Judgements and Awards

Section 10, 11 & 2(1)(b) - Effect of Agreement providing for only 2 arbitrators

2002(1) RAJ 381 (SC)
Narayan Prasad Lohia Vs Nikunj Kumar Lohia

This case probed into the question whether an arbitration agreement becomes invalid on the ground that it provided for appointment of only 2 arbitrators.

It was held that even if the parties provided for appointment of 2 arbitrators, the agreement does not become invalid. Under Section 11(3) the two arbitrators should then appoint a third arbitrator who shall act as presiding arbitrator. However, such an appointment should preferably be made in the beginning, even though the two arbitrators may also appoint a 3rd arbitrator at a later stage, ie. If and when they differ. This ensures that on a difference of opinion the arbitration proceedings are not frustrated. But if the 2 arbitrators agree and give a common award, there is no frustration of the proceedings. In such a case their common agreement would have prevailed, even if the 3rd arbitrator had differed.

Section 10(1), 11(6), 2(1)(f), 7, 34 & 31(8) - appointment of arbitrator contrary to agreement

2001(1) RAJ 548 (SC)
National Aluminium Company Ltd Vs Metalimpex Ltd

The Arbitration Agreement envisaged 2 arbitrators who in turn would appoint an umpire. One arbitrator was appointed by the petitioner who requested the respondent to appoint the other. On the failure of the respondent to do so, the petitioner approached the Chief Justice for appointment of sole arbitrator.

It was held that a sole arbitrator cannot be appointed in such circumstances in the absence of an agreement between the parties in this regard. Since the arbitration agreement envisages 2 arbitrators who in turn would appoint the presiding arbitrator, it may not be legal to appoint the sole arbitrator. If both the parties had been represented before the court and they had agreed, a sole arbitrator could have been appointed.

Section 11 - Failure to appoint arbitrator within limitation

2001(4) RAJ 106 (Ori)
Ratnakar Pradhan Vs Mahanadi Coalfields Ltd

There was a contract between the parties for execution of work, which envisaged that all disputes were to be settled by a sole arbitrator appointed by the CMD of the respondent. Once the dispute arose, in spite of notice by the petitioner, no arbitrator was appointed by the respondent, therefore the petitioner approached the court u/s 11. Thereafter the respondent appointed an arbitrator and contended that they wanted to explore the possibility of conciliation.

It was held that under the New Act, there can be conciliation even after the appointment of arbitrator and the respondent had no justification for the laxity in their actions. It is apparent that the respondent appointed the arbitrator only after it was brought to their notice that an application had been already filed in the Court. The respondent, having failed to exercise their power within a reasonable period, cannot thereafter insist that the arbitrator appointed by them must continue. Therefore the court has appointed an arbitrator.

Section 11, 9, 12 & 13 - Determination of validity of the appointment

2001(4) RAJ 595 (Gau)
Ranjul Baruah Vs Numaligarh Refinery Ltd

The applicant raised a reference of dispute to arbitration under a contract for construction work. On the failure on the part of the appointing authority, the contractor (applicant) appointed the arbitrator as per terms of clause of agreement. After initiation of proceedings, the opposite party applied for stay of proceedings, which was allowed. Hence this application for vacation of stay was filed by the applicant.

It was held that a reading of the provisions of the arbitral clause indicated that the contractor was authorized by agreement to appoint one of the persons from the panel forwarded by him on failure on the part of the appointing authority to act upon the panel. The Chief Justice comes in only when the parties fail to act on an agreed procedure. But in a given case, where the agreement provides alternatively powers of appointment with either of the parties and the arbitrator is appointed by one of them, such appointment cannot be treated as illegal merely because the other party does not agree.

In the instant case, the appointing authority failed to forward the panel of 3 names for selection by the contractor and also failed to select any person from the panel forwarded by the contractor. It was only then the contractor invoked his powers of appointment as per terms of the agreement. The appointment of the arbitrator has been in compliance with the agreement in letter and spirit and therefore the stay order was vacated.

Section 11 & 2(1)(e) - Arbitrability of dispute

2001(4) RAJ 595 (Gau)
Ranjul Baruah Vs Numaligarh Refinery Ltd

The question of arbitrability of the dispute was determined in this matter and the plea of the opposite party, that there is no referable dispute, hence the appointment of sole arbitrator could not be sustained, was rejected by the court.

