BTP Structural (I) Pvt. Ltd. v. Bharat Petroleum Corporation Ltd.
2014-06-20
R.D.DHANUKA
body2014
DigiLaw.ai
JUDGMENT R.D. DHANUKA, J. 1. By this application filed under section 11(6) of the Arbitration and Conciliation Act, 1996 applicant seeks appointment of a retired judge of this Court as arbitrator to settle the disputes between the parties in respect of the purchase order dated 29th March, 2000 and subsequent change orders. Some of the relevant facts for the purpose of deciding this application are as under:- 2. The respondent had issued a purchase order on 1st May, 1999 upon the petitioner. The arbitration clause forming part of the purchase order is extracted as under:- (a) Any disputes or difference of any nature whatsoever any claim, cross-claim, counter-claim or set off of the Corporation against the Contractor or regarding any right, liability, act, omission or account of any of the parties hereto arising out of or in relation to this agreement shall be referred to the Sole Arbitration of the Director (Marketing) of the Corporation or of some Officer of the Corporation who may be nominated by the Director (Marketing). The Contractor will not be entitled to raise any objection to any such arbitrator on the ground that the arbitrator is an Officer of the Corporation or that he has dealt with the matters to which the contract relates or that in the course of his duties as an Officer of the Corporation he had expressed views on all or any other matters in dispute or difference. In the event of the Arbitrator to whom the matter is originally referred being transferred or vacating his office or being unable to act for any reason, the Director (Marketing) as aforesaid at the time of such transfer, vacation of office or inability to act any in the discretion of the Director (Marketing) designate another person to act as arbitrator in accordance with the terms of the agreement to the end and intent that the original Arbitrator shall be entitled to continue the arbitration proceedings notwithstanding his transfer or vacation of office as an Officer of the Corporation if the Director (Marketing) does not designate another person to act as Arbitrator on such transfer, vacation of office or inability of original Arbitrator. Such persons shall be entitled to proceed with the reference from the point at which it was left by his predecessor.
Such persons shall be entitled to proceed with the reference from the point at which it was left by his predecessor. It is also a term of this contract that no person other that the Director (Marketing) or a person nominated by such Director (Marketing) of the Corporation as aforesaid shall act as arbitrator hereunder. The award of the arbitrator so appointed shall be final conclusive and binding on all parties to the agreement subject to the provisions of the Arbitration Act 1940 or any statutory modification or re-enactment thereof and the rules made thereunder for the time being in force shall apply to the arbitration proceedings under this clause. (b) The award shall be made in writing and published by the Arbitrator within two years after entering upon the reference or within such extended time not exceeding further twelve months as the Sole Arbitrator shall be a writing under his own hands appoint. The parties hereto shall be deemed to have irrevocably given their consent to the Arbitrator to make and publish the award within the period referred to herein above and shall not be entitled to raise any objection or protest thereto under any circumstances whatsoever. 3. Dispute arose between the parties. The Director (Marketing) of the respondent appointed an arbitrator. The learned arbitrator rendered an award on 21st October, 2009. By an order dated 27th April, 2012 this court has set aside the said award in the petition filed under section 34 of the Arbitration and Conciliation Act, 1996 filed by the applicant herein. 4. On 16th July, 2012, the applicant filed this application under section 11(6) of the Act for appointment of arbitrator. 5. On 10th June, 2013 the Division Bench of this court dismissed the appeal filed by the respondent herein. Respondent thereafter preferred a Special Leave Petition. Supreme Court issued a notice on such petition. By an order dated 10th February, 2014 the Supreme Court ultimately dismissed the said Special Leave Petition. 6. Dr.
