2016 (12) TMI 1560 - HC - Indian Laws

Application under Section 11 of the Arbitration and Conciliation Act - seeking appointment of independent arbitrator for adjudication of the disputes arisen between the applicant and respondents - Held that - The first objection raised by the respondent regarding pendency of the proceeding under BIFR and registration under SICA is not tenable. In addition to the aforesaid, it is to be noted here that The Sick Industrial Companies (Special Provisions) Repeal Act, 2003 has been incorporated by Act No.1 of 2004 which has been implemented w.e.f today vide the Gazette of India Extraordinary, Ministry of Finance (Department of Financial Services) Notification New Delhi, the 25th November, 2016 of the Central Government. As per Section 5 under the saving clause nothing has been saved which runs contrary to the aforesaid legal position to which any benefit may be derived by the respondents. Another objection is with respect to not agreeing on the name for appointment of Hon ble Mr. Justice P.D. Mule (Retd.). Therefore, it is apparent that respondent is not agreeing on the name of arbitrator proposed by the applicant. In view of the aforesaid, exercising the power as per Section 11 of the Arbitration and Conciliation Act, 1996, in the opinion of this Court, Hon ble Mr. Justice A.M. Naik (Retd.) may be appointed as arbitrator to resolve the dispute on a fees as specified in the Schedule which shall be borne by both the parties equally. The Registry of this Court may take appropriate step seeking consent of the arbitrator and place the same on record. In view of the foregoing, this application is hereby allowed and Hon ble Mr. Justice A.M. Naik (Retd.) is appointed as arbitrator.

Summary

Issues:
1. Appointment of independent arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996.
2. Dispute arising from non-payment of rent and job work between the parties.
3. Objection raised by respondent regarding pendency of proceedings under BIFR and registration under SICA.
4. Disagreement on the proposed arbitrator's name by the respondent.

Analysis:
1. The applicant, a private limited company, filed an application seeking the appointment of an independent arbitrator to resolve disputes with the respondents. The disputes arose from non-payment of rent and issues related to job work between the parties. The respondent objected to the appointment, citing registration under the Sick Industrial Companies (Special Provisions) Act, 1985. However, the court found this objection untenable based on legal provisions and precedents.

2. The respondent contended that the appointment of the proposed arbitrator was unacceptable as per the arbitration clause. Despite objections, the court, exercising its power under Section 11 of the Arbitration and Conciliation Act, 1996, appointed a retired judge as the arbitrator to resolve the dispute. The court directed the Registry to seek consent from the appointed arbitrator, and in case of non-consent, further orders were to be sought for a change in the arbitrator.

3. The court analyzed the legal provisions of Section 22 of the Sick Industrial Companies (Special Provisions) Act, which dealt with the suspension of legal proceedings against industrial companies under specific circumstances. The court referred to relevant case law to establish that arbitration proceedings were not barred under the Act. The court also noted the repeal of the Act in 2003, emphasizing that the objections raised by the respondents regarding the Act's provisions were without merit.

4. In conclusion, the court dismissed the objections raised by the respondents regarding the BIFR proceedings and the proposed arbitrator. The court appointed a retired judge as the arbitrator to resolve the disputes between the parties, with the fees to be shared equally. The court directed the Registry to proceed with the appointment, ensuring the arbitrator's consent was obtained, or further steps would be taken as necessary.