2007 (4) TMI 779 - SC - Indian Laws

Summary

Issues Involved:
1. Delay Condonation and Leave Granting
2. Appointment of Arbitrator by High Court
3. Compliance with Arbitration Clause 29 of the Contract
4. Furnishing of Security Deposit by Contractor
5. Justification of High Court's Appointment of Arbitrator
6. Examination of Section 11(6)(c) of the Arbitration and Conciliation Act, 1996

Summary:

1. Delay Condonation and Leave Granting:
The Supreme Court condoned the delay and granted leave to appeal against the judgments and final orders dated 29th July 2004 and 8th April 2005 by the High Court of Madhya Pradesh.

2. Appointment of Arbitrator by High Court:
The High Court appointed Mr. Justice B.C. Verma, a retired Chief Justice, as the sole arbitrator to adjudicate disputes between the appellants and the respondent. The appellants' application for review and/or recall of this order was rejected by the High Court.

3. Compliance with Arbitration Clause 29 of the Contract:
Clause 29 of the contract specified that disputes should be referred to the City Engineer first, and if unresolved, to an Arbitration Board constituted by the Corporation. The High Court directed the appellant to invoke the arbitration clause and appoint an arbitrator in compliance with Clause 29.

4. Furnishing of Security Deposit by Contractor:
Clause 29(d) required the contractor to furnish a security deposit before arbitration could proceed. The respondent had not furnished this security deposit, which was a prerequisite for the Corporation's obligation to constitute an Arbitration Board.

5. Justification of High Court's Appointment of Arbitrator:
The Supreme Court held that the High Court was not justified in appointing a retired Chief Justice as the sole arbitrator, as it was contrary to Clause 29 of the contract. The High Court should have ensured compliance with the arbitration agreement, which required the contractor to furnish a security deposit.

6. Examination of Section 11(6)(c) of the Arbitration and Conciliation Act, 1996:
Section 11(6)(c) allows a party to request the Chief Justice to take necessary measures if the agreed appointment procedure is not followed. However, the agreement provided other measures for securing the appointment, which should have been followed.

Conclusion:
The Supreme Court set aside the High Court's order appointing a retired Chief Justice as the arbitrator. The respondent was directed to furnish the security deposit within six weeks, and the Corporation was to constitute an Arbitration Board within three months. The Arbitration Board was to proceed from the stage reached by the previously appointed arbitrator. The appeal was disposed of with no order as to costs.