It was held that when a dispute is raised by a party to an arbitration agreement and denied by the other party, it has to be treated as a dispute within the meaning ht the arbitration clause to be adjudicated by the tribunal. One of the main objects of the Act is to minimize the supervisory role of courts in the arbitral process. The objection raised by the opposite party, therefore, is exclusively within the jurisdiction of and may be placed before the arbitral tribunal. The court, as defined in Section 2(1) (e) cannot be moved for a decision in this matter.

Section 11 & 16 - power to determine arbitrability of dispute

2002(3) RAJ 88 (Del)
Earnest Builders Vs Union of India

The power of the Chief Justice and/or its designate and the arbitrator was discussed in this case. In the present case, the persona designate , having nominated the arbitrator, paradoxically himself proceeded to act as an arbitrator to decide some of the claims fell within the excepted category and were not arbitrable.

It was held that such an action undertaken by the appointing authority was beyond the scope of his jurisdiction to refer the parties to arbitration. It is for the arbitrator to decide whether he could adjudicate upon a particular claim in the light of the contract between the parties.

U/s 11, the Chief Justice or his designate, while exercising his power under the said provisions, cannot entertain or decide the issues like existence of arbitration agreement, its validity or scope or jurisdiction of the arbitrator to decide the disputes that are sought to be referred to his arbitration. The only action the Chief Justice is required to take is to nominate an arbitrator(s), if a party fails to do so within a specified time after a request to do so had been made. Regard must be had to the qualifications that are required of an arbitrator by the agreement of the parties. All other issues are to be left to the tribunal.

Section 11- comparison with the old Act

2001(3) RAJ 172 (AP)
Sri Venkateshwara Construction Co Vs Union of India

This case discussed the power of the court to decided issues like existence of arbitration agreement, its scope and the jurisdiction of the arbitrator to decided such questions.

Held that, under the provisions of the old Act, the power to appoint an arbitrator/(s) in cases where the parties have failed to do so, was conferred upon the court under sections 8 and 20. One important aspect was that Section 20 not only empowered the court to appoint arbitrators, but also empowered it to make a reference of the disputes to such arbitrators. Such a power is absent in the new Act. Making a significant departure from the old position, now the power of appointing an arbitrator falls not upon the court but upon the Chief Justice or his designate.

It is also significant to note here that the legislation has deviated not only from the Old Act, but also from the UNCITRAL Model Law (Article 11) which authorizes a court to appoint arbitrators. This deviation was made with an intention to curtain the time consuming litigation regarding matters relating to appointment of arbitrators. Past experience showed that Sections 8 and 20 had become breeding grounds for such cumbersome litigations. Also significant is the fact that the decision of the Chief Justice in making the appointment is final, thus aiming to make this decision immune from judicial intervention.

Section 11 - Application unmaintainable after availing relief from another forum

2003(3) RAJ 410 (MP)
Basant Kumar Vs United India Insurance Company Ltd

On a dispute having arisen, the petitioner availed of the remedy under the Consumer Act and obtained an order in his favour granting compensation, inspite of a remedy being available under the Arbitration Act. Thereafter, the petitioner being dissatisfied with the amount granted by the Consumer Court, filed a suit for appointment of an arbitrator.

It was held that once the claim has been adjudicated on merit, it is not open to challenge that order by having recourse before the arbitrator. An arbitrator cannot be allowed to sit over the order of the District Forum or State Commission, particularly when the matter has been adjudicated on merits. The petitioner cannot now avail benefit of arbitration though initially it was open for him to choose the remedy. The order passed under the Consumer Act is final.

Section 11- Requirement of existence of arbitration agreement

2003(4) RAJ 499 (Kar)
UB Global Corporation Ltd Vs Kaveri Impex

The scope of the power of the Chief Justice /his nominee designate u/s 11 was discussed in this case. It was held that the power and jurisdiction of the Chief Justice/ his designate to appoint an arbitral tribunal depends on the existence of an arbitration agreement. When there is no arbitration agreement, a party has no right to file a petition u/s 11 and the Chief Justice/ his designate will have no jurisdiction to appoint an arbitrator. Such a power can only emerge only where (a) all parties admit or agree that there is an arbitration agreement or (b) the Chief Justice or his designate is satisfied prima facie about the existence of the arbitration agreement.

