2010 (5) TMI 919 - SC - Indian Laws

Summary

Issues Involved:
1. Appointment of an Arbitrator u/s 11(5) and 11(6) of the Arbitration and Conciliation Act, 1996.
2. Jurisdiction of the High Court to entertain the petition.
3. Existence and validity of the Arbitration Agreement.
4. Whether the claim is a live issue or a dead one.

Summary:

1. Appointment of an Arbitrator u/s 11(5) and 11(6) of the Arbitration and Conciliation Act, 1996:
The petitioner sought the appointment of an Arbitrator for adjudication of disputes under Sections 11(5) and 11(6) of the Arbitration and Conciliation Act, 1996. The disputes arose from agreements involving the development of a hotel project and changes in shareholding patterns.

2. Jurisdiction of the High Court to entertain the petition:
The respondent contended that the dispute involved International Commercial Arbitration, and thus, the jurisdiction to appoint an Arbitrator vested in the Chief Justice of India alone. The High Court of Andhra Pradesh had initially appointed an Arbitrator, but this order was set aside by the Supreme Court, which allowed the withdrawal of the original application under Section 11(6).

3. Existence and validity of the Arbitration Agreement:
The parties agreed that there was an Arbitration Agreement (Clause 41 of the agreement dated 19th January 2004). However, the respondents argued that the agreement had worked itself out and no live issue subsisted. The petitioner countered that disputes regarding the termination of his association with Varsha and the validity of agreements creating rights in the "Progressive Group" were still unresolved and required arbitration.

4. Whether the claim is a live issue or a dead one:
The Court examined whether the claim was a dead one or if a live issue still existed. It was determined that there were disputes between the parties that could not be resolved without evidence. The Court found that the Arbitration Agreement was clear and encompassed the disputes raised by the petitioner. The Arbitrator, under Section 16 of the Act, could rule on his own jurisdiction, including the existence or validity of the Arbitration Agreement.

Conclusion:
The petition was allowed, and Mr. Justice M. Jagannadha Rao, a former Judge of the Supreme Court, was appointed as the sole Arbitrator to adjudicate the claims/disputes, subject to his consent. The Arbitrator was directed to deal with the matter uninfluenced by previous observations made by the High Court of Andhra Pradesh or the Supreme Court. The petition was disposed of with no order as to costs.