5. On 10th June, 2013 the Division Bench of this court dismissed the appeal filed by the respondent herein. Respondent thereafter preferred a Special Leave Petition. Supreme Court issued a notice on such petition. By an order dated 10th February, 2014 the Supreme Court ultimately dismissed the said Special Leave Petition. 6. Dr. Tulzapurkar, learned senior counsel appearing for the applicant submits that on this court setting aside the arbitral award on the ground that the learned arbitrator had not complied with the principles of natural justice and the said order allowing the arbitration petition having been upheld by the Division Bench of this court and also by the Supreme Court, the arbitration agreement as well as the dispute raised by the applicant survives and is restored. It is submitted that though there was no stay of the order passed by the learned single judge on 27th April, 2012, the respondent who was empowered to appoint an arbitrator and having failed to appoint an arbitrator in accordance with procedure agreed upon under the arbitration agreement, this application under section 11(6) of the Act is maintainable. It is submitted that on the ground of bias and other grounds raised in the application, the Hon'ble Chief Justice or his designate Judge shall appoint a retired Judge of this Court as sole arbitrator to adjudicate upon the dispute. 7. Learned senior counsel submits that no sooner the impugned award rendered by the learned arbitrator is set aside by this court on 27th April, 2012 or within reasonable time, the Director (Marketing) ought to have appointed arbitrator and for such appointment of arbitrator, issuance of fresh notice by the applicant was not mandatory. The Director (Marketing) ought to have appointed arbitrator in view of the fact that the disputes raised by the applicant which were pending got revived in view of the order passed by this court setting aside the impugned award. It is submitted that since the respondent has failed to act in accordance with the agreed procedure under the arbitration agreement, the Hon'ble Chief Justice or his designate shall appoint an independent arbitrator, the respondent having lost their right to appoint arbitrator as per arbitration agreement. 8. Mr.
It is submitted that since the respondent has failed to act in accordance with the agreed procedure under the arbitration agreement, the Hon'ble Chief Justice or his designate shall appoint an independent arbitrator, the respondent having lost their right to appoint arbitrator as per arbitration agreement. 8. Mr. Sancheti, learned senior counsel appearing on behalf of the respondent on the other hand submits that though there was no stay granted by the appeal court, the fact remains that the appeal was pending in this court for quite sometime and ultimately came to be dismissed on 10th June, 2013. Supreme Court had issued notice before admission and the said proceedings were also pending for quite sometime. Special Leave Petition came to be dismissed on 10th February, 2014. Learned senior counsel submits that on this court setting aside the impugned award on the ground that the learned arbitrator had violated the principles of natural justice, though the arbitration agreement as well as the claims filed by the applicant in the earlier round of litigation are restored, the arbitrator then appointed by the respondent under the agreed procedure, his appointment also stands restored and thus no other arbitrator can be appointed. 9. In the alternate, the learned senior counsel submits that even if the agreement as well as claims filed by the respondent are restored to file, unless the applicant would have made an application and/or would have issued a notice for appointment of arbitrator to Director (Marketing), there was no question of failure on the part of the Director (Marketing) to appoint an arbitrator in terms of the arbitration agreement and thus application under section 11(6) of the Act is not maintainable. Learned senior counsel made with prejudice statement that the Director (Marketing) would nominate other officer in terms of the said agreement if the applicant has objection that the disputes shall not be heard by the same arbitrator whose award is set aside. 10. Learned senior counsel submits that even otherwise there is no question of any failure on the part of the Director (Marketing) in view of the fact the proceedings were pending before this court and thereafter before the Supreme Court. It is submitted that if there was any vacancy, the Director (Marketing) could have appointed a fresh arbitrator.
