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2017 DIGILAW 524 (JHR)

Sanjay Kumar son of Sri S. C. Lall v. Bharat Sanchar Nigam Limited, Ranchi

2017-03-17

D.N.PATEL

body2017
JUDGMENT : 1. This application has been preferred under Subsection 6 of Section 11 of the Arbitration and Conciliation Act, 1996. 2. Having heard learned counsel for both the sides and looking to the agreement entered into between the parties to this arbitration application, there is arbitration Clause which is at Annexure-2. The agreement is for collection of telephone bills through authorised STD/ISD PCO booths under BSNL Order No. 185/2004-MKTG dated 13th April, 2005 and 29th June, 2005. For the ready reference, Clause 5 of the agreement reads as under: “5. In the case of any dispute arising during the currency of the agreement, the General Manager, BSNL, Ranchi Telecom District, Ranchi will appoint a sole Arbitrator with mutual consent and decision of the arbitrator will be binding for both the parties. The venue of such arbitration will be at Ranchi. The provision of Indian Arbitration and Conciliation Act, 1996 as amended from time to time will be applicable in arbitration proceedings.” 3. It further appears that notice through Advocate was given on 27th April, 2015 for appointment of the learned Arbitrator which is at Annexure6 to the memo of this arbitration application. 4. Despite the notice, no reply has been given by the respondents and now this arbitration application has been preferred by the applicant. 5. It has been held by the Hon'ble Supreme Court in the case of Deep Trading Co. v. Indian Oil Corpn., reported in (2013) 4 SCC 35 in paragraphs 11, 15, 16, 19 and 22, which read as under: “11. Subsections (3), (4) and (5) of Section 11 have no application in the present case as the parties have agreed on a procedure for appointing the arbitrator in Clause 29. Subsection (2) provides that subject to subsection (6), the parties are free to agree on a procedure for appointing the arbitrator or arbitrators. Subsection (6) makes provision for making an application to the Chief Justice concerned for appointment of an arbitrator in three circumstances: (a) a party fails to act as required under the agreed procedure, or (b) the parties or the two appointed arbitrators fail to reach an agreement expected of them under that procedure, or (c) a person, including an institution, fails to perform any function entrusted to him or it under that procedure. If one of the three circumstances is satisfied, the Chief Justice may exercise the jurisdiction vested in him under Section 11(6) and appoint the arbitrator. In the present case, the dealer moved the Chief Justice of the Allahabad High Court under Section 11(6)(a) for the appointment of an arbitrator as the Corporation failed to act as required under Clause 29. 15. In Datar Switchgears (SCC p. 158, para 19), a two-Judge Bench of this Court considered the scheme of Section 11, noted the distinguishing features between Section 11(5) and Section 11(6) and then considered the question whether in a case falling under Section 11(6), the opposite party cannot appoint an arbitrator after the expiry of thirty days from the date of demand. This Court held that in cases arising under Section 11(6), if the opposite party has not made an appointment within thirty days of the demand, the right to make appointment is not forfeited but continues, but such an appointment has to be made before the first party makes application under Section 11 seeking appointment of an arbitrator. If no appointment has been made by the opposite party till application under Section 11(6) has been made, the right of the opposite party to make appointment ceases and is forfeited. 16. In Punj Lloyd (SCC pp. 63940, para 3), the agreement entered into between the parties contained arbitration clause. The disputes and differences arose between the parties. Punj Lloyd (the appellant) served a notice on Petronet (the respondent) demanding appointment of an arbitrator and reference of disputes to him. Petronet failed to act. On expiry of thirty days, Punj Lloyd moved the Chief Justice of the High Court for appointment of the arbitrator under Section 11(6). Petronet had not made appointment till the date of moving the application. The designate Judge refused to appoint the arbitrator holding that the remedy available to it was to move in accordance with the agreement. Aggrieved by the said order, a writ petition was filed which was dismissed and the matter reached this Court. A three-Judge Bench of this Court referred to Datar Switchgears and held that the matter was covered squarely by that judgment and the view taken by the designate Judge in dealing with the application under Section 11(6) and the Division Bench was not right. A three-Judge Bench of this Court referred to Datar Switchgears and held that the matter was covered squarely by that judgment and the view taken by the designate Judge in dealing with the application under Section 11(6) and the Division Bench was not right. This Court restored the application under Section 11(6) before the Chief Justice of the High Court for fresh consideration and appointment of the arbitrator in accordance with Section 11(6). 19. If we apply the legal position exposited by this Court in Datar Switchgears to the admitted facts, it will be seen that the Corporation has forfeited its right to appoint the arbitrator. It is so for the reason that on 9-8-2004, the dealer called upon the Corporation to appoint the arbitrator in accordance with the terms of Clause 29 of the agreement but that was not done till the dealer had made application under Section 11(6) to the Chief Justice of the Allahabad High Court for appointment of the arbitrator. The appointment was made by the Corporation only during the pendency of the proceedings under Section 11(6). Such appointment by the Corporation after forfeiture of its right is of no consequence and has not disentitled the dealer to seek appointment of the arbitrator by the Chief Justice under Section 11(6). We answer the above questions accordingly. 22. We are afraid that what has been stated above has no application to the present fact situation. In Newton Engg., this Court was not concerned with the question of forfeiture of right of the Corporation for appointment of an arbitrator. No such argument was raised in that case. The question raised in Newton Engg. was entirely different. In the present case, the Corporation has failed to act as required under the procedure agreed upon by the parties in Clause 29 and despite the demand by the dealer to appoint the arbitrator, the Corporation did not make appointment until the application was made under Section 11(6). Thus, the Corporation has forfeited its right of appointment of an arbitrator. In this view of the matter, the Chief Justice ought to have exercised his jurisdiction under Section 11(6) in the matter for appointment of an arbitrator appropriately. Thus, the Corporation has forfeited its right of appointment of an arbitrator. In this view of the matter, the Chief Justice ought to have exercised his jurisdiction under Section 11(6) in the matter for appointment of an arbitrator appropriately. The appointment of the arbitrator by the Corporation during the pendency of the proceedings under Section 11(6) was of no consequence.” (emphasis supplied) In view of the aforesaid decision, even if the respondent has right to appoint Arbitrator, but, even after giving notice by the applicant, the Arbitrator is not appointed and if the application is preferred before the Court under Subsection 6 of Section 11 of the Arbitration and Conciliation Act, 1996, now the respondent cannot appoint Arbitrator and the Court has all power, jurisdiction and authority to appoint the Arbitrator. 6. In view of the aforesaid facts and looking to the aforesaid ratio propounded by the Hon'ble Supreme Court, I hereby appoint Retired Hon'ble Mr. Justice D.G.R. Patnaik, who is a retired Judge of this Court as learned Arbitrator to resolve the dispute between the parties. 7. Learned Arbitrator is, hereby, requested to complete the arbitration proceeding as early as possible and practicable, preferably within a period of six months from the date of commencement of the arbitration proceeding. 8. Learned counsel for both the sides jointly submitted that they shall cooperate the hearing and they shall not ask for any unnecessary adjournments. 9. Registrar General of this Court is, hereby, directed to supply a copy of this order as well as a copy of this arbitration application along with all annexures to the learned Arbitrator, appointed by this Court. 10. Accordingly, this arbitration application is allowed and disposed of.