Research › Search › Judgment

Calcutta High Court · body

2011 DIGILAW 1400 (CAL)

Ashok Kumar Ghosh v. STATE OF WEST BENGAL

2011-11-03

SANJIB BANERJEE

body2011
JUDGMENT 1. THE essential facts are not in dispute. Disputes and differences have admittedly arisen between the parties and are covered by the arbitration clause contained in the agreement between them. In terms of the arbitration agreement, the petitioner sought the appointment of an arbitrator by a letter dated October 11, 2010 which was received by the appointing authority on the same day. The present request under section 11 (6) of the Arbitration and Conciliation Act, 1996 was carried to this Court on November 22, 2010. The appointing authority, a chief engineer of the relevant department,' appointed himself as the arbitrator in accordance with the arbitration agreement on November 24, 2010. A copy of the present petition was served on the respondent on or after November 24, 2010. 2. THE petitioner says that upon the expiry of a period of 30 days from the date of a valid request for the constitution of an arbitral tribunal in accordance with the relevant arbitration agreement, the addressee would lose the authority to appoint or participate in the process of the appointment of the arbitrator or the constitution of the arbitral tribunal. It is on such ground that the petitioner insists that the Chief Justice or his designate is free under section 11 of the 1996 Act to appoint any person as arbitrator, notwithstanding the agreement. The relevant part of the arbitration agreement requires a request to be made by the contractor to the chief engineer of the concerned department and for the chief engineer to either take up the reference himself or appoint another as arbitrator. No qualification as to who may be appointed as arbitrator are indicated in the agreement. The chief engineer in this case took it upon himself to adjudicate the disputes covered by the arbitration agreement that had arisen between the parties. In course of this request remaining pending in Court, the person then manning the office of the chief engineer has been transferred from the. post and, as such, an arbitrator is per force to be appointed. In course of this request remaining pending in Court, the person then manning the office of the chief engineer has been transferred from the. post and, as such, an arbitrator is per force to be appointed. Though the petitioner insists that in view of the judicial interpretation of section 11 of the 1996 Act, an appointing authority would lose the mandate to appoint an arbitrator after the expiry of a period of 30 days from the date of receipt of the request for appointment, it is evident from section 11 of the Act that there is no statutory command in such regard. In Datar Switchgears v. Tata Finance Ltd. (2000)8 SCC 151 it was held that the reasonable period which an appointing authority may be afforded to sit upon a request should be 30 days. Such interpretation was obviously inspired by section 11(4) of the Act. Section 11 (4) of the Act refers to sub-section (3) thereof sub-section (3) of section 11 covers a situation where there is no agreed procedure for the appointment of an arbitrator or the constitution of an arbitral tribunal. It is in such context that sub-section (4) recognizes that a party to an agreement may request the other party thereto to appoint an arbitrator or the two arbitrators appointed may agreed on the third arbitrator. The period in case of either limb of subsection (4) is 30 days. Neither sub-section 3) nor sub-section (4) of section 11 covers a situation where there is an agreed mechanism for the constitution of an arbitral tribunal and the appointing authority as agreed upon by the parties fails to mak6 the appointment with a period of 30 days from the date of receipt of a request in such regard. 3. IT matters little, in the context of section 11 of the Act and the general tenor of the statute, as to whether the appointing authority is an officer or employee of one of the parties to the arbitration agreement. 4. 3. IT matters little, in the context of section 11 of the Act and the general tenor of the statute, as to whether the appointing authority is an officer or employee of one of the parties to the arbitration agreement. 4. IN a judgment reported at (2007)5 SCC 304 [ACE Pipeline Contracts (P) Ltd. v. Bharat Petroleum Ltd.) the Datar Switchgears judgment was noticed and it was held that notwithstanding the failure on the part of an appointing authority to ensure the appointment of an arbitrator in accordance with the arbitration agreement, upon a request being received under section 11 of the Act by the Chief Justice or his designate, the sentiment embodied in subsection (8) of section 11 of the Act has to be respected. Section 11 (8) provides that the Chief Justice or his designate should have due regard to the qualifications required of the arbitrator by the agreement of the parties and other conditions as to the independence and impartiality of the arbitral tribunal. In other words, mere regard for the qualification of the arbitrator without concerns as to the impartiality or independence of the tribunal would not do. Similarly, the Chief Justice or the designate may not disregard the qualifications required