Wig Brothers (India) Pvt. Ltd. v. Devi Shakuntala Thakral Charitable Foundation
2014-10-13
ALOK ARADHE
body2014
DigiLaw.ai
JUDGMENT : Alok Aradhe, J.:- This petition has been filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the Act") for appointment of Arbitrator on behalf of the respondent. Background facts leading to filing of the petition briefly stated are that the petitioner is engaged in the business of civil construction. The petitioner agreed to carry out the construction work of various buildings for the respondent at Oriental Institute of Science and Technology and Oriental Engineering College in Jabalpur, Madhya Pradesh. A Letter of Intent was issued on 21-4-2009. Clause 27 of the aforesaid Letter of Intent contains an arbitration clause, which reads as under:-- "All disputes and differences of any kind, whatever arising out of or in connection with the contract or the carrying out of the works (whether during the progress of the works or after their completion and whether before or after the determination, abandonment or breach of the contract) shall be referred to and settled by the Architect who shall state his decision in writing. Such decision may be in the form of a Final Certificate or otherwise. The decision of the Architect with respect of any of the Excepted Matters shall be final and without appeal; but, if either the employer or the contractor be dissatisfied with the decision of the Architect on any matter, question or dispute of any kind (except any of the Excepted Matters) or as to the withholding by the Architect of any certificate to which the contractor may claim to be entitled then and in any such case either party (the employer or the contractor) may within 28 (twenty eight) days after receiving notice of such decision give a written notice to the other party through the Architect requiring that such matters in dispute be arbitrated upon.
Such written notice shall specify the matters which are in dispute and such dispute or difference of which such written notice has been given and no other shall be and is hereby referred to the arbitration and final decision of a single Arbitrator being a Fellow of the Indian Institute of Architects to be agreed upon and appointed by both the parties or in case of disagreement as to the appointment of a single Arbitrator to the arbitration of two Arbitrators both being Fellows of the Indian Institute of Architects one to be appointed by each party, which Arbitrators shall before taking upon themselves the burden of reference appoint an umpire." 2. The dispute arose between the parties. The petitioner thereupon invoked arbitration clause and vide communication dated 25-8-2011 nominated Mr. Abhijit Ray as an Arbitrator whereas the respondent nominated one Mr. Amogh Kumar Gupta as an Arbitrator. The aforesaid two Arbitrators unanimously appointed one Mr. K. Rajagopalan as Presiding Arbitrator and the communication in this regard was sent to the parties on 19-1-2012. Thus, the Arbitral Tribunal was constituted in terms of arbitration clause. 3. Thereafter, the respondent filed an application under Section 14 of the Act for termination of the mandate of the Arbitral Tribunal comprising Mr. Abhijit Ray, Mr. Amogh Kumar Gupta and Presiding Arbitrator Mr. K. Rajagopalan. The Trial Court vide order dated 13-7-2013 terminated the mandate of the Arbitrator appointed by the respondent on the ground that the aforesaid Arbitrator by communication dated 17-3-2012 has expressed his unwillingness to proceed with the arbitration. Admittedly, the aforesaid order has attained finality. 4. The petitioner thereafter, vide communication dated 19-9-2013 requested the respondent to nominate its Arbitrator. However, the respondent failed to nominate the Arbitrator within a period of 30 days from the date of receipt of communication sent by the petitioner. In the aforesaid factual background, the petitioner has approached this Court seeking appointing of the Arbitrator on behalf of the respondent. 5. Learned Counsel for the petitioner submitted that the respondent has forfeited its right to nominate an Arbitrator. It is further submitted that once the constitution of the Arbitral Tribunal is complete, the Court has no power to replace the Arbitrator merely because one Arbitrator has expressed his inability to function as such.
