2009 (2) TMI 874 - HC - Indian Laws

Summary

Issues:
Appointment of a substitute arbitrator upon the death, resignation, or termination of mandate of an arbitrator appointed under section 11(6) of the Arbitration and Conciliation Act, 1996.

Analysis:
The case involved an application under section 11(6) of the Arbitration and Conciliation Act for the appointment of a substitute arbitrator following the termination of the mandate of an arbitrator, a retired Judge, appointed by the Chief Justice. The key question was whether the substitute arbitrator should be appointed by the Chief Justice or in accordance with the arbitration agreement. Disputes arose from a contract with an arbitration clause stating that all disputes shall be referred to the sole arbitration of a person appointed by the respondent. The petitioner requested the Chief Justice for an arbitrator appointment as per section 11(6) of the Act.

In a previous order, the Court held that once an application was filed for appointment by the Chief Justice, the respondent lost the right to appoint an arbitrator as per the agreement. Subsequently, the respondent appointed an arbitrator, but later sought termination of the mandate due to the arbitrator's ill health. The Court allowed the termination and the current application was filed for a substitute arbitrator.

The respondent argued that the substitute arbitrator should be appointed according to the arbitration agreement under section 15(2) of the Act. However, the Court analyzed the legislative intent behind section 15(2) and referred to precedents where the Supreme Court clarified that the appointment of a substitute arbitrator should follow the rules applicable to the initial appointment, not necessarily the agreement.

The Court emphasized that the appointment of the substitute arbitrator should align with how the original arbitrator was appointed, in this case, by the Chief Justice. Precedents were cited to support the view that once an application is made under section 11(6), the right of the other party to appoint an arbitrator under the agreement ceases. Therefore, the respondent's subsequent appointment of an arbitrator did not impact the need for a substitute arbitrator appointed by the Chief Justice.

Ultimately, the Court allowed the application for a substitute arbitrator to be placed before the Chief Justice for naming, emphasizing that the appointment should follow the rules applicable to the initial appointment, disregarding the respondent's subsequent appointment.