Judgments and Awards

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.

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.

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.

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.

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.

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.

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.

Saurabh Kalani Vs Tata Finance Ltd

There was an allegation that the arbitrator had acted as an advocate for the claimant /Tata Finance or its sister concerns. On examination it was found that the arbitrator had no such affiliation, contract or interest with the claimant and the arbitrator's employment with Tata International Ltd ended over 12 years prior to the reference of this dispute. It was admitted by the arbitrator that he had acted as an advocate for Tata International over 5 years earlier in an unconnected matter which had no bearing on the present dispute. There had been an employment in the distant past with another public company, albeit in the same group, but it was not such as to warrant invocation of circumstances spelt out in Section 12. The arbitrator has also been a member of the Bar for over 15 years ever since he ceased to he in the service of Tata International Ltd.

It was held that the allegations against the arbitrator was unsubstantiated and frivolous and there was no justifiable doubt as to his independence or impartiality.

Unipack Industries Vs Subhash Chand Jain

The stage and scope of challenge to appointment of arbitrator was discussed in this case.

It was held that although an arbitrator is under a duty to disclose in writing the circumstances likely to give doubts as to his independence or impartiality, in case such doubts still arise, the arbitrator can be challenged if circumstances arise as to produce doubts about his independence or impartiality or he does not possess the qualification agreed to between the parties.

Section 13 provides the procedure in this regard, subject to what is agreed between the parties. U/s 13(1), if a party intends to challenge the arbitrator, then he may send a written statement giving reasons for challenging the arbitral tribunal, within 15 days of becoming aware of the constitution of the tribunal. The tribunal is competent to look into the controversy however, Section 13 (4) clearly prescribes that the tribunal shall continue with the proceedings. Subsequently when the award is made, the party can challenge the award and it can be the said ground which he had taken at the initial stage.