2003 (1) TMI 538 - HC - Companies Law

Summary

Issues:
1. Appointment of an Arbitrator under section 11 of the Arbitration and Conciliation Act, 1996.
2. Refusal of respondent No. 1 to fill the vacancy caused by the resignation of the previous nominee.
3. Interpretation of the arbitration agreement between the parties.
4. Compliance with the provisions of the Arbitration Act, 1996.
5. Application of relevant judicial precedents regarding appointment of Arbitrators.

Analysis:

1. Appointment of an Arbitrator: The petitioner filed an arbitration application under section 11 of the Arbitration and Conciliation Act, 1996, seeking the Court's intervention to appoint an Arbitrator due to the refusal of respondent No. 1 to fill the vacancy caused by the resignation of the previous nominee, Shri B.P. Gupta.

2. Refusal to Fill Vacancy: The respondent No. 1 declined to appoint another arbitrator, citing the absence of an arbitration agreement between the parties. The respondent argued that appointing a new Arbitrator would be improper and illegal. However, the Court noted that the refusal was based on pending writ petition CW 3057/2002 seeking to halt the arbitration proceedings, which was limited to the final award and not the ongoing proceedings.

3. Interpretation of Arbitration Agreement: The Court emphasized the importance of allowing arbitral proceedings to continue smoothly for expeditious completion, as mandated by the Arbitration Act, 1996. It highlighted that upon the resignation of an Arbitrator, a substitute must be appointed according to the applicable rules, which were not followed by respondent No. 1 in this case.

4. Compliance with Arbitration Act: The Court directed respondent No. 1 to appoint its nominee Arbitrator within 15 days to replace the resigned nominee, failing which Ms. Justice Sharda Aggarwal would be appointed. The Court stressed the need to adhere to the Act's provisions and previous administrative orders for appointing Arbitrators.

5. Application of Judicial Precedents: The Court referenced the Konkan Railway Corporation Ltd. cases to emphasize that the Court's role in appointing an Arbitrator is not to adjudicate disputed questions but to ensure a smooth process. It highlighted that contentious issues regarding the existence or validity of the arbitration agreement should not delay the appointment of an Arbitrator, as confirmed by previous Supreme Court judgments.

In conclusion, the Court allowed the application, directing respondent No. 1 to appoint an Arbitrator promptly or face the Court's appointment of Ms. Justice Sharda Aggarwal. The judgment emphasized the importance of following the Arbitration Act's provisions and relevant judicial precedents for the timely and efficient resolution of arbitration disputes.