2016 (4) TMI 1455 - HC - Indian Laws

Seeking appointment of a retired Judge of the Supreme Court as an Arbitrator for adjudication of the disputes between the parties - HELD THAT - The present petition has been filed under both Sections 11(5) and 11(6) of the Act. The fundamental procedure for invocation of this Court s jurisdiction under Section 11(5) of the Act i.e. failure on part of the parties to agree on a procedure for appointment of Arbitrator under Section 11(2) of the Act is not made out. Appointment of an independent and impartial Arbitral Tribunal does not append the recent changes brought about in the Act including Section 12(5) and the Seventh Schedule to the Act or in any manner contrary to the rule of law. Although it is mentioned here and is appreciated the fairness of the learned Senior counsel for the petitioner who has made his submission that he is merely arguing the matter on legal issue otherwise he and his client have full faith and respect for the learned sole Arbitrator appointed. He submits that since it is an important legal issue therefore he is making his submissions on legal issue only. The petitioner s argument that the appointment of the Arbitral Tribunal is bad in view of Item 22 of the Fifth Schedule to the Act is entirely frivolous and without any basis whatsoever. Insofar as the petitioner s challenge in terms of Item 24 of the Fifth Schedule is concerned the said argument has no consequence as Justice Shah (Retd.) has been appointed as an Arbitrator in relation to similar disputes between the same parties under two Purchase Orders pertaining to the same project at Annupur. The Arbitral Tribunal has already been constituted and has entered into reference who has already ensured the compliance of the provision under the amended Act about no conflict. Now the petitioner cannot be allowed to change the Arbitral Tribunal - Even besides the stipulation of the agreement/purchase order governing the parties this Court inclines to appoint Hon ble Mr. Justice A.P. Shah (Retd. Chief Justice) as sole Arbitrator to decide the dispute between the parties. There is no merit in the petition and the same is accordingly dismissed.

Summary

Issues Involved:
1. Appointment of an Arbitrator under Section 11(5) and Section 11(6) of the Arbitration and Conciliation Act, 1996.
2. Validity of the appointment of the Arbitrator by the respondent.
3. Compliance with the Fifth and Seventh Schedules of the Arbitration and Conciliation Act, 1996.

Detailed Analysis:

1. Appointment of an Arbitrator under Section 11(5) and Section 11(6) of the Arbitration and Conciliation Act, 1996:
The petitioner filed a petition under Section 11(5) and Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking the appointment of a retired Judge of the Supreme Court as an Arbitrator. The petitioner argued that the Arbitrator appointed by the respondent should be declared ineligible and the appointment void ab initio. The court noted that the fundamental procedure for invoking its jurisdiction under Section 11(5) was not made out as the parties had already agreed on a procedure for appointing an Arbitrator under Section 11(2) of the Act. The court concluded that the disputes must be resolved according to the agreed procedure, and recourse to Section 11(5) was not justified.

2. Validity of the appointment of the Arbitrator by the respondent:
The petitioner objected to the procedure for the appointment of the Arbitrator as provided in the Purchase Order, stating that the respondent's Managing Director, who was ineligible to act as an Arbitrator, could not nominate another person. The court held that the Managing Director's right to nominate a sole Arbitrator was independent of his right to act as the Arbitrator himself. The court emphasized that the recent amendments to the Act did not invalidate the Managing Director's right to nominate an independent and neutral Arbitrator. The court found no merit in the petitioner's argument that the arbitration agreement was rendered void.

3. Compliance with the Fifth and Seventh Schedules of the Arbitration and Conciliation Act, 1996:
The petitioner contended that the appointment of the Arbitrator was contrary to Items 22 and 24 of the Fifth Schedule, which list grounds that give rise to justifiable doubts about an Arbitrator's independence or impartiality. The court dismissed these arguments, stating that the Fifth Schedule does not provide grounds for disqualification but merely an indicative list for determining justifiable doubts. The court also noted that the Arbitrator had already made the requisite disclosures under the Sixth Schedule, indicating no circumstances likely to give rise to justifiable doubts about his independence and impartiality. The court agreed with the respondent's suggestion that any objections to the Arbitral Tribunal's constitution should be raised before the Tribunal itself.

Conclusion:
The court dismissed the petition, finding no merit in the petitioner's arguments. It upheld the validity of the Arbitrator's appointment by the respondent and emphasized that the disputes should be resolved according to the agreed procedure. The court also noted that the Arbitrator had complied with the necessary provisions of the amended Act, ensuring no conflict of interest.