10. Learned senior counsel submits that even otherwise there is no question of any failure on the part of the Director (Marketing) in view of the fact the proceedings were pending before this court and thereafter before the Supreme Court. It is submitted that if there was any vacancy, the Director (Marketing) could have appointed a fresh arbitrator. Since the appointment of arbitrator is not set aside, there could be no failure on the part of the respondent to nominate any other arbitrator. 11. Learned senior counsel placed reliance on the judgment of the Supreme Court in case of Indian Oil Corporation Limited and others vs. Raja Transport Private Limited (2009) 8 SC 520 and in particular paragraphs 2, 7, 11, 13 to 15, 43, 48, 49 and 54. Learned senior counsel submits that the Supreme Court on interpretation of the clause in question before Supreme Court which is identical to the arbitration agreement arrived at between the parties has held that though the clause does not contemplate any separate notice for appointment of arbitrator, unless notice is issued by the contractor to the Director (Marketing), there was no question of any failure on the part of the Director (Marketing) to appoint arbitrator for want of notice. Paragraphs 2, 7, 11, 13 to 15, 43, 48, 49 and 54 reads thus:- 2. Under an agreement dated 28.2.2005, the appellant appointed the respondent as its dealer for retail sale of petroleum products. Clause 69 of the said agreement provided for settlement of disputes by arbitration. The said clause reads thus: “69. Any dispute or a difference of any nature whatsoever or regarding any right, liability, act, omission or account of any of the parties hereto arising out of or in relation to this Agreement shall be referred to the sole arbitration of the Director, Marketing of the Corporation or of some officer of the Corporation who may be nominated by the Director Marketing. The dealer will not be entitled to raise any objection to any such arbitrator on the ground that the arbitrator is an officer of the contract relates or that in the course of his duties or differences.
The dealer will not be entitled to raise any objection to any such arbitrator on the ground that the arbitrator is an officer of the contract relates or that in the course of his duties or differences. In the event of the arbitrator to whom the matter is originally referred being transferred or vacating his office or being unable to act for any reason the Director Marketing as aforesaid at the time of such transfer, vacation of office or inability to act, shall designate another person to act as arbitrator in accordance with the terms of the agreement. Such person shall be entitled to proceed with the reference from the point at which it was left by his predecessor. It is also a term of this contract that no person other than the Director, Marketing or a person nominated by such Director, Marketing of the Corporation as aforesaid shall act as arbitrator hereunder. The award of the arbitrator so appointed shall be final, conclusive and binding on all parties to the Agreement, subject to the provisions of the Arbitration Act, 1940 or any statutory modification of re-enactment thereof and the rules made thereunder and for the time being in force shall apply to the arbitration proceedings under this clause. ” (Emphasis supplied) 7. When the said appeals were pending, the respondent issued a notice dated 4.1.2006 through its counsel to the appellant, referring to the appellant's insistence that only its Director (Marketing) or an officer nominated by him could act as the arbitrator, in pursuance of the order of the Civil Judge dated 16.11.2005. The respondent alleged that it did not expect fair treatment or justice, if the Director (Marketing) or any other employee of the appellant was appointed as arbitrator, and that therefore any such appointment would be prejudicial to its interest. 11. The learned Chief Justice, after hearing the parties allowed the application by the impugned order dated 26.9.2008, and appointed a retired High Court Judge as sole arbitrator to decide the dispute. The learned Chief Justice assigned the following two reasons to appoint a retired Judge as Arbitrator, instead of the person named in the Arbitration Agreement: (i) The Director (Marketing) of the appellant, being its employee, should be presumed not to act independently or impartially.
The learned Chief Justice assigned the following two reasons to appoint a retired Judge as Arbitrator, instead of the person named in the Arbitration Agreement: (i) The Director (Marketing) of the appellant, being its employee, should be presumed not to act independently or impartially. (ii) The respondent had taken steps in accordance with the agreed appointment procedure contained in the arbitration agreement and the directions of the civil court, by issuing a notice dated 4.1.2006 calling upon the appellant to appoint an arbitrator. After the receipt of the notice dated 4.1.2006, the appellant had to refer matter for arbitration to its Director Marketing, but it did not do so. Nor did it take any step for appointment of the Arbitrator. By not referring the matter to arbitration to its own Director, despite receipt of the notice dated 4.1.2006, the appellant had failed to act as required under the agreed procedure. 13. Arbitration is a binding voluntary alternative dispute resolution process by a private forum chosen by the parties. It is quite common for governments, statutory corporations and public sector undertakings while entering into contracts, to provide for settlement of disputes by arbitration, and further provide that the Arbitrator will be one of its senior officers. If a party, with open eyes and full knowledge and comprehension of the said provision enters into a contract with a government/statutory corporation/public sector undertaking containing an arbitration agreement providing that one of its Secretaries/Directors shall be the arbitrator, he can not subsequently turn around and contend that he is agreeable for settlement of disputes by arbitration, but not by the named arbitrator who is an employee of the other party. 14. No party can say he will be bound by only one part of the agreement and not the other part, unless such other part is impossible of performance or is void being contrary to the provisions of the Act, and such part is severable from the remaining part of the agreement. The arbitration clause is a package which may provide for what disputes are arbitrable, at what stage the disputes are arbitrable, who should be the arbitrator, what should be the venue, what law would govern the parties etc. A party to the contract cannot claim the benefit of arbitration under the arbitration clause, but ignore the appointment procedure relating to the named Arbitrator contained in the arbitration clause. 15.