Section 11 - limitation for making application for appointment of arbitrator

2000(1) RAJ 175 (AP)
Meda Narsimhulu Vs Council of Scientific and Industrial Research

The power to decide the question of limitation for making an application u/s 11 for appointment of arbitrator was discussed in this matter. The Court held that it is for the arbitrator to decided the objection that the claim is barred by limitation. The jurisdiction conferred on the Chief Justice or his designate does not comprehend the power to decide debatable and arguable questions which could otherwise be decided by the arbitrator.

Section 11(4) - Delay in appointment of arbitrator

1998(2) RAJ 78 (Del)
MMTC Ltd Vs Trimurtee Fertilizers Ltd

The petitioner had sent a notice to the respondent on 4.12.1996, requesting him to appoint the arbitrator, in response to which the respondent stated that it needed 15 days time for such appointment as their managing director was out of station. The arbitrator was duly appointed on 22.1.1997 immediately after the return of the managing director. The question was whether such an appointment was valid.

It was held that there was neither delay in appointment nor any inclination on the respondent's part not to appoint an arbitrator within the stipulated period. The legislature in its wisdom has enacted the 1996 Act and has used the expression 'shall' in Section 11(4) to achieve the objective of having arbitration through the forum of arbitration at the earliest possible opportunity. The idea is to safeguard the effort of one party not to scuttle the contractual obligation which they undertook while entering into an arbitration agreement, by not appointing an arbitrator after notice has been served to the opposite party. Therefore, if a party fails to appoint a nominee arbitrator after receipt of notice to do so, the court comes into play and on the request of the aggrieved party, shall appoint the arbitrator.

Section 11 - maintainability of criminal complaint after reference of dispute to arbitrator

2002(4) RAJ 625 (Bom)
Atlaz Degi-Tel Pvt Ltd Vs Atlaz Technology Pvt Ltd

There was an agreement whereby the petitioner was to purchase respondent's business unit, pursuant to which the petitioner issued post dated cheques. A dispute arose between the parties and the petitioner applied u/s 11 for appointment of arbitrator. In the meanwhile, the respondent filed a suit u/s 138 of the Negotiable Instruments Act. The Petitioner contended that the dispute was essentially of civil nature and initiation of criminal proceedings by way of short cuts of other remedies was unacceptable.

It was held that merely because an act has a civil profile is not sufficient to denude it of its criminal outfit. The provisions incorporated in the agreement for referring the dispute to arbitration is not an effective substitute for a criminal prosecution when the disputed act is an offence. Arbitration is a remedy for affording reliefs to the party affected by the breach of agreement but the arbitrator cannot conduct a trial of any act which amounts to an offence, albeit the same act may be connected with the discharge of any function under the agreement.

Although the transaction is question is a commercial transaction arising out of an agreement, offence u/s 138 NI Act appears to have been committed in the course of such transaction and as such the process issued u/s 138 should not be quashed.

Section 11 - Panel of arbitrators as per agreement not necessary

2003(3) RAJ 214 (AP)
K Venkateswarlu Vs State of Andhra Pradesh

There was an agreement between the parties according to which a panel of 3 arbitrators was to be appointed in the event a dispute arose. One party failed to act upon the request of the other party for appointment therefore the other party approached the court for appointment of an arbitrator. The issue that came up was whether it was incumbent on the court to appoint a panel of 3 arbitrators as per the agreement.

It was held that in such a case the agreement of the parties ceases to exist and Section 11 proprio vigore comes into operation. There is nothing in Section 11 which ordains the Chief Justice or his designate to appoint a panel of arbitrators as per the agreement. Under the scheme of Section 11, the Chief Justice shall appoint an arbitrator at the request of the party where the other party fails to appoint an arbitrator within 30 days from the date of request or where the 2 appointed arbitrators fail to agree on the 3rd arbitrator within 30 days from the date of their appointment.

Once the agreement in that regard ceases when the party fails to agree upon the same, the Chief Justice is free to appoint a sole arbitrator even in respect of matters where the party agreed to have the dispute resolved by 3 arbitrators.

Section 11(2) & (6), 12, 13, 16(1) - appointment of arbitrator without setting aside appointment by parties

2000(3) RAJ 415 (MP)
Mukesh Kumar Agrawal Vs Raj Kumar Agarwal

There was a dispute about the dissolution of a firm and the partners fixed a procedure for appointment of arbitrators. Some of the partners appointed the arbitrator and the remaining partners approached the Chief Justice u/s11, who appointed the arbitrator.

