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2014 DIGILAW 1431 (MP)

Primus Chemicals Ltd. v. Guha Industries

2014-11-05

PRAKASH SHRIVASTAVA

body2014
ORDER : PRAKASH SHRIVASTAVA, J. 1. This is an application under section 11(6) of the Arbitration and Conciliation Act, 1996 (for short the Act) for appointment of an independent Arbitrator. The case of the applicant is that the applicant company had placed the order dated 26-2-1996 and 4-3-1996 for purchase of certain items with the respondent and had paid the advance. In spite of the repeated request by the applicant, the non-applicant had not supplied the items for which the purchase order was given. The arbitration clause provides for appointment of two arbitrators, therefore, the applicant had appointed its arbitrator and requested the non-applicant to appoint their arbitrator but the non-applicant had not appointed their arbitrator. The sole arbitrator appointed by the applicant had conducted the proceeding and passed the award dated 24-11-2003. The said award was challenged by the non-applicant under section 34 of the Act in Misc. Case No. 33/2009 and the learned 2nd Additional District Judge, Ujjain by order dated 21-12-2010 has set aside the award. The applicant company had again sent a letter dated 14-1-2011 for appointment of arbitrator and had appointed his arbitrator but in spite of the receipt of the request within the statutory period of 30 days the non-applicant had not appointed the arbitrator, therefore, applicant has approached this Court for appointment of the arbitrator. 2. Learned counsel for the respondent has raised the objection that since the arbitration has been conducted once in terms of the arbitration clause and the award has been set aside, therefore, fresh arbitration is not permissible. He has also raised an objection that the arbitration clause provides for appointment of two arbitrators, therefore, sole arbitrator cannot be appointed by this Court and that the claim of the applicant is time barred, therefore, it is required to be rejected on the ground of delay. 3. I have heard learned counsel for the parties and peruse the record. In the present case the arbitration agreement is not in dispute. 3. I have heard learned counsel for the parties and peruse the record. In the present case the arbitration agreement is not in dispute. The arbitration clause of purchase order reads as under :-- "(12.0) Arbitration: (12.1) Should a dispute or difference whatsoever arise between the Purchaser and the Contractor upon, or in relation to, or in connection with the contract, either party may forthwith give to the other notice in writing and the existence of such question, dispute or difference, and the same shall be referred to the adjudication of two arbitrators, one to be nominated by the Purchaser and the other to be nominated by the Contractor, or in the case of the said arbitrators none agreeing, then to the adjudication of an Umpire to be appointed by arbitrators in writing, before proceeding with the reference, and the award of the arbitrator, in the event of their not agreeing the decision of the Umpire appointed by them, shall be final and of binding on the parties, and the provisions of the Indian Arbitration Act, 1940, and all the rules there under and any statutory modification thereof shall be deemed to have been applied incorporated in this contract." 4. So far as the first objection about earlier arbitration is concerned, on an application under section 34 of the Act objecting to the award by the earlier arbitrator, the Additional District Judge by the order dt. 21-12-2010 has set aside the award on the ground that since the arbitration clause provides for appointment of two arbitrators, one by each of the party, therefore, award by the single arbitrator appointed only by one party cannot be sustained. Such an order of setting aside the award on technical ground of competence of the arbitrator to pass the award will not preclude the concerned party to approach the Court under section 11 of the Act for appointment of an independent arbitrator. 5. Hon'ble Supreme Court in the matter of McDermott International Inc. Vs. Burn Standard Co. Ltd. and Others, (2006) 11 SCC 181 , while considering the scope of interference in an award by Court has held that the Court can only quash the award leaving the parties free to begin the arbitration again, if it is desired. 5. Hon'ble Supreme Court in the matter of McDermott International Inc. Vs. Burn Standard Co. Ltd. and Others, (2006) 11 SCC 181 , while considering the scope of interference in an award by Court has held that the Court can only quash the award leaving the parties free to begin the arbitration again, if it is desired. Bombay High Court in the matter of M/s. Associated Constructions v. Mormugoa Port Trust vide order dated 29-7-2010 passed on Arbitration Application No. 18/2007 referring to the earlier judgment of the Court, has held that fresh arbitration is permissible in the event of an award being set aside for the reason other than the merit. 6. Since in the present case also the earlier award was passed only by one arbitrator appointed by one of the parties without their being the second arbitrator appointed by another party in terms of arbitration clause, therefore, such an award being set aside as 'non-est' will not come in the way of the parties for approaching this Court for appointment of independent arbitrator under section 11 of the Act. 7. The second objection is that in terms of arbitration clause two arbitrators, one by each party, is to be appointed, therefore, the sole arbitrator cannot be appointed by this Court. The facts on record clearly indicate that the parties have failed to appoint the arbitrators, one by each party, in terms of the arbitration clause, therefore, this Court under section 11(6) of the Act is empowered to appoint the independent arbitrator. This Court in the matter of Hindustan Electro Graphito Ltd. Vs. M.P. State Electricity Board and Another, (2004) 1 MPLJ 378 , dealing with similar issue where the arbitration clause provide for appointment of two arbitrators and request was made by one of the parties for appointment of arbitrator, has held that as per section 11(6) of the Act even one independent and impartial person can be appointed as arbitrator. Thus, this objection of the non-applicant also has no merit. 8. Thus, this objection of the non-applicant also has no merit. 8. The next objection of the non-applicant is about the claim being time barred but at this stage it is only required to be seen that the claim is not a dead claim and considering the fact that the applicant had earlier appointed the arbitrator and the award was passed in the year 2003 which was set aside in the year 2010 and thereafter, the present application has been filed, it cannot be held that the claim of the applicant is a dead claim. The issue relating to the limitation can be adjudicated by the arbitrator on the basis of evidence led by the parties. In view of the aforesaid aspect of the matter the application under section 11(6) of the Act is allowed. Since I am of the view that an independent arbitrator need to be appointed to adjudicate the dispute between the parties, therefore, considering the nature of controversy Hon'ble Shri Justice (Retd.) I.S. Shrivastava, R/o B-101, Sanghvi Residency, Opposite Sahara City, Bypass Road, Indore (M.P.) is appointed as an independent arbitrator. The parties are directed to remain present before the arbitrator on 8-12-2014.