A party to the contract cannot claim the benefit of arbitration under the arbitration clause, but ignore the appointment procedure relating to the named Arbitrator contained in the arbitration clause. 15. It is now well settled by a series of decisions of this Court that arbitration agreements in government contracts providing that an employee of the Department (usually a high official unconnected with the work or the contract) will be the Arbitrator, are neither void nor unenforceable. We may refer to a few decisions on this aspect. 43. The divergent views expressed in Ace Pipeline (supra) and Bharat Battery (supra) were sought to be harmonised by a three-Judge Bench of this Court in Northern Railway Administration v. Patel Engineering Co. Ltd. 2008 (11) SCALE 500 . After examining the scope of Sub-sections (6) and (8) of Section 11, this Court held: “11. The crucial expression in Sub-section (6) is "a party may request the Chief Justice or any person or institution designated by him to take the necessary measures". This expression has to be read along with requirement in Subsection (8) that the Chief Justice or the person or an institution designated by him in appointing an arbitrator shall have "due regard" to the two cumulative conditions relating to qualifications and other considerations as are likely to secure the appointment of an independent and impartial arbitration. 12. A bare reading of the scheme of Section 11 shows that the emphasis is on the terms of the agreement being adhered to and/or given effect as closely as possible. In other words, the Court may ask to do what has not been done. The Court must first ensure that the remedies provided for are exhausted. It is true as contended by Mr. Desai, that it is not mandatory for the Chief Justice or any person or institution designated by him to appoint the named arbitrator or arbitrators. But at the same time due regard has to be given to the qualifications required by the agreement and other considerations. (Emphasis supplied) 13. The expression 'due regard' means that proper attention to several circumstances have been focused. The expression 'necessary' as a general rule can be broadly stated to be those things which are reasonably required to be done or legally ancillary to the accomplishment of the intended act. Necessary measures can be stated to be the reasonable step required to be taken. 14.
The expression 'necessary' as a general rule can be broadly stated to be those things which are reasonably required to be done or legally ancillary to the accomplishment of the intended act. Necessary measures can be stated to be the reasonable step required to be taken. 14. It needs no reiteration that appointment of the arbitrator or arbitrators named in the arbitration agreement is not a must, but while making the appointment, the twin requirements of Sub-section (8) of Section 11 have to be kept in view, considered and taken into account. 48. In the light of the above discussion, the scope of Section 11 of the Act containing the scheme of appointment of arbitrators may be summarised thus: (i) Where the agreement provides for arbitration with three arbitrators (each party to appoint one arbitrator and the two appointed arbitrators to appoint a third arbitrator), in the event of a party failing to appoint an Arbitrator within 30 days from the receipt of a request from the other party (or the two nominated arbitrators failing to agree on the third arbitrator within 30 days from the date of the appointment), the Chief Justice or his designate will exercise power under Sub-section (4) of Section 11 of the Act. (ii) Where the agreement provides for arbitration by a sole arbitrator and the parties have not agreed upon any appointment procedure, the Chief Justice or his designate will exercise power under Sub-section (5) of Section 11, if the parties fail to agree on the arbitration within thirty days from the receipt of a request by a party from the other party. (iii) Where the arbitration agreement specifies the appointment procedure, then irrespective of whether the arbitration is by a sole arbitrator or by a three-member Tribunal, the Chief Justice or his designate will exercise power under Sub-section (6) of Section 11, if a party fails to act as required under the agreed procedure (or the parties or the two appointed arbitrators fail to reach an agreement expected of them under the agreed procedure or any person/institution fails to perform any function entrusted to him/it under that procedure).