This appointment by the Chief Justice was held not valid and it was further held that once the parties have appointed an arbitrator, whether right or wrong, there is a procedure under the Act to challenge his authority. The applicant cannot by-pass that procedure and directly file an application u/s 11. Once the arbitrator has already been appointed, there is no occasion for the Chief Justice to exercise his powers u/s 11. The arbitrator is already seized of the matter and it is for him to decide whether he was validly or invalidly appointed.

Section 11(2) & (6) - Determination of existence of dispute

2002(3) RAJ 354 (Del)
Satya Prakash and Brothers Vs Municipal Corporation of Delhi

The respondent had awarded a contract to the petitioner for improvement of roads. The respondent failed in handing over unhindered site inspite of repeated verbal and written requests due to which there was delay in completion of work by the petitioner who suffered a loss. The petitioner sent a notice requesting appointment of arbitrator to which the respondent gave no reply and hence the petitioner was compelled to approach the Chief Justice. The respondent contended that the dispute was non existence.

The court, while rejecting the respondent's contention, held that once the petitioner is claiming a specific amount and the same has been specifically admitted, the dispute must be taken to have been in existence. Also, despite notice, the MCD had not appointed an arbitrator therefore there was no option for the court except to act under Section 11(6) to appoint an arbitrator.

Section 11(2) & (6) - Limitation period for appointment of arbitrator

2000(3) RAJ 256 (Del)
Akshaya Jain Vs Airports Authority of India

This case explored the issue of the limitation period for appointment of arbitrator by the appointing authority in domestic and international arbitration.

It was held that the appointing authority cannot appoint an arbitrator after 60 days and by no stretch of imagination can a period of 11 months be considered reasonable. Even in international arbitration, a time frame of 60 days has been provided after which on the failure of the appointing authority to appoint an arbitrator the appointing authority's right to appoint passes on to the Secretary General of the Permanent Court of Arbitration, who is required to designate an appointing authority. Therefore, the period within which an arbitrator may be appointed by the appointing authority in a domestic arbitration can in no event be more than 60 days.

The dominant feature underlying the 1996 Act is expeditious disposal. In particular, even Sections 11(4) and 11(5) clearly set out a 30 days time limit for taking action by a party when more than 1 arbitrator is to be appointed. Thus, even though section 11(6) does not stipulate an explicit time limit, yet inherent in the other sections of Section 11 is the element of expedition. Sections 11(4) and 11(5) certainly provide a guidance if not the time limit to be taken by the appointing authority.

Section 11(5) & 10 - Grounds for appointment of arbitrator

1998(3) RAJ 248 (Del)
International Pharmaceuticals Vs Union of India

There was an agreement between the petitioner and Ministry of Health and Family Welfare (respondent) for supply of medicinal drugs. There was a subsequent demand of additional supplies at the same rates, terms and conditions, even though this was not stipulated in the agreement, which was approved by the then Minister of Health. The respondent later cancelled the contract contending that the agreement was void since there was no sanction under Article 299 of the Constitution.

While rejecting the respondent's contention, it was held that even in the written statement it was mentioned that the order for additional supplies were approved by the then Minister who ordered that the supplies be purchased. In terms of the original agreement, the supplies were made by the petitioner to the respondent and the respondent themselves has treated the enhancement of the earlier order at the same rates, terms and conditions. Now to take a stand that the agreement is void and enforceable is without any basis.

Section 11(5) - Appointment of independent arbitrator

1998(1) RAJ 69 (AP)
Marshall Corporation Ltd Vs Union of India

There was a delay in appointment of arbitrator by the respondent despite various reminders. The arbitrator was appointed subsequent to the filing of the applications seeking the appointment of the arbitrator and to the filing of the counters of the respondent.

It was held that in view of such lax conduct of the respondent and their failure to appoint the arbitrator in spite of several requests made by the petitioner, the respondents shall be deemed to have forfeited their right to appoint the arbitrator as contemplated under Clause 70 of the General conditions of the contract and the court is entitled to appoint an independent arbitrator of its choice for the dispute in hand.

