Research › Search › Judgment

Madhya Pradesh High Court · body

2004 DIGILAW 81 (MP)

Subham Agencies (P) Ltd. v. M. P. E. B.

2004-01-28

A.K.AWASTHY

body2004
Judgment ( 1. ) THIS is an application under Section 11 (6) of the Arbitration and Conciliation Act, 1996 (hereinafter to be referred to as the act) for appointment of Arbitrator by the Chief Justice or his designate. ( 2. ) IT is not in dispute that the applicant was awarded contract on 14. 10. 1993 for a period of three years for displaying of advertisement on kiosks to be affixed to electric poles belonging to the M. P. E. B. in the State of M. P. except Bhopal. That one A. K. Vigg filed writ petition challenging the grant of contract to the applicant by the MP. E. B. and in this W. P. 1242/94 it was ordered on 31. 10. 1996 that policy be laid down by the M. P. E. B, for Competitive Bids of contract to get maximum amount. That the applicant has filed the writ petition No. 48/98 for recovery of losses resulting in non-fulfilment of contract and it was decided on 12,02. 1998. ( 3. ) THE case of the applicant is that the M. P. E. B. has not refunded the amount which is of more than 25 lacs and not resolved the dispute in spite of the direction in the writ petition. That Clause 14 of the contract provides for an Arbitration. That the applicant by letter dated 14. 12. 1999 informed the M. P. E. B. for the appointment of Arbitrator as per Clause 14, but the M. P. E. B. has refused to appoint the Arbitrator and as such the Chief Justice or his designate to appoint the Arbitrator under Section 11 (6) of the Act. ( 4. ) THE non-applicant has raised the preliminary objection that High Court Bench at Indore has no jurisdiction to entertain this petition because the agreement provides that all the dispute arising out of the contract between the parties will be decided only in any competent Court situated at Jabalpur, That the applicant has filed the writ petition for alleged dispute and as in the writ petition the disputes between the parties were already decided, this petition is not maintainable and it will amount that the applicant has waived or abandoned the Arbitration clause and on account of waiver the application for the appointment of Arbitrator is not tenable. That the application for appointment of Arbitrator is barred by time. That the application for appointment of Arbitrator is barred by time. That as per Arbitration clause dispute can only be referred to Executive Director (O and M) M. P. E. B. Jabalpur. ( 5. ) AFTER hearing the learned counsel for both the parties and considering the various citation of learned counsel for the non-applicant I am of the opinion that in view of settle view of Apex Court in various cases the issues raised by the non-applicants can be decided by the appointed Arbitrators under Section 16 of the Act and the designate of the Chief Justice will transgress his power in dealing with the issues in petition under Section 11 (6) of the Act, because the order of appointment of Arbitrator is purely administrative in nature. The Act, 1996 made certain drastic changes in Law of Arbitration to meet the liberal policy and globalisation of commerce and delay in disposal of cases in Court. This Act is codified in tune with the model law on International Commercial Arbitration as adopted by United Nation Commission on International Trade Law (UNCITRAL) with main objective to amplify the powers of Arbitral Tribunal and minimize the supervisory role of Courts in the Arbitral process. It is provided under Section 16 of the Act that Arbitral Tribunal to rule on its own jurisdiction. The Tribunal has power to decide the objections with respect to existence or the validity or applicability of Arbitration agreement. It is now well settled that the nominee or designate of the Chief Justice under Section 11 of the Act merely exercise its administrative functions and, therefore, has no jurisdiction to adjudicate upon the contentious issues between the parties and the issues are to be decided by arbitral Tribunal under Section 16 of the Act to whom the dispute is referred. ( 6. ) THE agreement containing the Arbitration clause was executed at Indore, Thus, prima facie this Court has territorial jurisdiction. Thus, the argument of learned counsel for the non-applicants that by virtue of agreement the jurisdiction of the Court at Indore to decide the cases is excluded is contentious issue and it will not be proper for nominee of the Chief Justice to deal with this jurisdictional objection of the non-applicants. Thus, the argument of learned counsel for the non-applicants that by virtue of agreement the jurisdiction of the Court at Indore to decide the cases is excluded is contentious issue and it will not be proper for nominee of the Chief Justice to deal with this jurisdictional objection of the non-applicants. In application under Section 11 (6) of the Act the other objections of the non-applicants that whether the applicant has abandoned or waived his right to invoke the Arbitration clause by filing the writ petition before the High Court for getting the relief which he is claiming under the contract is also contentious issue and it will be dealt by the Arbitrator. ( 7. ) IT is laid down in case of Hythro Power Corporation Ltd. v. Delhi Transco Ltd. , 2003 Arb. WLJ 469 (SC)=2003 (3) Arb. LR 1 (SC), Konkan Railway Corporation Ltd. v. Mehul Construction Co. , (2000) 7 SCC 201 =2000 (3) Arb. LR 162 (SC), Konkan Railway Corporation Ltd. v. Rani Construction (P) Ltd. , (2002) 2 SCC 388 =2002 (1) Arb. LR 326 (SC) (Constitution Bench), National Dairy Development Board, 2002 (2) MPLJ 72 and Hindustan Petroleum Corporation Ltd. v. Pinkcity Midway Petroleums, (2003) 6 SCC 503 =2003 (2) Arb. LR 666 (SC), that if prima facie the Arbitration clause to resolve dispute exists between the parties then the validity existence and applicability of the clause along with limitation, jurisdiction and all contentious issues are not to decided by the nominee, but under Section 16 of the Act by the Arbitrator. It is clearly laid down in case of Hythro Power (supra), that the Chief Justice or his designate under Section 11 of the Act exercises purely administrative function and it is not open to him to discharge any judicial function of adjudicating any dispute regarding the "existence of Arbitration agreement". In case of Hindustan Petroleum Corporation (supra), it is laid down that even the applicability of the Arbitration agreement will not be looked by the nominee of the Chief Justice. In this judgment the following paragraph 21 from (2002) 2 SCC 388 =paragraph 15 from 2002 (1) Arb. LR 326 (SC) (supra), was quoted in para 15 at page 511 (Page 672 of Arb. In this judgment the following paragraph 21 from (2002) 2 SCC 388 =paragraph 15 from 2002 (1) Arb. LR 326 (SC) (supra), was quoted in para 15 at page 511 (Page 672 of Arb. LR): "it might also be that in a given case the Chief Justice or his designate may have nominated an Arbitrator although the period of thirty days had not expired. If so, the Arbitral Tribunal would have been improperly constituted and be without jurisdiction. It would then be open to the aggrieved party to require the Arbitral Tribunal to rule on its jurisdiction. Section 16 provides for this. It states that the Arbitral Tribunal may rule on its own jurisdiction. That the Arbitral Tribunal may rule on any objections with respect to the existence or validity of the Arbitration agreement shows that the Arbitral Tribunals authority under Section 16 is not confined to the width of its jurisdiction, as was submitted by learned counsel for the appellants, but goes to the very root of its jurisdiction. There would, therefore, be no impediment in contending before the Arbitral Tribunal that it had been wrongly constituted by reason of the fact that the Chief Justice or his designate had nominated an Arbitrator although the period of thirty days had not expired and that, therefore, it had no jurisdiction. " ( 8. ) IN this context the following observations in (2000) 7 SCC 201 = 2000 (3) Arb. LR 162 (SO (supra), are very relevant. At page 206 (Page 166 of Arb. LR): "when the matter is placed before the Chief Justice or his nominee under Section 11 of the Act it is imperative for the said Chief Justice or his nominee to bear in mind the legislative intent that the Arbitral process should be set in motion without any delay whatsoever and all contentious issues are left to be raised before the Arbitral Tribunal itself. At that stage it would not be appropriate for the Chief Justice or his nominee to entertain any contentious issue between the parties and decide the same. A bare reading of Sections 13 and 16 of the Act makes it crystal dear that questions with regard to the qualifications, independence and impartiality of the Arbitrator, and in respect of the jurisdiction of the Arbitrator could be raised before the Arbitrator who would decide the same. . . . . . . . . A bare reading of Sections 13 and 16 of the Act makes it crystal dear that questions with regard to the qualifications, independence and impartiality of the Arbitrator, and in respect of the jurisdiction of the Arbitrator could be raised before the Arbitrator who would decide the same. . . . . . . . . . . . . . . . . . . This being the legislative intent, it would be proper for the Chief Justice or his nominee just to appoint an Arbitrator without wasting any time or without entertaining any contentious issues at that stage, by a party objecting to the appointment of an Arbitrator. If this approach is adhered to, then there would be no grievance of any party and in the Arbitral proceeding, it would be open to raise any objection, as provided under the Act. " ( 9. ) IT is contended by the learned counsel for the non-applicants t at the applicant has not given the required notice to him for the appointment of Arbitrator and as such petition under Section 11 (6) of the Act is not tenable. The non-applicant Board has totally refused the prayer of the applicant for invoking the clause of the resolving dispute by the Arbitrator even before filing this petition by the applicant. In case of Datar Switchgears Ltd. v. Tata Finance Ltd. and others, (2000) 8 SCC 151 =2000 (3) Arb. LR 447 (SO, it is held that if the opposite party fails to appoint the Arbitrator even after 30 days of the notice of demand and before filing the petition under Section 11 of the Act the right to appoint the Arbitrator by the non-applicant ceases. Consequently, in view of dispute between the parties arid the Arbitration clause and failure of the non-applicants to appoint the Arbitrator after the notice of demand the application to appoint the Arbitrator under Section 11 (6) of the Act deserves to. be allowed. ( 10. ) THE application is allowed and Justice Shri Y. B. Suryavanshi, retired Judge of M. P. High Court is appointed as sole Arbitrator.