(iv) While failure of the other party to act within 30 days will furnish a cause of action to the party seeking arbitration to approach the Chief Justice or his designate in cases falling under Sub-sections (4) & (5), such a time bound requirement is not found in Sub-section (6) of Section 11. The failure to act as per the agreed procedure within the time limit prescribed by the arbitration agreement, or in the absence of any prescribed time limit, within a reasonable time, will enable the aggrieved party to file a petition under Section 11(6) of the Act. (v) Where the appointment procedure has been agreed between the parties, but the cause of action for invoking the jurisdiction of the Chief Justice or his designate under Clauses (a), (b) or (c) of Sub-section (6) has not arisen, then the question of Chief Justice or his designate exercising power under Sub-section (6) does not arise. The condition precedent for approaching the Chief Justice or his designate for taking necessary measures under Sub-section (6) is that (i) a party failing to act as required under the agreed appointment procedure; or (ii) the parties (or the two appointed arbitrators), failing to reach an agreement expected of them under the agreed appointment procedure; or (iii) a person/institution who has been entrusted with any function under the agreed appointment procedure, failing to perform such function. (vi) The Chief Justice or his designate while exercising power under Sub-section (6) of Section 11 shall endeavour to give effect to the appointment procedure prescribed in the arbitration clause. (vii) If circumstances exist, giving rise to justifiable doubts as to the independence and impartiality of the person nominated, or if other circumstances warrant appointment of an independent arbitrator by ignoring the procedure prescribed, the Chief Justice or his designate may, for reasons to be recorded ignore the designated arbitrator and appoint someone else. Re : Question (iii) 49. In the present case, the respondent approached the Chief Justice of the High Court by alleging that it had acted in terms of the agreed procedure under the arbitration agreement, and that the appellant had failed to act as required under the appointment procedure. Therefore, the respondent invoked the power of the Chief Justice under Sub-section (6) of Section 11.
In the present case, the respondent approached the Chief Justice of the High Court by alleging that it had acted in terms of the agreed procedure under the arbitration agreement, and that the appellant had failed to act as required under the appointment procedure. Therefore, the respondent invoked the power of the Chief Justice under Sub-section (6) of Section 11. In view of it, what falls for consideration is whether the appellant had failed to act as required under the appointment procedure. This pre- supposes that the respondent had called upon the appellant to act as required under the agreed appointment procedure. Let us examine whether the respondent had in fact called upon the appellant to act in accordance with the agreed procedure. 54. If the respondent wanted to invoke arbitration in terms of the arbitration agreement, it ought to have referred the disputes to the Director (Marketing) in term of Section 69 of the contract agreement for arbitration. Alternatively, the respondent ought to have at least called upon the appellant, to refer the dispute to the Director (Marketing) for arbitration. In the absence of any such a demand under Clause 69, it cannot be said that the respondent invoked the arbitration clause or took necessary steps for invoking arbitration in terms of the arbitration agreement. If the respondent had called upon the appellant to act in a manner contrary to the appointment procedure mentioned in the arbitration agreement, it cannot be said that the appellant failed to respond and act as required under the agreed procedure. 12. Mr. Sancheti, learned senior counsel also invited my attention to the grounds raised in the arbitration application in support of his submission that there is no ground raised in the petition that there was any failure on the part of the Director (Marketing) to nominate an arbitrator and that in view of such alleged failure the present application under section 11(6) of the Act came to be filed. It is submitted by the learned senior counsel that the only two grounds which are raised in the application are (1) that in view of the officer of the respondent who would be biased if appointed by the respondent to adjudicate upon the disputes and (2) the mandate of the learned arbitrator who was appointed earlier having been automatically terminated, application under section 11(6) came to be filed.