Section 11(6) & (8) - Forfeiture of respondent's right to appoint arbitrator

2001(2) RAJ 176 (Del)
Mucon India (P) Ltd Vs Delhi Vidyut Board

This case made it clear that the respondent would forfeit its right to appoint an arbitrator after taking recourse u/s 11(6). It was held that u/s 11 (6) of the Act where no time limit is prescribed if the opposite party has not made an appointment within a period of 30 days of the demand to appoint an arbitrator, the right to appoint is not forfeited and continues. But such right of the opposite party ceases to exist if an application u/s 11 (6) is moved for appointment of arbitrator. Therefore an appointment has to be made by the opposite party before the filing of application u/s 11 (6). If the appointment is made after the filing of the application u/s 11(6), then such an appointment is a nullity and in fact no appointment in the eyes of law.

Section 11 (6) & (5) - Circumstances surrounding appointment of arbitrator

2000(3) RAJ 181 (SC)
Datar Switchgears Ltd Vs Tata Finance Ltd

The circumstances surrounding the appointment of an arbitrator u/s 11 (6) and the failure of procedure under different circumstances were discussed in this case.

According to the facts, the appellant had not issued any notice to the respondent seeking appointment of arbitrator. The respondent had asked the appellant to make payment within a stipulated period and indicated that in the event of non payment within 14 days, the said notice itself was to be treated as the notice under the arbitration clause in the agreement. This is not a case where the appellant requested and gave a notice period for appointment of arbitrator and the respondent failed to comply. It is pertinent to note that the appellant did not file an application even after the respondent invoked Section 9 seeking interim relief.

It was held that Section 11(5) can be invoked by a party who has requested the other party to appoint an arbitrator and the latter fails to make any appointment within 30 days from the receipt of the notice. An application u/s 11 (6) can be filed when there is a failure of procedure for appointment of arbitrator. This failure can arise under different circumstances. It can be a case where a party who is bound to appoint an arbitrator refuses to do so or where the 2 appointed arbitrators fail to appoint the 3rd arbitrator. If the appointment of an arbitrator is entrusted to any person or institution and such person or institution fails to discharge such function, the aggrieved party can approach the Chief Justice for appointment of arbitrator. In this case, it cannot be said that there was a failure of procedure as prescribed by the Act.

Section 11 (6) - Deviation from terms of agreement not permissible

2001(4) RAJ 130 (Del)
Jagdish Prasad Aggarwal Vs Cimmco Birla Ltd

There was an agreement between the parties that all questions of disputes shall be referred to a sole arbitrator appointed by the President of the respondent. However, the arbitrator was appointed by the Executive Director & Chief Operating Officer and the issue that arose was whether such was permissible or not.

While confirming that such an appointment was improper, it was held that once the parties enter into an agreement spelling out covenants in specific and categorical terms, it is not open to any of the parties to deviate from those terms even in the matter of appointment of arbitrator. Any amount of infraction of such a term of agreement vitiates the appointment of arbitrator. Just as the arbitrator cannot transverse beyond the terms of the agreement whenever reference of dispute is made to him, so is the position in the case of appointment of arbitrator where there is a specific stipulation that a particular person shall have the authority to appoint an arbitrator.

Section 11 (6) - Judicial review of order passed u/s 11 (6)
Chief Engineer, Western Zone II Central Public Works Department Vs Pandit Shankarrao Kulkarni

This writ petition challenges an order passed by the Single Judge whereby the Single Judge appointed an arbitrator and declared that the appointment of an arbitrator made by the petitioner was null and void.

It was held that the order passed by the Single Judge appointing an arbitrator u/s 11 (6) was an administrative one. Every administrative order passed by a statutory authority is subject to judicial review by this court and an order passed u/s 11 (6) cannot be an exception to the rule. In the instant case, the impugned order cannot be said to be merely an administrative one as it carried a judicial pronouncement regarding the status of the order passed by the petitioner as being a nullity in law implying that the order is quashed and set aside.

It was further held that although the Act has aimed at expeditious conclusion of arbitration proceedings, it does not mean that the powers of this Court under article 227 and 227 of the Constitution are taken away. The mere fact that during the pendency of this petition (filed on 4.5.2000), the arbitrator passed his award (on 4.7.2000), would not shut the doors of this court and the petition would not become in fructuous. If the arbitrator has acted without an authority in law, the entire arbitral proceedings would stand vitiated. The legality of his appointment order goes to the very root of the matter and such an order is the foundation of the arbitral proceedings. Once such an order is held to be illegal, the entire proceedings must be held to be null and void ab initio.

