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2002 (1) TMI 1226 - SC - Companies LawWhether the order of the Chief Justice or his designate under section 11 is a judicial order or an administrative order? Held that - The order of the Chief Justice or his designate under section 11 nominating an arbitrator is not an adjudicatory order and the Chief Justice or his designate is not a tribunal. Such an order cannot properly be made the subject of a petition for special leave to appeal under article 136. The schemes made by the Chief Justices under section 11 cannot govern the interpretation of section 11. If the schemes as drawn go beyond the terms of section 11 they are bad and have to be amended. To the extent that The Appointment of Arbitrators by the Chief Justice of India Scheme 1996 goes beyond section 11 by requiring in clause 7 the service of a notice upon the other party to the arbitration agreement to show cause why the nomination of an arbitrator as requested should not be made it is bad and must be amended. The other party needs to be given notice of the request only so that it may know of it and it may if it so chooses assist the Chief Justice or his designate in the nomination of an arbitrator.
Issues Involved:
1. Nature of the order passed by the Chief Justice or his nominee under Section 11 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: Nature of the Order under Section 11: The primary issue was whether the order passed by the Chief Justice or his designate under Section 11 of the Arbitration and Conciliation Act, 1996, is a judicial or administrative order. The judgment delved into various sections of the Act, including Sections 2(e), 5, 8, 10, 11, 12, 13, 16, 34, and 37, to understand the legislative intent and the procedural framework. The court noted that: - Section 11 empowers the Chief Justice or his designate to appoint an arbitrator when the parties fail to do so within the stipulated time. - The Chief Justice or his designate acts in an administrative capacity, merely facilitating the constitution of the arbitral tribunal without adjudicating any contentious issues between the parties. - The use of the term "decision" in Section 11 does not imply an adjudicatory function but rather an administrative action to expedite the arbitration process. The court emphasized that: - The Chief Justice or his designate's role is to ensure the appointment of an independent and impartial arbitrator, considering only the qualifications and other relevant factors as stipulated in the arbitration agreement. - The function does not involve resolving disputes or making judicial determinations, which are left to the arbitral tribunal. Remedy if Request is Turned Down: The second issue addressed the remedy available if the Chief Justice or his designate refuses to appoint an arbitrator. The court clarified that: - If the Chief Justice or his designate fails to perform their duty under Section 11, a mandamus could be issued to compel the performance of this administrative duty. - The aggrieved party is not left without remedy, as judicial intervention is possible to ensure the arbitral process is set in motion without undue delay. The court also discussed the broader procedural safeguards within the Act: - Section 12 and 13 allow for challenging the independence or impartiality of the arbitrator, even if appointed by the Chief Justice or his designate. - Section 16 empowers the arbitral tribunal to rule on its own jurisdiction, including the validity of its constitution. - Section 34 provides for setting aside an arbitral award on specific grounds, including improper composition of the arbitral tribunal, with further appeal options under Section 37. Conclusion: The court concluded that: - The order of the Chief Justice or his designate under Section 11 is administrative, not judicial. - The Chief Justice or his designate does not function as a tribunal, and their orders under Section 11 are not subject to appeal under Article 136 of the Constitution. - The decision of the three-judge bench in Konkan Railway Corporation Ltd. v. Mehul Construction Co. is affirmed, supporting the view that the Chief Justice or his designate acts administratively in appointing arbitrators. The court appreciated the assistance rendered by the learned Attorney General as Amicus Curiae and dismissed the appeals with no order as to costs.
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