It is submitted that in so far as allegations of apprehension of bias is concerned, even if an officer is appointed in terms of the agreed procedure and if there are any such apprehension, the applicant can always make an application under section 12 of the Arbitration and Conciliation Act before the learned arbitrator and that cannot be a ground for refusal of appointment of an arbitrator in violation of the agreed procedure. It is submitted that since the applicants have not raised any issue about alleged failure on the part of the Director (Marketing), the Hon'ble Chief Justice or his designate cannot allow the applicant to urge that issue across the bar for the first time. 13. Dr. Tulzapurkar, learned senior counsel appearing for the applicant in rejoinder submits that since the respondents were fully aware of the disputes which were already subject matter of the earlier arbitration which disputes having been restored in view of the order setting aside such award, there was no question of issuance of any further notice. It is submitted that in any event since there was no stay granted by this court of the order passed by the learned Single Judge, the respondent on their own ought to have appointed arbitrator even during the pendency of the appeal or Special Leave Petition or in any event immediately after dismissal of Special Leave Petition as far back as on 10th February, 2014. 14. A perusal of the arbitration agreement which is extracted at paragraph (15) of the petition clearly indicates that the power to appoint an arbitrator vest in Director (Marketing) of the Corporation. It is not in dispute that pursuant to such arbitration agreement the Director (Marketing) had nominated an arbitrator who rendered an award. It is also not in dispute that the said award came to be set aside by this court on 27th April, 2012 and the appeal as well as special leave petition arising out of the said order came to be dismissed. The arbitration application was filed during the pendency of appeal by the respondent in this court. 15. In my view, in view of this court setting aside award under section 34 on the ground that the same suffered from violations of principles of natural justice, arbitration agreement does not come to an end and survives.
The arbitration application was filed during the pendency of appeal by the respondent in this court. 15. In my view, in view of this court setting aside award under section 34 on the ground that the same suffered from violations of principles of natural justice, arbitration agreement does not come to an end and survives. The effect of setting aside the award by the learned Single Judge of this court in this situation would be that the dispute which was filed by the applicant in the earlier round of litigation is restored for consideration of arbitrator. Question however that arises for consideration in this proceedings is whether any fresh notice for appointment of arbitrator was required to be issued in terms of the arbitration agreement and if no such notice was issued, whether there was any failure on the part of the Director (Marketing) for appointment of arbitrator. 16. Section 11(2) of the Arbitration and Conciliation Act, 1996 provides that subject to sub-section (6) the parties are free to agree on a procedure for appointing the arbitrator or arbitrators. Section 11(3) provides that if there is no agreement between the parties, each party shall appoint one arbitrator, and the two appointed arbitrators shall appoint the third arbitrator. Section 11(4) provides that if appointment procedure in sub-section 3 applies and if the party fails to appoint an arbitrator within 30 days from the receipt of the request to do so from the other party, the other party can apply for appointment of arbitrator under section 11(6) before the Hon'ble the Chief Justice or his designate. 17. The next question that arises however is that if there is an agreed procedure, whether there was any failure on the part of the Director (Marketing) to appoint. In my view, section 11(6) can be attracted if there is agreed procedure between the parties and if there is any failure on the part of the party to comply with such agreed procedure in making appointment of the arbitrator. 18. Perusal of the record indicates that the appeal filed by the respondent was pending before this court and came to be dismissed on 10th June, 2013. Special Leave Petition came to be dismissed on 10th February, 2014.
