2022 (1) TMI 155 - SC - Indian Laws

Appointment of an arbitrator - Declination to appoint an Arbitrator in exercise of its power under Section 11(6) of the Arbitration and Conciliation Act, 1996 - settlement of disputes through the process of arbitration in terms of the clause of arbitration under general conditions of agreement - appellant failed to participate despite the opportunity being afforded, exparte award came to be passed - HELD THAT - The exposition of legal principles is indeed well settled by this Court in DATAR SWITCHGEARS LTD. VERSUS TATA FINANCE LTD. 2000 (10) TMI 873 - SUPREME COURT followed in PUNJ LLOYD LTD. VERSUS PETRONET MHB LTD. 2005 (4) TMI 612 - SUPREME COURT that once an application under Section 11(6) of the Act has been filed for appointment of an Arbitrator before the High Court, the respondents forfeited their right to appoint an Arbitrator and the High Court alone holds jurisdiction to appoint an Arbitrator in exercise of power under Section 11(6) of the Act. Indisputedly, the appointment of an Arbitrator was made by the respondents after arbitration petition was filed by the appellant under Section 11(6) of the Act in the Registry of the High Court on 23rd October, 2009. This Court cannot be oblivious of the peculiar facts and circumstances brought to our notice that after filing of an arbitration petition on 23rd October 2009 in the Registry of the High Court, the appellant completely slept over the matter and the respondents were never served of any notice of the Arbitration Petition filed before the High Court of Orissa - the fact still remains that except the letter being once sent by the appellant on 27th December, 2011 informing of the arbitration petition being filed under Section 11(6) of the Act before the High Court, no steps were taken thereafter to pursue his arbitration application and since the appellant had not participated before the Arbitral Tribunal after filing of the statement of claim, exparte award came to be passed by the Arbitral Tribunal on 21st June, 2013. It may be noticed that notices were issued for the first time by the High Court of the arbitration petition filed by the appellant in the year 2016 almost 3 years after passing of the exparte award dated 21st June, 2013. The High Court was not inclined to exercise its jurisdiction under Section 11(6) of the Act for appointment of an Arbitrator and dismissed the petition by an Order dated 26th July, 2019 with liberty to the appellant to submit objections against the exparte award dated 21st June, 2013 under Section 34 or 37 of the Act, if so advised - so far as the question of law is concerned, certainly being settled that after the application has been filed for appointment of an Arbitrator under Section 11(6) of the Act, before the High Court the respondents forfeited their right to appoint an Arbitrator under the clause of arbitration thereafter but from the narration of facts which has been noticed by us, we are of the view that no error was committed by the High Court in dismissing the petition filed under Section 11(6) of the Act for appointment of an Arbitrator. Appeal dismissed.

Summary

Issues:
1. Appointment of an Arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996.

Detailed Analysis:

Issue 1: Appointment of an Arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996

The appellant filed an appeal challenging the order declining to appoint an Arbitrator under Section 11(6) of the Act. The dispute arose when the appellant's tender was accepted, leading to a contract agreement containing arbitration clauses. Despite serving a legal notice for arbitration, the respondents allegedly failed to appoint an Arbitrator, prompting the appellant to file an Arbitration Petition in the High Court. However, the appellant did not actively pursue the petition, leading to an ex-parte award against them. The High Court subsequently dismissed the petition in 2019, allowing the appellant to submit objections under Section 34 or 37 of the Act.

Analysis:
The Supreme Court noted that once an application under Section 11(6) is filed, the respondent loses the right to appoint an Arbitrator, with the High Court having jurisdiction. Despite the initial petition, the appellant failed to actively pursue the matter, leading to the ex-parte award. The Court acknowledged the appellant's inaction and the delay in notifying the respondents, ultimately upholding the High Court's decision to dismiss the petition. The appeal was consequently dismissed, affirming the High Court's ruling.

This detailed analysis provides an overview of the legal judgment, focusing on the issue of appointing an Arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996. It covers the key facts, legal principles, court's observations, and the final decision rendered by the Supreme Court.