of an arbitrator in making the appointment on consideration of independence and impartiality. Shortly after the ACE Pipeline judgment, another judgment was rendered by a two-judge Bench of the Supreme Court reported at (2007)7 SCC 684 (Union of India v. Bharat Battery Manufacturing Company (P) Ltd.) where it was observed that upon the reasonable period of 30 days elapsing from the date of the appointing authority receiving a request from a party to the arbitration agreement for the appointment of an arbitrator, such appointing authority would lose its authority and there would be no impediment to the Chief Justice or his designate to constituting the arbitral tribunal under section 11 of the 1996 Act. The apparent difference of opinion between two benches of coordinate strength was noticed and the matter was referred to a three-judge Bench. The apparent difference of opinion between two benches of coordinate strength was noticed and the matter was referred to a three-judge Bench. The larger Bench stressed on the expression "due regard" appearing in section 11(8) of the 1996 Act and agreed with the view in ACE Pipeline that though it was not mandatory for the Chief Justice or his designate to appoint such person as had been specified in the agreement between the parties, yet due regard had to be had of the agreement between the parties and the same respected unless considerations as to impartiality and independence demanded otherwise. The larger Bench judgment is reported at (2008)10 SCC 240 (Northern Railway Administration v. Patel Engineering Co. Ltd.). 5. A subsequent judgment reported at (2009)4 SCC 523 (Union of India v. Singh Builders Syndicate) referred to the Northern Railway judgment in the context of an order by which a retired judge had been appointed arbitrator notwithstanding the arbitration agreement between the parties requiring a gazetted railway officer or a panel of gazetted railway officers to make up the arbitral tribunal. Though the judgment must be seen to have been in exercise of the special powers of the Supreme Court in not interfering with the order impugned, the observations in the body of the judgment are of some relevance. The observations support the view that the ambit of the interference whether by the Court or by the Chief Justice or his designate in matters covered by the 1996 Act would be limited. 6. THERE are several situations which may arise. It is possible that an appointing authority is requested to make an appointment and fails to take any steps for several months. It is upon the person making the request (or even the other party to the arbitration agreement) to apply to the Chief Justice or his designate under section, 11 of the Act to secure the constitution of an arbitral tribunal after the expiry of a reasonable period of time from the date of the request. Such reasonable time, according to the Datar Swttchgears, has been understood to be 30 days from the date of the request. But, say, an appointing authority does not take steps for six months from the date of the request and thereafter makes the appointment. Such reasonable time, according to the Datar Swttchgears, has been understood to be 30 days from the date of the request. But, say, an appointing authority does not take steps for six months from the date of the request and thereafter makes the appointment. It may not be open for the party making the request for appointment to apply under section 11 thereafter to suggest that the appointment made after the judicially interpreted reasonable time of 30 days has to be seen as void. The judicial interpretation as to reasonable time has a nexus with promptitude with which the party making the request approaches the Chief Justice or his designate. If a party making a request to an appointing authority sleeps over the matter for a period of a year and the appointing authority makes the appointment eleven months after the receipt of request, the fact that the appointment has been made after 30 days from the date of receipt of the request would not, ipso facto, invalidate the appointment as there is no statutory mandate in such regard. In the present Case the request was undoubtedly received more than 30 days prior to the date of appointment of the arbitrator. Yet, as on the date of appointment, the appointing authority or his employer, the respondent herein, may not have been aware of the request under section 11 having been filed by the petitioner. The appointment by the appointing authority in the present case cannot be said to be bad merely on the ground that it was made 30 days after the date of request or merely on the ground that it was made after the present request was filed in Court. 7. HOWEVER, since the relevant chief engineer who was approached and took upon the burden of the reference has since moved from the post, the present chief engineer of the relevant department should consider the petitioner's request for appointment afresh and either take up the burden of acting as arbitrator to adjudicate upon the disputes covered by the arbitration agreement between the parties or appoint another person in his place and stead. Such exercise should be completed within a month hereof. 8. AP No. 678 of 2011 is disposed of without any order as to costs. Petition disposed of.