Section 11 (6) - Interpretation of 'Necessary Measure'

2002(4) RAJ 437 (Kar)
JL Prasad Vs General Manager, Southern Railway, Chennai

There was an agreement containing the arbitration clause and prescribing the procedure for appointment of arbitrator. The petitioner issued notice seeking reference of dispute to the arbitrator. The respondent did not take any step within 30 days from the receipt of the notice. The question arose whether an independent arbitrator should be appointed.

It was held that where there is no agreed appointment procedure and a party fails to appoint his arbitrator or concur in the appointment of sole arbitrator upon request of a party, the Chief Justice appoints the arbitrator. But where the appointment procedure is agreed and if a party fails to act as required under the agreed procedure, a party can only request the Chief Justice to take the 'necessary measure' which has to be taken under the appointment procedure. 'Necessary measure' is ensuring that the parties give effect to their arbitration agreement, firstly by directing them to take steps as per their appointment procedure and then by ensuring that the arbitration agreement is not rendered nugatory by one of the parties refusing to act in terms of the prescribed procedure.

Section 11(6) views the term 'necessary measure' as taking steps to give effect to the prescribed appointment procedure. It provides that when a party fails to act as per the appointment procedure, the other party may request the Chief Justice to take necessary measure, unless the agreement on the appointment procedure provides other means for seeking the appointment. Thus, the appointment procedure is to be ignored only if the arbitration agreement specifies other means for securing the appointment.

Therefore, in a petition u/s 11(6), the Chief Justice should in the first instance take the measure of activating/enforcing the agreed procedure by directing the parties to act in terms of the appointment procedure. If in spite of such order either party fails to act so within the time frame as fixed, then the Chief Justice can appoint an independent arbitrator.

Section 11 (6), (2) & (5) - Interpretation of 'Necessary Measure'

2000(2) RAJ 487 (Del)
Essel Shyam Communications Ltd Vs Union of India

The parties in the instant case agreed to the appointment of a particular person or his nominee as an arbitrator. The designated arbitrator was a high ranking officer, however, the respondent failed to refer the disputes to the appointed agreed arbitrator in spite of notice.

It was held that the Court gets the power to take necessary measures for securing the appointment but it will have no power to appoint another arbitrator. Taking the 'necessary measure for securing the appointment ' in these circumstances would mean to appoint the agreed arbitrator, if any. The agreement of the parties has to be given effect to and cannot be ignored. In the present case, there is no valid ground not to bind the parties to their agreed arbitrator nor to appoint another arbitrator in supercession of the agreed arbitration.

Section 11(6) & 20 - Determination of place of arbitration

2002(2) RAJ 542 (Del)
Gas Authority of India Ltd Vs Gobind Glass & Industries

The parties had appointed their own arbitrators, however, neither the parties nor the appointed arbitrators had appointed the presiding arbitrator. The parties had agreed that the place of arbitration would be either at Delhi or at Ahmedabad. Also, in the meanwhile, the parties were locked in a civil suit at Ahmedabad; execution of all documents and supplies were made from Ahmedabad.

Regarding the issue of the place of arbitration, it was held that admittedly, both parties had agreed on the place of arbitration either at Delhi or at Ahmedabad. In view of the given circumstances and the failure of the parties as well as the appointed arbitrators to reach an agreement to appoint the presiding arbitrator and keeping in view the hardship and inconvenience the respondent would suffer and the inordinate delay in the process of appointment of presiding arbitrator, coupled with the fact that the parties are already interlocked in a civil suit at Ahmedabad has persuaded this Court to appoint a presiding arbitrator from Ahmedabad.

Section 11 (6)(a) - Questions to be decided by the arbitrator

2001(4) RAJ 306 (Jha)
Lal Babu Singh Vs State of Bihar

This case clarified the kind of questions to be decided by the arbitrator. According to the facts, an agreement was entered into by the parties in 1990 and later cancelled in 1992. Once the dispute arose, the respondents in their counter affidavit did not take a defence that the claim or the application was barred by limitation. The only defence was that the claim was inadmissible.

It was held that the question whether the claim is admissible or not and whether the petitioner is entitled to the amount claimed by him are to be decided by the arbitrator. The petitioner had prayed that an independent sole arbitrator may be appointed to resolve the dispute. On this prayer, the respondent did not say that any person other than an independent sole arbitrator be appointed. Therefore, the petitioner's application is allowed.

