Judgments and Awards

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.

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.

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.

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.

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.

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.

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.

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.

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.