2000 (8) TMI 1000 - SC - Companies Law

What is the nature of the order that is passed by the Chief Justice or his nominee in exercise of power under sub-section (6) of section 11? Even if said order is held to be administrative in nature what is the remedy open to the person concerned if his request for appointment of an Arbitrator is turned down by the learned Chief Justice or his nominee, for some reason or other? Held that - The nature of the function performed by the Chief Justice being essentially to aid the Constitution of the Arbitration Tribunal immediately and the Legislature having consciously chosen to confer the power on the Chief Justice and not a Court, it is apparent that the order passed by the Chief Justice or his nominee is an administrative order. This being the position even an order refusing to appoint an arbitrator will not be amenable to the jurisdiction of this Court under article 136 of the Constitution. Needless to mention such an order refusing to appoint an arbitrator after deciding the contentious issues would be an act of non-performance of duty and in view of what has been stated earlier the concerned authority could be directed by mandamus to perform its duty. We fail to understand how a petition under article 32, at all is entertainable against the order of the learned Chief Justice, refusing to appoint an arbitrator under section 11 of the 1996 Act. This petition under article 32, accordingly stands dismissed.

Issues Involved:
1. Nature of the order passed by the Chief Justice or his nominee under Section 11(6) of the Arbitration and Conciliation Act, 1996.
2. Remedy available if the request for appointment of an arbitrator is turned down by the Chief Justice or his nominee.

Detailed Analysis:

Issue 1: Nature of the Order under Section 11(6)
The primary question is whether the order passed by the Chief Justice or his nominee under Section 11(6) of the Arbitration and Conciliation Act, 1996, is judicial or administrative in nature. The judgment references previous cases, such as Sundaram Finance Ltd. v. NEPC India Ltd. and Ador Samia (P.) Ltd. v. Peekay Holdings Ltd., which concluded that the Chief Justice or his nominee acts in an administrative capacity when appointing an arbitrator. The judgment emphasizes that the legislative intent behind the 1996 Act was to minimize judicial intervention in the arbitral process and to expedite the resolution of disputes. The judgment states: "The nature and function performed by the Chief Justice or his nominee under sub-section (6) of section 11 being essentially to aid the constitution of the arbitral Tribunal cannot be held to be a judicial function."

Issue 2: Remedy if Request for Appointment is Denied
The second issue concerns the remedy available if the Chief Justice or his nominee refuses to appoint an arbitrator. The judgment clarifies that if the order is administrative, it is not subject to judicial scrutiny under Article 136 of the Constitution. However, if the refusal to appoint an arbitrator is erroneous, the aggrieved party can seek a writ of mandamus directing the Chief Justice or his nominee to perform their duty. The judgment states: "In such an event, there would not be inordinate delay in setting the arbitral process in motion."

Application to Specific Cases:

Special Leave Petition (Civil) No. 11522-11526 of 1999
The order of the Chief Justice of Bombay High Court in appointing an arbitrator is challenged. The judgment concludes that since the order is administrative, it is not amenable to the jurisdiction of the Supreme Court under Article 136. The special leave petitions are dismissed.

Special Leave Petition (Civil) No. 19549 of 1999
The Chief Justice of Gauhati High Court refused to appoint an arbitrator after entertaining contentious issues. The judgment reiterates that the order is administrative and not subject to judicial scrutiny under Article 136. However, the aggrieved party can approach the High Court for a writ of mandamus. The special leave petition is rejected.

Writ Petition (Civil) No. 81 of 2000
This petition under Article 32 of the Constitution challenges the same order of the Chief Justice of Gauhati High Court. The judgment dismisses the petition, stating it is not entertainable under Article 32.

Special Leave Petition (Civil) No. 11317 of 1999
The order of the nominee of the Chief Justice of Andhra Pradesh High Court appointing an arbitrator is challenged. The judgment concludes that the order is administrative and not subject to judicial scrutiny under Article 136. The special leave petition is dismissed.

Special Leave Petition (Civil) No. 12323 of 1999
Similar to the above, this petition by the Union of India challenges the appointment of an arbitrator by the nominee of the Chief Justice of Andhra Pradesh High Court. The special leave petition is dismissed for the same reasons.

Special Leave Petition (Civil) No. 8563 of 1999
The order of the nominee of the Chief Justice of Madras High Court appointing an arbitrator is challenged. The judgment concludes that the order is administrative and not subject to judicial scrutiny under Article 136. The special leave petition is dismissed.

Special Leave Petition (Civil) No. 8581 of 1999
Similar to the above, this petition challenges the appointment of an arbitrator by the nominee of the Chief Justice of Madras High Court. The special leave petition is dismissed for the same reasons.

Conclusion:
The judgment reaffirms that the order passed by the Chief Justice or his nominee under Section 11(6) of the Arbitration and Conciliation Act, 1996, is administrative in nature. Consequently, such orders are not subject to judicial scrutiny under Article 136 of the Constitution. However, if there is a refusal to appoint an arbitrator, the aggrieved party may seek a writ of mandamus to compel the performance of the duty.

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