Section 11(6)(c) - Determination of pre-mature petition

2001(3) RAJ 167 (del)
Pasupati Fabrics Limited Vs Savani Financial Limited

A dispute arose relating to subscribing public issue and the agreement between the parties prescribed that the matter was first required to be referred to the Arbitration Committee of Delhi Stock Exchange (DSE). The petitioner accordingly filed the statement of claim with the arbitration committee of DSE and the Dy. General Manager was requested to take further action. The DSE wrote that it never agreed to conduct the arbitration proceedings between the parties and the matter cannot be referred to arbitration.

It was held that perusal of the petitioner's and DSE's letters show that it was always understood that the arbitration is to be conducted by the Arbitration Committee of DSE. Even in the DSE's reply, reference is made to the DSE Arbitration Committee by DSE itself. The objection of DSE to the reference of disputes to its Arbitration Committee was not that the letter of request was not addressed to the Committee, but that it was refused on the ground that it had not agreed to conduct such arbitration.

It was further held that the writing of the letter by the petitioner to DSE for reference of disputes to the Arbitration Committee of DSE is sufficient compliance of the agreement between the parties. Once the DSE has refused to refer the matter to the Arbitration Committee on the ground that it had not agreed to reference of disputes to the Committee, the DSE has failed to perform its functions entrusted by the agreement and the present petition for appointment of an arbitrator by the Court is maintainable and is not pre-mature.

Section 11(6) - Remedy to challenge the order

2000(3) RAJ 1 ( SC)
Konkan Railway Corpn Ltd Vs Mehul Construction Co

The important issue of remedy to challenge orders u/s 11(6) was discussed in this matter. While dismissing the petition under Article 32 against the order u/s 11(6), the Court held that the nature and function performed by the Chief Justice or his nominee was essentially to aid the constitution of the arbitral tribunal and cannot be held to be a judicial function as otherwise the Legislature would have used the expression 'court' or 'judicial authority' instead of 'Chief Justice'. Therefore it is apparent that an order passed by the Chief Justice under this section is an administrative order.

This being the position, even an order refusing to appoint an arbitrator will not be amenable to the jurisdiction of Supreme Court under Article 136 of the Constitution. The aggrieved party, however, has a remedy to approach the High Court for issuance of a writ mandamus, if so advised, in accordance with law.

It was also clarified that the Chief Justice not having functioned as a court or a tribunal and the order being administrative in nature, the observations and findings are not binding and will not be taken into consideration by the arbitral tribunal, if an objection to validity or existence of the arbitration agreement is taken before it. Such objections, if taken, will be decided on its own merits.

Section 11 (8) - Failure of respondent to appoint within time

2001(4) RAJ 243 (Del)
Vindhya Telelinks Ltd Vs Department of Telecommunications

There was an arbitration clause in the agreement between the parties that envisaged no other person other than the DG or a person appointed by him should act as arbitrator. In 1997, the plaintiff invoked the clause, however, the defendant (DG) appointed the arbitrator only after the plaintiff filed this present petition.

It was held that the DG, having failed to appoint the arbitrator within time, had abdicated his rights to do so and the court will step in, in his place to make the parties adhere to their agreement. Accordingly, the court directed the defendant to suggest to the petitioner, 5 names of officers of appropriate status eligible to be appointed as arbitrator and the petitioner was directed to select 2 names from the list. Thereafter, the DG was asked to choose one of those 2 names for appointment as arbitrator.

Section 11(9) - Appointment of arbitrator where one party is foreign

2000(3) RAJ 436 (SC)
Malaysian Airlines Systems Bhd Vs Stic Travels (P) Ltd

This case discussed the scope of appointment of arbitrators with respect to a matter arising in an Indian Court where one of the parties is a foreign party and the other party an Indian national.

Held that in several countries where the UNCITRAL Model is adopted, it has been held that it is not impermissible to appoint an arbitrator of a nationality of one of the parties. In light of the fact that the 1996 Act is based on the UNCITRAL Model, which in Article 6(4) only speaks of 'taking into account' the nationality as one of the factors, the court was of the view that the word 'may' in Section 11(9) was not intended to be read as 'shall'.

While the nationality of the arbitrator is to be kept in view, the section does not imply that the proposed arbitrator is necessarily disqualified because he belongs to the nationality of one of the parties. The provision is not mandatory.











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