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Himachal Pradesh High Court · body

2018 DIGILAW 928 (HP)

Kavita Bhaskar v. H. P. General Industries Corporation Ltd.

2018-05-21

CHANDER BHUSAN BAROWALIA

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JUDGMENT : Chander Bhusan Barowalia, J. The present petition, under Section 11 (6) of Arbitration and Conciliation Act, 1996, has been maintained by the petitioner, for appointment of arbitrator. As per the petitioner, in the year 2012, she filed a suit for recovery of an amount of Rs. 21,318/- alongwith interest, against the respondent, before the learned trial Court. However, the respondent in its written statement had specifically averred that as there exist an arbitration agreement, therefore the suit is not maintainable. Consequently, the petitioner sought permission to withdraw the said suit with liberty to approach the learned Arbitrator, under Order 23, Rule 3 of CPC, but the same was rejected by the learned trial Court. Against the said order of rejection, the petitioner filed CMPMO No. 405 of 2014 before this Court, which was allowed, vide order dated 01.01.2015. Thereafter, the respondent filed a review petition against the order dated 01.01.2015, being review petition No. 11 of 2016, which was dismissed, vide order dated 15.07.2016. As per the petitioner, despite making numerous requests to the respondent for appointment of the arbitrator, so that she could get her due amount from the respondent, nothing has been done by the respondent. Therefore, the present petition may be allowed and arbitrator may be appointed for adjudication of the present dispute inter se the parties. 2. Learned counsel for the petitioner has argued that for adjudication of the present dispute, the arbitrator was required to be appointed, however the respondent inspite of obeying the order for appointment of the arbitrator, later on maintained the review petition before this Court, which was dismissed. She has further argued that to adjudicate the lis inter se the parties, the present petition deserves to be allowed and arbitrator is required to be appointed. Learned counsel for the petitioner, in support of her contentions, placed reliance upon the judgment rendered by the Division Bench of Hon’ble Supreme Court in North Eastern Railway and others vs. Tripple Engineering work, (2014) 9 SCC 288 . The relevant extract of the judgment is as under: “6. The “classical notion” that the High Court while exercising its power under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter for short “the Act”) must appoint the arbitrator as per the contract between the parties saw a significant erosion in ACE Pipeline Contracts (P) Ltd. v. Bharat Petroleum Corpn. The “classical notion” that the High Court while exercising its power under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter for short “the Act”) must appoint the arbitrator as per the contract between the parties saw a significant erosion in ACE Pipeline Contracts (P) Ltd. v. Bharat Petroleum Corpn. Ltd. wherein this Court had taken the view that though the contract between the parties must be adhered to, deviations therefrom in exceptional circumstances would be permissible. A more significant development had come in a decision that followed soon thereafter in Union of India v. Bharat Battery Mfg. Co. (P) Ltd. wherein following a three- Judge Bench decision in Punj Llyod Ltd. v. Petronet MHB Ltd. it was held that once an aggrieved party files an application under Section 11(6) of the Act to the High Court, the opposite party would lose its right of appointment of the arbitrator(s) as per the terms of the contract. The implication that the Court would be free to deviate from the terms of the contract is obvious.” 3. On the other hand, learned counsel for the respondent has argued that the respondent vide letter dated 29th December, 2015, has already appointed Mr. Vishal Panwar, Advocate, as Arbitrator and the same was conveyed to the petitioner Annexures R-1 and R-2. Learned counsel for the respondent has further argued that as in compliance to the order, passed by a Coordinate Bench of this Court in CMPMO No. 405 of 2014, arbitrator has already been appointed, so the present petition deserves to be dismissed. 4. To appreciate the arguments of learned counsel for the parties, this Court has gone through the records in detail. 5. At the very outset, Clause 23 of the agreement (Annexure A-1), executed inter se the parties, provides that in case any dispute arise between the parties, the same to be solved by the arbitrator, to be appointed by the second party and the decision of the arbitrator shall be final and binding on both the parties. Meaning thereby that in case of any dispute, the arbitrator shall be appointed by the respondent. 6. Meaning thereby that in case of any dispute, the arbitrator shall be appointed by the respondent. 6. A Coordinate Bench of this Court on 1st October, 2015, passed an order on CMPMO No. 405 of 2014 and allowed the petitioner to withdraw her suit by further directing the respondent to appoint the arbitrator within a period of one month therefrom, as per the condition No. 23 of agreement. However, despite said order, the respondent had not appointed the arbitrator within one month and in reply filed by the respondent, it has been specifically mentioned that vide letter dated 29th December, 2015, Mr. Vishal Panwar, Advocate, has already been appointed as Arbitrator. Though, order of the Court was to appoint the arbitrator within a period of one month, however appointing the arbitrator beyond one month is not a compliance of the order, passed by this Court. 7. The Hon’ble Supreme Court in Indian Oil Corporation Limited vs. Raja Transport Limited, (2009) 8 SCC 520 , has held as under: “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 subsections (4) and (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 the Chief Justice or his designate exercising power under subsection (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. (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.” 8. In view of the law, as discussed hereinabove, This Court finds that as the respondent has failed to appoint the arbitrator within a period of one month and the matter is yet to solved, it will be appropriate to appoint another arbitrator. So, the present petition is allowed and Mr. J.S. Bhogal, Senior Advocate, is appointed as Arbitrator to adjudicate the lis inter se the parties. The arbitrator is directed to enter into reference within a period of two weeks from the date of receipt of the copy of this order. Thereafter, the petitioner is directed to file claim petition within a period of two weeks. Reply/counter claim may be filed by the respondent within a further period of three weeks. The pleadings, including rejoinder and counterclaim, if any, shall also be completed by the parties within a period of eight weeks after entering into reference by the arbitrator. Thereafter, the arbitrator will afford an opportunity to the parties to place on record the documents, if they intend to do so and evidence in any form by following the procedure with the consent of the parties. Registry to immediately inform Mr. J.S. Bhogal, Senior Advocate about the passing of the order, by sending a copy of this order to him. The arbitrator will be entitled for the fee as per law. 9. In view of above, the petition, so also pending application(s), if any, shall stand(s) disposed of.