18. Perusal of the record indicates that the appeal filed by the respondent was pending before this court and came to be dismissed on 10th June, 2013. Special Leave Petition came to be dismissed on 10th February, 2014. Though there was no stay granted by the appeal court as well as by the Supreme Court and though the applicant filed this application under section 11(6) of the Act did not pursue this application. The Director (Marketing) also did not appoint any arbitrator. 19. Perusal of the judgment of Supreme Court in case of Indian Oil Corporation Limited (Supra) indicates that Supreme Court has construed the arbitration clause which in my view is identical to the clause in question in this proceedings. In the said judgment, the Supreme Court has adverted to the earlier judgment of Supreme Court in case of Ace Pipeline Contracts (P) Ltd. vs. Bharat Petroleum Corporation Ltd. (2007) 5 SCC 304 and also in case of Union of India vs. Bharat Battery Mfg. Co.(P) Ltd. (2007) 7 SCC 684 . Supreme Court has held that a court under section 11 can be asked to make an appointment if that is not done by the appointing authority. It is also held by the Supreme Court that section 11(6) of the Arbitration and Conciliation Act would be attracted only if there is a failure on the part of the appointing authority in terms of the arbitration agreement. In my view, the judgment of Supreme Court in case of Indian Oil Corporation Limited (supra) would squarely apply to the facts of this case and assist the case of the respondent. 20. In so far as the first submission of Mr. Sancheti, learned senior counsel that on this court setting aside the arbitral award on 27th April, 2012, appointment of the erstwhile arbitrator appointed by the Director (Marketing) is also restored is concerned, in my view there is no merit in this submission of the learned senior counsel. There is no provision for remand under the provisions of Arbitration and Conciliation Act, 1996. In my view though the arbitration agreement as well as the disputes raised by the applicant stood restored in view of this court having set aside the award on the ground of violation of principles of natural justice, the appointment of the same arbitrator cannot be restored.
In my view though the arbitration agreement as well as the disputes raised by the applicant stood restored in view of this court having set aside the award on the ground of violation of principles of natural justice, the appointment of the same arbitrator cannot be restored. Be that as it may since the arbitration agreement is revived, the arbitrator has to be appointed in accordance with the terms of the arbitration agreement. 21. In my view, after the award of the learned arbitrator is set aside, the applicant ought to have given a notice to the Director (Marketing) for appointment of arbitrator for deciding the matter denovo. It is not in dispute that no such notice was issued by the applicant for appointment of arbitrator. 22. In my view, even if the applicant has some apprehension about the alleged bias against the officer of the respondent as an arbitrator who may be appointed by the Director (Marketing), on the ground of such apprehension, the appointment of arbitrator in terms of the agreed procedure cannot be made. If the applicant has any apprehension about the neutrality or bias against the learned arbitrator of his appointment by the Director (Marketing), they would be always at liberty to file appropriate application under section 12 of the Arbitration and Conciliation Act, 1996 before the learned arbitrator. 23. In so far as second ground raised in the application that an award of the learned arbitrator having been set aside by this court, mandate of the learned arbitrator is terminated and thus the retired Judge of this Court shall be appointed in this application is concerned, even if the argument of the learned senior counsel appearing for the applicant is accepted that the mandate of the learned arbitrator is terminated on this court setting aside the award under section 34 of the Arbitration and Conciliation Act, 1996, under section 15(2) when the mandate of the arbitrator is terminated, a substitute arbitrator can be appointed only according to the rules that were applicable to the appointment of the arbitrator being replaced. The applicant not having issued notice to the Director (Marketing) for appointment of another arbitrator, the earlier arbitrator could not have been replaced by the Director (Marketing) under the arbitration agreement.
The applicant not having issued notice to the Director (Marketing) for appointment of another arbitrator, the earlier arbitrator could not have been replaced by the Director (Marketing) under the arbitration agreement. In my view, the submission of the learned senior counsel is contrary to section 15 of the Arbitration and Conciliation Act, 1996 and is rejected. 24. A perusal of the arbitration application clearly indicates that there is no such ground even raised in the application to the effect that there was any failure on the part of the Director (Marketing) to appoint an arbitrator and resultantly application under section 11(6) of the Act came to be filed. In my view, since there was no notice issued by the applicant for appointment of arbitrator, there was no failure on the part of the Director (Marketing) to appoint any arbitrator. In my view, section 11(6) can be attracted only if there is failure on the part of the appointing authority to appoint arbitrator as per provisions of section 11(2) of the Act. In my view, this application under section 11(6) is thus not maintainable. 25. However, since the learned senior counsel appearing on behalf of the respondent on instruction states that Director (Marketing) has agreed to appoint other officer in terms of the said agreement as arbitrator instead of asking the applicant to issue notice again for appointment of arbitrator, it would be appropriate if the Director (Marketing) is directed to appoint an arbitrator within 30 days from the date of this order. It is ordered accordingly. Arbitration application is disposed of in the aforesaid terms. No order as to costs.