5. Learned Counsel for the petitioner submitted that the respondent has forfeited its right to nominate an Arbitrator. It is further submitted that once the constitution of the Arbitral Tribunal is complete, the Court has no power to replace the Arbitrator merely because one Arbitrator has expressed his inability to function as such. It is further submitted that the order dated 13-7-2013 passed by the Trial Court has attained finality and is binding on the parties. In support of his submissions, learned Counsel for the petitioner has placed reliance on the decision of Supreme Court in the cases of Datar Switchgears Ltd. Vs. Tata Finance Ltd. and another, (2000) 8 SCC 151 , Punj Lloyd Ltd. Vs. Petronet MHB Ltd., (2006) 2 SCC 638 , Dakshin Shelters Private Limited vs. Geeta S. Johari, (2012) 5 SCC 152 . On the other hand, learned Counsel for the respondent submitted that on termination of the mandate of the Arbitrator appointed by the respondent, the mandate of the Presiding Arbitrator also stands terminated as per the arbitration agreement. It is further submitted that since the respondent has failed to appoint an Arbitrator, therefore, the Court can appoint an independent Arbitrator on behalf of the respondent. In support of aforesaid submissions, learned Counsel for the respondent has placed reliance on the decision of Supreme Court in the cases of Northern Railway Administration, Ministry of Railway, New Delhi Vs. Patel Engineering Company Limited, (2008) 10 SCC 240 , Denel (Proprietary) Limited Vs. Ministry of Defence, (2012) 2 SCC 759 . 6. I have considered the submissions on both sides. Admittedly, the respondent despite service of notice dated 19-9-2013 has failed to nominate its Arbitrator. Therefore, it has forfeited its right to nominate an Arbitrator in view of law laid down by the Supreme Court in the case of Datar Switchgears Ltd. (supra) and Punj Lloyd Ltd. (supra) and Deep Trading Company Vs. Indian Oil Corporation, (2013) 4 SCC 35 . The aforesaid legal position has fairly not been disputed by learned Counsel for the respondent. However, it is well-settled in law that even in a case where a party forfeits its right to appoint an Arbitrator, yet the Court while making appointment of an Arbitrator shall bear in mind the requirement contained in arbitration clause for appointment of the Arbitrator. [See: ACE Pipeline Contracts (P) Ltd. Vs. Bharat Petroleum Corpn.
However, it is well-settled in law that even in a case where a party forfeits its right to appoint an Arbitrator, yet the Court while making appointment of an Arbitrator shall bear in mind the requirement contained in arbitration clause for appointment of the Arbitrator. [See: ACE Pipeline Contracts (P) Ltd. Vs. Bharat Petroleum Corpn. Ltd., (2007) 5 SCC 304 and Bharat Sanchar Nigam Limited and another Vs. Motorola India Private Ltd., (2009) 2 SCC 337 ]. 7. The contention raised by learned Counsel for the respondent that on termination of the mandate of the Arbitrator appointed by it, the mandate of Presiding Arbitrator also stands terminated as per the arbitration agreement need not be examined in the facts of the case as admittedly the respondent had sought termination of the mandate of Arbitral Tribunal comprising Mr. Abhijit Ray, Mr. Amogh Kumar Gupta and Presiding Arbitrator, Mr. K. Rajagopalan. Admittedly, the Trial Court vide order dated 13-7-2013 terminated the mandate appointed by the respondent only and did not terminate the mandate of the Arbitrator appointed by the petitioner as well as of the Presiding Arbitrator. Admittedly, the aforesaid order has attained finality. It is well-settled in law that even a void order or a decision rendered between the parties will bind the parties, until and unless the same is challenged successfully in higher forum. [See: State of Kerala Vs. M.K. Kunhikannan Nambiar Manjeri Manilcoth, Naduvil and others, (1996) 1 SCC 435 ]. 8. In other words, the challenge to the constitution of the Arbitral Tribunal comprising Mr. Abhijit Ray and Presiding Arbitrator namely, Mr. K. Rajagopalan at the instance of the respondent has failed. In any case, the respondent is estopped from challenging the constitution of the Arbitral Tribunal. Therefore, the aforesaid contention need not be examined in the facts of the present case. It is also relevant to notice Section 15(2) of the Act, which reads as under:-- "15. Termination of mandate and substitution of Arbitrator.-- (1) *** *** *** (2) Where the mandate of an Arbitrator terminates, a substitute Arbitrator shall be appointed according to the rules that were applicable to the appointment of the Arbitrator being replaced." For the aforesaid reasons, Mr. Jitendra Mehta, Architect, resident of 185, Saket Nagar, Indore, who is Fellow of the Indian Institute of Architects is hereby appointed as an Arbitrator on behalf of the respondent.
Jitendra Mehta, Architect, resident of 185, Saket Nagar, Indore, who is Fellow of the Indian Institute of Architects is hereby appointed as an Arbitrator on behalf of the respondent. Let a copy of this order be sent by the Office to Mr. Jitendra Mehta. Accordingly, the petition is disposed of.