1999 (2) TMI 572 - HC - Companies Law

Summary

Issues Involved:
1. Appointment of a sole arbitrator.
2. Compliance with the arbitration clause in the agreement.
3. Jurisdiction of the High Court under Section 11(6) of the Arbitration and Conciliation Act, 1996.

Detailed Analysis:

1. Appointment of a Sole Arbitrator:
The petitioner sought the appointment of a sole arbitrator by the High Court. The petitioner was dissatisfied with the appointment of Shri V. Nainani as the sole arbitrator by the respondent, MANAGE, and approached the court for relief. The court examined whether this case warranted the appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996.

2. Compliance with the Arbitration Clause in the Agreement:
The agreement between the petitioner and the respondent included an arbitration clause (Clause 52.0), which outlined a detailed procedure for resolving disputes. Clause 52.2 required the contractor to appeal to the Director General, MANAGE, if dissatisfied with the Engineer-in-Charge's decision. If still dissatisfied, the contractor had to indicate their intention to refer the dispute to arbitration within 30 days. Clause 52.3 specified the procedure for appointing a sole arbitrator, where the Director General would propose a panel of three officers, and the contractor would select one.

The court found that the petitioner did not follow the prescribed procedure. The petitioner prematurely proposed a panel of arbitrators before the appeal decision was made. The Director General, MANAGE, correctly rejected this premature proposal. After the appeal was dismissed, the Director General provided a panel of three names as per the agreement, but the petitioner rejected the entire panel without valid reasons.

The court emphasized that the contractor is bound to accept one of the names from the panel proposed by the Director General, as per the terms of the agreement. The contractor's refusal to follow this procedure did not entitle them to seek the High Court's intervention under Section 11(6).

3. Jurisdiction of the High Court under Section 11(6) of the Arbitration and Conciliation Act, 1996:
Section 11(6) of the Act allows the High Court to appoint an arbitrator if a party fails to act according to the agreed procedure. The court noted that the respondent, MANAGE, acted in accordance with the agreed procedure by proposing a panel of arbitrators after the appeal decision. The petitioner's refusal to select an arbitrator from the panel did not constitute a failure by the respondent to act as required.

The court concluded that the petitioner's application lacked merit as the respondent had adhered to the agreed arbitration procedure. The petitioner's approach to the High Court was seen as an attempt to bypass the agreed procedure rather than a legitimate invocation of Section 11(6).

Conclusion:
The court rejected the arbitration application, emphasizing that both parties are bound by the arbitration clauses in the agreement. The petitioner's refusal to follow the prescribed procedure and the premature proposal of a panel were not grounds for the High Court to appoint an arbitrator. The application was dismissed without costs.