9911796707
TMI Blog2002 (10) TMI 707X X X X Extracts X X X X X X X X Extracts X X X X ..... . Ltd. v. Rani Construction (P.) Ltd. [2002] 2 SCC 388/[2000] 28 SCL 357, it is settled that the Chief Justice or his designate does not discharge any judicial function under section 11(6). The Chief Justice or his designate, though a Judge, does not sit as a Court. The two fora, contemplated by section 11(6) and section 14(2) are different, and therefore, no single forum can grant such reliefs as are contemplated by the two provisions. 3. The facts in brief. The petitioners and the respondents entered into a shareholders agreement dated 31-8-1999 which contains an arbitration clause. The relevant clauses of the agreement are as under :- "28.2 This agreement shall be governed by, and construed in accordance with Indian law and, subject to clauses 28.3 and 28.4, the parties hereby irrevocably submit to the jurisdiction of the appropriate courts in Orissa. 28.3 Any dispute, question or difference arising between GRIDCO (Petitioner) and the Investors (respondents 1 and 2) in connection with this agreement or otherwise in regard to the relationship of the parties pursuant to the terms of this agreement, including the construction and scope of the agreement, shall be first referred t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the High Court of New Zealand from 1991 through 1994. He presently maintains chambers in Auckland and London. He is, among other positions, a Member of the ICC Court of International Arbitration in Paris and the LCIA Court of Arbitration in London. Mr. William's contact information is : (details Omitted) We are pleased to report that Mr. Williams has advised that he accepts appointment. Very truly yours, Donald Francis Donovan Copy : David A.R. Williams, Q.C. Mr. K.B. Verma, IAS (Retd.)" 7. According to the petitioners they made enquiries from Shri Verma, the arbitrator, on the morning of 24-1-2002 and learnt that there was no written communication from Mr. Verma agreeing to appoint Mr. David A.R. Williams as the third arbitrator and the presiding arbitrator; that there were only telephonic conversations between Mr. Verma and Mr. Donald regarding the appointment of the third and presiding arbitrator; that it appears that Mr. Verma was led by Mr. Donald into forming an impression and believing that the appointment of an Indian national as the presiding arbitrator was not permissible in law; and that Mr. Donovan had telephonically communicated to Mr. Verma on the night of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ternational arbitration . . . Under the Arbitration and Conciliation Act, 1996, Mr. William's appointment was effective upon our agreement, and we have also now notified the parties. We are, therefore, a validly constituted tribunal. I do not know of any authority that would allow us to rescind the appointment, but in any event I believe it would be inappropriate to do so. With the greatest respect for your recent thoughts on the matter, therefore, I must decline your request that we reconsider our appointment. In these circumstances, I see no need to pass on your thoughts to Mr. Williams or to copy him on this e-mail.' 10. In his further communication dated 28-1-2002, Mr. Donald informed the petitioners very firmly that Mr. Verma and he, having conferred, he was writing on behalf of Mr. Verma and himself that they do not have authority to reconsider their appointment of Mr. Williams and that the Tribunal was effectively constituted with Mr. Williams as presiding arbitrator. Mr. Donald emphasized that Mr. Williams is a person of unquestionable distinction who is eminently qualified to serve as presiding arbitrator in this proceeding. 11. Many a letters/messages appears to have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 15 of the Act. 15. It may be stated that Mr. David A.R. Williams is a Queen's Counsel of New Zealand and was a litigation partner of the Russell McVeagh firm in Auckland until 1987. He served as a Judge of the High Court of New Zealand from 1991 through 1994. He is a member of the ICC Court of International Arbitration in Paris and the LCIA Court of arbitration in London. The credentials and credibility of Mr. Williams to act as presiding arbitrator has not been disputed by the petitioners; what has been disputed is only the legality and consequential validity of the appointment. 16. According to the petitioners, the appointment of Mr. Williams as presiding arbitrator is a nullity for two reasons: (i) that the appointment of the third arbitrator is a judicial act, to be performed by two arbitrators, and therefore, must be in writing and in consultation with or at least after putting the parties to notice of the proposed appointment; and (ii) that Mr. K.B. Verma agreed to the appointment of Mr. Williams as third arbitrator on account of his being under a mistake as to Indian Law that the third arbitrator in an international commercial arbitration has to be a non-Indian. For th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under no obligation to obtain the approval of the choice of the personnel by the parties who appointed the arbitrators. If any party is dissatisfied with the choice that will not affect the validity of the appointment. [See, Oliver v. Collings (1809) 11 East 367 : 103 ER 1045]. The appointment by arbitrators of an umpire should be the act of the will and judgment of the two. Such an appointment is to be one of choice and not of chance. [See, Re-Cassell (1829) 9 B&C 624 : 109 ER 232]." 19. In Re Lord & Lord's case (supra) it appeared by the submission that the parties had bound themselves, in case the two arbitrators first appointed should not agree, to perform the award of such third person as the said arbitrators should by writing under their hands, to be indorsed on the submission, appoint as umpire. One of the arbitrators sweared that the memorandum of appointment was not made or signed by himself. In this background it was held that every judicial act, to be done by two or more, must be completed in the presence of or who do it; for those who are to be affected by it have a right to the united judgment of all upto the very last moment. 20. In Re Hopper's case (supra), Re Lor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be said to be a judicial Act. In the Constitution Bench decision of this Court in Konkan Railway Corpn. Ltd.'s case (supra) the principles laid down in Jaswant Sugar Mills Ltd.'s case (supra) have been reiterated and it has been held that the appointment of an arbitrator by the Chief Justice under section 11(6) is not an adjudicatory order and cannot be said to be discharging of a judicial function. That being so, the appointment of the third arbitrator by two arbitrators can certainly not be a judicial Act, Shri P. Chidambaram, the learned senior counsel further referred to the provisions contained in sections 7(3), 7(4)(a), 12(1), 12(2) and 31(1) of the Act and submitted that the Legislature has taken care to use the word 'writing' or 'in writing' wherever it intended any Act or function to be performed in writing but the Legislature has not chosen to engraft the requirement of writing into section 11(3), and therefore, by process of interpretation or by attributing an intention to Legislature which the legislative drafting does not, the requirement of the appointment of third arbitrator by the two arbitrators being necessarily in writing cannot be spelled out. There is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed appointment. 24. The next question is : whether it can be said that Mr. K.B. Verma while agreeing for appointment of Mr. Williams as third arbitrator was under a mistake as to Indian law, and if so, then its effect? Shri G.L. Sanghi, the learned senior counsel, referred to the order passed by M. Jagannadha Rao, J. acting as designate of the Chief Justice deciding an application under section 11(5) Malaysian Airlines Systems BHD (II) v. Stic Travels (P.) Ltd. [2001] 29 SCL 89 (SC). Vide paras 26 and 28, His Lordship has held that section 11(9) is not mandatory and the word 'may' therein cannot be read as 'shall' and to appoint an arbitrator not belonging to the nationality of either of the parties is not mandatory. There is no quarrel with the abovesaid proposition. Yet, there is nothing wrong in the two arbitrators having formed an opinion in consultation with each other that a person of third nationality would be preferable as presiding arbitrator. The submission based on 'mistake of law' doctrine is unwarranted and besides the point. 25. In Konkan Railway Corpn. Ltd.'s case (supra) it has been held (vide para 21) that in spite of an appointment having been made by the ..... 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