The said Architect served a notice of arbitration to the appellant and immediately, an application under Order 7 Rule 11 of CPC was field before him objecting his appointment as the arbitrator: HIGH COURT OF MADHYA PRADESH AT INDORE

Arbitration Appeal is accordingly allowed and disposed of by HIGH COURT OF MADHYA PRADESH AT INDORE in the case of M/S CHOKHI DHANI V. M/S JS CONSTRUCTION through HON’BLE JUSTICE SUBODH ABHYANKAR

The facts of the case are that the appellant is a proprietorship concern and is running its business in the name and style of ‘Chokhi Dhani’. In the year 2003, the appellant entered into an agreement with the respondent M/s J.S. Construction as the contractor for construction of a water park, Clause 46 of which refers to arbitration. In connection with the said agreement, a dispute arose between the parties in respect of payment towards the work carried out by the contractor as it was alleged by the contractor that the appellant has withheld an amount of Rs.14,95,960/- due to it and thus, for the appointment of an arbitrator, an application under Section 11 of the Act of 1996 was also filed by the respondent before this Court which was registered as AC No.8/2007, and came to be decided by this Court vide its order dated 28/04/2010, permitting the respondent to withdraw the petition with liberty to approach the named arbitrator under Clause 46. After withdrawal of the aforesaid application AC No.8/2007, the respondent designated the Architect as the sole arbitrator as according to the agreement between the parties, the Architect is defined as ‘Kalp Kartik Architects’. The said Architect served a notice of arbitration to the appellant and immediately, an application under Order 7 Rule 11 of CPC was field before him objecting his appointment as the arbitrator. The aforesaid application was rejected by the arbitrator vide its order dated 03/12/2012, holding that all the issues have been settled by the order of High Court dated 28/04/2010 passed in AC No.8/2007. Appellant’s further case is that despite this order, no date was conveyed to them and finally, an ex-parte award was passed on 10/05/2013. Against the said order dated 03/12/2012, passed by the arbitrator rejecting the application filed by the appellant under Order 7 Rule 11 of CPC, a civil revision was also filed before this Court being CR No.8/2013, but after passing of the final award by the arbitrator, the aforesaid civil revision had become infructuous hence it was not proceeded with. The award passed by the arbitrator on 10/05/2013 was challenged by the appellant under Section 34 of the Act of 1996, before the District Judge, Indore which was dismissed by the District Judge vide impugned order dated 05/07/2016, hence, this appeal.

In this case, this court is of the opinion that it is not possible that the appellant/his counsel would not even enquire from the arbitrator about the next date of hearing. It is also found that the appellant had also not paid the arbitrator’s fee. There is no communication placed on record by the appellant that it ever approached the arbitrator with a request for a date of hearing from 12/12/2012 to 10.05.2013 which conduct of the appellant appears rather unnatural, deliberate and premeditated and does not entitle it to take advantage of its own wrong. Thus, it is held that the appellant was given proper opportunity of hearing by the arbitrator. Be that as it may, since this Court has already held that the arbitrator was not competent to hold the arbitral proceedings, the appeal stands allowed on this ground only, consequently, the impugned order dated 05/07/2016 passed by the XV Additional District Judge, Indore as also the award dated 10/05/2013 passed by the arbitrator are hereby set aside. As the appellant has also deposited Rs.30,50,925/- towards the 50% of the award amount, which has also been withdrawn by the respondents, it is directed that the respondent shall return the amount so received by them to the appellant within a period of three months from the date of this order, with interest at the prevailing Bank rates till the date of payment. If the amount is not returned within the stipulated period, it would fetch interest @8% p.a. till its realization. It is also observed that Respondents shall be free to proceed afresh in accordance with the provisions of condition no.46 of the agreement. Needless to say, the time spent by the parties in these proceedings, up to the final disposal of this appeal shall be excluded from any period of limitation. Arbitration Appeal is accordingly allowed and disposed of.
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