1995 (7) TMI 417 - SC - Companies Law

Summary

Issues:
1. Whether a Civil Court can revoke the appointment of an arbitrator chosen under the terms of a contract?
2. Whether revocation of an arbitrator's authority is equivalent to removal and can be done only on specified grounds?
3. Can the court appoint an arbitrator if the arbitration agreement provides a method for appointment?
4. Whether delay in making an award by the arbitrator justifies revocation of authority?
5. Whether the High Court was correct in setting aside the order appointing an independent arbitrator?

Analysis:
1. The Supreme Court addressed the issue of whether a Civil Court can revoke the appointment of an arbitrator chosen under the terms of a contract. It was established that the court cannot interpose and interdict the appointment of an arbitrator unless legal misconduct, fraud, or disqualification is proven. The parties must have just and sufficient cause for revocation, and the court does not have a general power to appoint an arbitrator if the arbitration agreement specifies a method for appointment.

2. The Court clarified that revocation of an arbitrator's authority is akin to removal and can only be done on specified grounds such as misconduct or failure to commence duties within the stipulated time. Both parties can consent to revoking the arbitrator's authority, but in the absence of such consent, there must be valid reasons for revocation.

3. Regarding the delay in making an award by the arbitrator, the Court emphasized that the delay alone does not justify revocation of the arbitrator's authority. In this case, the arbitrator was willing to proceed with the arbitration, but the appellant was not cooperating, leading to adjournments and prolonging the proceedings. The Court held that the arbitrator did not show any laches in giving the award.

4. The Court reiterated that when parties have specifically chosen a named authority as an arbitrator in the contract, the court cannot intervene and appoint an arbitrator under any provision of the Arbitration Act. In this case, the High Court was correct in setting aside the order appointing an independent arbitrator, as the parties had voluntarily chosen the Superintending Engineer as the arbitrator.

5. Finally, the Court directed the arbitrator to adjudicate the dispute and provide an award within six months. It was emphasized that if the appellant does not cooperate, the arbitrator should proceed to decide the dispute according to the law, regardless of the time limit. The appeal was dismissed with no costs awarded.