9911796707
TMI Blog2000 (10) TMI 873X X X X Extracts X X X X X X X X Extracts X X X X ..... the Chief Justice of Bombay High Court, under section 11 of the Arbitration and Conciliation Act, 1996 ( the Act ). The appellant had entered into a lease agreement with the first respondent in respect of certain machineries. Dispute arose between the parties and the first respondent sent a notice to the appellant on 5-8-1999 demanding payment of Rs. 2,84,58,701 within fourteen days and in the notice it was specifically stated that in case of failure to pay the amount, the notice be treated as one issued under clause 20.9 (Arbitration clause) of the Lease Agreement. The appellant did not pay the amount as demanded by the 1st respondent. The 1st respondent did not appoint an Arbitrator even after the lapse of thirty days, but filed Arbitration Petition No. 405 of 1999 on 26-10-1999 under section 9 of the Act for interim protection. On 25-11-1999, the 1st respondent appointed the second respondent as the sole Arbitrator by invoking clause 20.9 of the Lease Agreement and the Arbitrator in turn issued a notice to the appellant asking them to make their appearance before him on 13-3-2000. Thereafter, the appellant filed Arbitration Application No. 2 of 2000 before the Hon ble Chief Jus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itrator. If the parties fail to reach any agreement as referred to in sub-section (2), or if they fail to agree on the Arbitrator within thirty days from receipt of the request by one party, the Chief Justice can be moved for appointing an Arbitrator either under sub-section (5) or sub-section (6) of section 11. Sub-section (5) of section 11 can be invoked by a party who has requested the other party to appoint an Arbitrator and the latter fails to make any appointment within thirty days from the receipt of the notice. Admittedly, in the instant case, the appellant has not issued any notice to the 1st respondent seeking appointment of an Arbitrator. An application under sub-section (6) of section 11 can be filed when there is a failure of the procedure for appointment of Arbitrator. This failure of procedure can arise under different circumstances. It can be a case where a party who is bound to appoint an Arbitrator refuses to appoint the Arbitrator or where two appointed Arbitrators fail to appoint the third Arbitrator. If the appointment of Arbitrator or any function connected with such appointment is entrusted to any person or institution and such person or institution fails t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... connection. 9. The learned senior counsel for the respondents submits that the Bombay, Delhi and Andhra Pradesh cases relied upon are distinguishable. It is also contended that under section 11(6) no period of time is prescribed and hence the opposite party can make an appointment even after 30 days, provided it is made before the application is filed under section 11. 10. The appellant contended that the 1st respondent did not appoint the Arbitrator within a reasonable period and that amounts to failure of the procedure contemplated under the Agreement. Our attention was drawn to a decision of the Bombay High Court in Naginbhai C. Patel v. Union of India 1999 (2) Bom. CR 189. There, the petitioner, a Government Contractor, as per the form of the Arbitration clause requested the Secretary, P.W.D. to appoint the arbitrator. The Secretary, P.W.D. did not take any action and the petitioner filed an application under section 11(6). After the filing of this application, the respondent appointed an Arbitrator and urged before the Chief Justice that application under section 11(6) filed by the petitioner became infructuous. It was held that the petitioner had waited for 30 day ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o appoint an Arbitrator. Application under section 11 was filed after nearly 4 years on 21-4-1999. Only thereafter the respondent appointed an arbitrator on 13-5-1999, but only in respect of some of the disputes. The respondent felt that the other disputes were outside the ambit of the arbitration clause. The High Court of Andhra Pradesh held that in view of section 11(6), read with section 11(8) the respondent had forfeited his right to appoint an arbitrator after the expiry of 30 days from the date of demand for arbitrator. Even in the above case, the appointment was not made before the application under section 11 was filed. Hence, the case is not applicable to the facts of this case. In all the above cases, therefore, the appointment of the Arbitrator was not made by the opposite party before the application was filed under section 11. Hence, all the above cases are not directly in point. 13. In the present case, the respondent made the appointment before the appellant filed the application under section 11 but the said appointment was made beyond 30 days. Question is whether in a case falling under section 11(6), the opposite party cannot appoint an Arbitrator after the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the abitrator appointed with his consent. There must be just and sufficient cause for revocation. . ." (p. 330) When parties have entered into a contract and settled on a procedure, due importance has to be given to such procedure. Even though rigour of the doctrine of freedom of contract has been whittled down by the various labour and social welfare legislation, still the Court has to respect the terms of the contract entered into by parties and endeavour to give importance and effect to it. When the party has not disputed the arbitration clause, normally he is bound by it and obliged to comply with the procedure laid down under the said clause. 18. Therefore, we do not think that the first respondent, in appointing the second respondent as the Arbitrator, failed to follow the procedure contemplated under the Agreement or acted in contravention of the arbitration clause. 19. Lastly, the appellant alleged that nomination mentioned in the arbitration clause gives the first respondent a right to suggest the name of the Arbitrator to the appellant and the appointment could be done only with the concurrence of the appellant. We do not find any force in the contention. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
