of the Arbitration & Conciliation Act, filed Arbitration Case No. 47/2010, Sudhir Chand Datt Vs. National Council of Y.M.C.A. 's and another, and sought a direction for appointment of an Arbitrator. When the said proceedings were pending, the applicant appointed one Shri K.S. Bhatia, resident of New Delhi as their Arbitrator and accordingly finding both the parties to have appointed their Arbitrators as per Clause 15 the case was disposed of by this Court on 3-5-2011 vide Annexure A-6.
Thereafter, correspondences took place between the Arbitrators namely, Shri K.S. Bhatia and Shri Anind Choudhary. Initially, Shri K.S. Bhatia, Arbitrator of the applicant sent a letter dated 27-4-2011 to Shri Anind Choudhary vide Annexure A-7proposing (he name of Justice D.M. Dharmadhikari, Former Judge of Supreme Court as the third Arbitrator. In reference to this, Shri Anind Choudhary submitted a reply and communicated to Shri K.S. Bhatia vide letter dated 10-5-2011 indicating a
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