2008 (7) TMI 943 - HC - Companies Law

Arbitration and Conciliation - appointment of independent sole arbitrator dismissed - Held that - The contention of the appellant that appointment of Presiding Co- Arbitrator is not in conformity with the terms of the arbitration agreement is belied by the letter of the appellant dated 14/20.12.2000 addressed to the respondent, wherein it is acknowledged that the Presiding Arbitrator was appointed by both the co-arbitrators. The learned Single Judge has rightly held that the appellants have themselves not filed any claim before the Arbitrators and the application is barred by delay. The appellant chose to keep silent for about nine years, i.e. arbitrator was appointed in 1997 and appellant approached learned Single Judge in 2006. No explanation has been offered for silence since the last letter dated 22.12.2000 till the date of filing of the petition. This is a clear case of laches on the part of the appellant.Appeal dismissed.

Summary

Issues:
1. Appointment of an independent sole arbitrator under Sections 11(6) and 14(1) of the Arbitration and Conciliation Act, 1996.
2. Interpretation of the arbitration agreement in a contract for earthwork.
3. Exclusion of certain claims from arbitration scope.
4. Delay in filing claims before the arbitrators.

Analysis:

Issue 1: Appointment of an independent sole arbitrator
The appellant appealed against the dismissal of their petition for the appointment of an independent sole arbitrator. The dispute arose from a contract for earthwork, and the appellant sought arbitration for various claims. The respondent suggested a panel of arbitrators, leading to the appointment of arbitrators. However, the appellant raised concerns about the appointment process, leading to the appeal for an independent sole arbitrator.

Issue 2: Interpretation of the arbitration agreement
The contract between the parties included a clause for settlement of disputes through arbitration. The appellant raised multiple claims, including payment disputes and contract termination issues. The respondent referred only some claims for arbitration, leading to a dispute over the interpretation of the arbitration clause. The court analyzed the scope of the arbitration agreement and whether certain claims fell within its purview based on the contract terms.

Issue 3: Exclusion of certain claims from arbitration
The court examined the specific claims raised by the appellant, focusing on claims related to business loss and reputation damages. The respondent argued that these claims were outside the scope of the arbitration agreement as per the contract terms. The court referred to the agreement's clause excluding claims for idle labor, machinery, business loss, or similar losses. The exclusion clause was crucial in determining the arbitrability of certain claims.

Issue 4: Delay in filing claims before arbitrators
The court emphasized the importance of timely filing claims before arbitrators to avoid delays in the arbitration process. The appellant argued that the delay was due to arbitrators not commencing proceedings promptly. However, the court noted that the appellant failed to file a formal statement of claim before the arbitrators despite raising claims earlier. The court considered the delay in approaching the court for arbitration after a significant period of inaction, highlighting the principle of laches.

In conclusion, the court dismissed the appeal, citing lack of merit due to issues such as the exclusion of certain claims from arbitration, delay in filing claims, and adherence to the arbitration agreement's terms. The judgment underscores the significance of timely action and adherence to contractual provisions in arbitration disputes to ensure the efficacy of the process.