Where one party unilaterally appoints an arbitrator, it defeats the purpose of unbiased adjudication of disputes between the parties. A single judge bench comprising of Hon’ble Justice Suresh Kumar Kait, in the matter of Hashnine Systems private Ltd. Vs. Eastern Air Command Head (Quarters), Indian Air Force (ARB.P. 356/2021), dealt with an issue where a petition has been filed seeking appointment of an Arbitrator for adjudication of disputes which have arisen between the parties, under Section 11(6) of the Arbitration and Conciliation Act, 1996.
In the present case the respondent had arbitrarily invoked the Bank Guarantee No. 00960100000226 dated 14.03.2014 for an amount of Rs 21,36,100/- and Bank Guarantee No. 00960100000249, dated 26.06.2014 for an amount of Rs.10,68,035/-. Time and again the petitioner tried to approach the respondent to resolve the disputes. Petitioner had also sent a legal notice to the respondent to refund the amount and further had sent to make the payment within 15 days or consider it to be a notice as- ‘Notice Invoking Arbitration under Clause 3 of the Part III -Standard Conditions of Supply’. The respondent was asked to appoint an Arbitrator within 60 days to adjudicate the disputes between the parties, but there was no reply to those legal notices and hence was considered that the respondent did not appoint an arbitrator. Thereby the petitioner filed a petition.
The respondent submitted that the petition is not maintainable as the respondent had already appointed an arbitrator. To this, the counsel of the petitioner strongly objected and stated that the arbitrator must be appointed in terms contained in clause 3 of Part III – Standard Conditions of Supply, and hence arbitrator unilaterally appointed by the respondent is not acceptable by the petition.
After hearing both sides the court observed that- “The arbitration agreement between the parties and invocation of arbitration are not disputed by the respondent. No party can be permitted to unilaterally appoint an Arbitrator, as the same would defeat the purpose of unbiased adjudication of dispute between the parties.”
Thereby the court allowed the petition and appointed a sole arbitrator to adjudicate the dispute between the parties.