2024 (2) TMI 1009 - HC - Indian Laws

Appointment of Arbitral Tribunal to adjudicate upon the disputes between the parties - whether a petition under Section 11 (6) of the Act would be maintainable? - HELD THAT - Under Section 21 of the Act, the expression used is commencement of the proceeding . The argument advanced on behalf of the petitioner with regard to the aforesaid provision of the Act is that on receipt of the claim by the respondent, the arbitral proceeding is deemed to be commenced. However, such submission is not acceptable in the facts and circumstances of the instant case. Admittedly, it is the provision of the Contract that in case the claim exceeds Rs. 5 crores, the Tribunal would be constituted by three members and unless and until the Arbitral Tribunal is constituted, the question of commencement will not arise at all. With regard to application of Section 11 (6) of the Act in making a challenge of the present nature, the learned counsel has relied upon a decision of the Hon ble Supreme Court in the case of HUAWEI TECHNOLOGIES CO. LTD. VERSUS STERLITE TECHNOLOGIES LTD. 2015 (9) TMI 866 - SUPREME COURT . However, on a reading of the said decision, this Court is of the opinion that the same would not have any application in the present case. Rather, on reading of the contents of paragraph 8, a different interpretation would be available which will not come to the aid of the petitioner. This Court is of the firm opinion that a challenge of this nature would not be maintainable under the provision of Section 11 (6) of the Act and unless a petition is presented before the appropriate forum under the appropriate provisions of law, such challenge cannot be maintained - Petition dismissed.

Summary

Issues involved:
The issues involved in the judgment are the commencement of arbitral proceedings, appointment of arbitrators, interpretation of Section 11(6) of the Arbitration and Conciliation Act, 1996, and the maintainability of a challenge under Section 11(6).

Commencement of Arbitral Proceedings:
The petitioner, Oil India Ltd., claimed that the arbitral proceedings commenced upon receipt of a notice from the respondent-claimant on 27.09.2022. The petitioner argued that under Section 21 of the Act, the proceedings start when a request for arbitration is received. However, the Court found that the Tribunal must be constituted by three members as per the Contract if the claim exceeds Rs. 5 crores before the proceedings can commence.

Appointment of Arbitrators:
The dispute arose when the respondent changed the nominee arbitrator initially appointed, leading to a communication issued by the Presiding Arbitrator under Section 12 of the Act. The petitioner contended that the Presiding Arbitrator cannot assume jurisdiction without consent from both parties' nominee arbitrators. The Court presumed consent unless proven otherwise.

Interpretation of Section 11(6) of the Act:
The petitioner relied on a Supreme Court decision in Huawei Technologies Company Ltd. Vs. Sterlite Technologies Ltd. to challenge the appointment of the Presiding Arbitrator under Section 11(6). However, the Court found that the decision did not apply to the present case, and a different interpretation was necessary. It concluded that a challenge under Section 11(6) was not maintainable without filing a petition before the appropriate forum.

Maintainability of a Challenge under Section 11(6):
The Court dismissed the petition as it held that a challenge like the present one was not maintainable under Section 11(6) of the Act. It emphasized the need to follow the appropriate legal procedures and present the challenge before the suitable forum for consideration.