Blog

So far as the question of law is concerned, after the application has been filed for appointment of an Arbitrator under Section 11(6) of the Act, before the High Court the party forfeits their right to appoint an Arbitrator under the clause of arbitration thereafter. However, in the instant case, the High Court was not inclined to exercise its jurisdiction under Section 11(6) of the Act for appointment of an Arbitrator and no error was committed by the High Court in dismissing the petition with liberty to the appellant to submit objections against the ex­parte award under Section 34 or 37 of the Act, if so advised. This was observed by Hon’ble Rastogi, J in the matter of M/s. Doorga Welding Works vs. Chief Engineer, Railway Electrification, Allahabad and Ors.– [SLP(Civil) No(s). 28682 of 2019)].

In this case, instant appeal has been filed assailing an order declining to appoint an Arbitrator in exercise of its power under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Act”).  Brief facts of the case are that the tender of the appellant was accepted in reference to which a contract agreement was executed between the parties containing clauses 63 and 64 of the general conditions of contract containing the clause of arbitration for settlement of claims and/or disputes between the parties. Since there were claims which could not be settled, the appellant served a legal notice for appointment of an Arbitrator and for settlement of claims. There was no express reference made of clauses 63 and 64 in the notice, but the substance of the notice was for settlement of disputes through the process of arbitration in terms of the arbitration clause under general conditions of agreement which is a part of the contract agreement executed between the parties.

It is alleged that since the respondents failed to appoint an arbitrator pursuant to the notice, an Arbitration Petition was filed in the High Court of Orissa for appointment of an Arbitrator under Section 11(6) of the Act. After filing of the arbitration petition, the appellant completely forgot to take action in furtherance and it was never notified to the respondents at any stage. In the meanwhile, the respondents, in response to the letter of the appellant asked the appellant to select two names from a panel of four persons. Immediately thereafter, a Miscellaneous Case was filed seeking an order restraining the respondents from appointing an Arbitrator and that application too remained pending and no action was taken up by the appellant to pursue either the Arbitration Petition or the Miscellaneous Case before the High Court. In the meanwhile, two officers from the panel suggested by the respondents were selected by the appellant   and   in   furtherance thereto, the respondents constituted an Arbitration Tribunal. The appellant thereafter appeared before the Arbitral Tribunal and preferred statement of claim. The respondents also submitted their statement of defence. The appellant thereafter submitted an application that the Tribunal has not been nominated within the stipulated time and hence, the constitution of the Tribunal is not valid and further submitted that the Tribunal should not proceed with the arbitration proceedings. Since the Arbitral Tribunal was constituted with consent of the appellant, the Tribunal proceeded with the arbitration proceedings and since the appellant failed to participate despite the opportunity being afforded, an ex­-parte award came to be passed on rejecting the claim of the appellant. Finally in the arbitration petition filed by the appellant, notices were issued to the respondents by the High Court, almost 3 years after passing of the ex­-parte award. The High Court, taking note of such peculiar facts and circumstances, dismissed the arbitration petition with liberty to the appellant to submit its objections under Section 34 or 37 of the Act, if so advised.

Supreme court after perusing the facts and arguments presented, held that – “Undisputedly, the appointment of an Arbitrator was made by the respondents after arbitration petition was filed by the appellant under Section 11(6) of the Act in the Registry of the High Court but this Court cannot be oblivious of the peculiar fact and circumstances that after filing the arbitration petition in the Registry of the High Court, the appellant completely slept over the matter and  the respondents were never served any notice of the Petition filed and when the respondents called upon the appellant to suggest and select two names out of the panel of four for constitution of the Arbitral Tribunal, the appellant selected two officers and thereafter appeared before the Arbitral Tribunal and submitted his statement of claim. In our considered view, so far as the question of law is concerned, certainly being settled that after the application has been filed for appointment of an Arbitrator under Section 11(6) of the Act, before the High Court the respondents forfeited their right to appoint an Arbitrator under the clause of arbitration thereafter but from the narration of facts which has been noticed by us, we are of the view that no error was committed by the High Court in dismissing   the petition filed under Section 11(6) of   the   Act   for appointment of an Arbitrator.”

Click here to view the judgement

Judgement reviewed by Mehvish Alam