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TMI Blog2010 (5) TMI 660X X X X Extracts X X X X X X X X Extracts X X X X ..... cide the dispute between the parties as the respondent in the reply to the notice accepted liablity to pay the amount but is not in a position to settle the dues only because of the directions issued by Ministry of Defence, Government of India - it would be in the interest of both parties and to do complete justice, an arbitrator other than the Managing Director of the Respondent requires to be appointed to settle the dispute - in favour of petitioner - Arbitration Petition No. 16 of 2009 - - - Dated:- 10-5-2010 - H.L. DATTU, J JUDGMENT H.L. Dattu, J.- The Petitioner has filed the present Arbitration Petition under sub-section (6) of Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the Act"). It is prayed in the petition to appoint a sole arbitrator to adjudicate the dispute between the parties. 2. The Petitioner is a company wholly owned by the Government of the Republic of South Africa, duly incorporated as per the laws of the Republic of South Africa, with its main business address at Denel Head Office, Nelmapius Drive, Irene, Pretoria, Republic of South Africa. 3. The Respondent is a Corporation duly registered under the Compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Ministry of Defence, Government of India and in view of the direction issued by the Ministry to withhold payment of the said invoices, it is unable to settle the amounts due to the petitioner. 9. The Insurance Corporation also requested, vide its letter dated 29th May 2006, to pay the amount raised against them. The respondent by its reply letter dated 8th June 2006 addressed to the Corporation - insurer, inter alia contended, that, as per the guide- lines issued by the Ministry of Defence, Government of India, to discontinue dealings with M/s DENEL (PYT) LTD., and withhold payment due if any, it is unable to satisfy its liability to the petitioner. 10. Petitioner through its Advocate addressed a letter dated 29th November, 2006, inter-alia, requesting them to make payments towards three Purchase Orders - PUR/PN/CI/621977 dated 28.07.2004, PUR/PN/CN/621973 dated 28.07.2004 and PUR/PN/CI/622029 dated 11.12.2004. 11. The respondent through its Advocates and Solicitors, vide their letter dated 18th December, 2006, though admitted their liability towards the aforesaid Purchase Orders, refuse to settle the amounts due only on the ground, that, they are prohibited from making ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, they are prohibited from making any payment to the petitioner by the Ministry of Defence, Government of India. It is further contended, that, Clause-10 of the Purchase Order provides for referral of disputes between the parties to the Managing Director or his nominee and since the Managing Director being the appointee of the Central Government, the petitioner genuinely apprehends that it may not get any justice in the hands of the Managing Director, since he cannot go against the directions issued by the Ministry of Defence, Government of India and, therefore, it would be appropriate to appoint independent sole arbitrator. In aid of his submission, reliance is placed on the observations made by this Court in the case of Indian Oil Corporation Ltd. Ors. Vs. Raja Transport Pvt. Ltd., [(2009) 8 SCC 520]. At paras 34 to 37, this Court has observed as under: "34. The fact that the named arbitrator is an employee of one of the parties is not ipso facto a ground to raise a presumption of bias or partiality or lack of independence on his part. There can however be a justifiable apprehension about the independence or impartiality of an employee arbitrator, if such person was the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of the respondent in responding to the request made by the petitioner. It is further contended, that, in view of Clause-10 of the Purchase Order which provides for appointment of the arbitrator, only the `named person' in the Clause-10 can be appointed and, therefore, the petitioner- company cannot request for appointment of independent arbitrator for resolving disputes, if any, between the parties. The learned counsel relies on the observations made by this Court in the case of You One Engineering Construction Co. Ltd. Anr. Vs. National Highways Authority of India (NHAI), [(2006) 4 SCC 372]. It is stated in the said decision: "Although the learned counsel for the petitioners contended that this is a situation falling within the contemplation of clause (c) of Section 11(6) of the Act, namely, that the institution i.e. IRC failing to perform the function entrusted to it under the appointment procedure, I am not satisfied. Under the appointment procedure agreed to under clause 67.3, each of the parties to the dispute is required to nominate its arbitrator and the third arbitrator is to be chosen by the two arbitrators appointed by the parties and he shall act as the presidin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chief Justice or any person or institution designated by him to come to the rescue of the parties. Therefore, petitioner in the present case has sought the appointment of the arbitrator by this Court so that the dispute between the parties can be resolved. 22. In the case of Datar Switchgears Ltd. v. Tata Finance Ltd. Anr., [(2000) 8 SCC 151], this Court while considering the powers of the Court to appoint arbitrator under Section 8 of the Arbitration Act, 1940, cited the decision of this Court in the case of Bhupinder Singh Bindra v. Union of India and Anr. [AIR1995 SC 2464]. It was held in that case that "It is settled law that court cannot interpose and interdict the appointment of an arbitrator, whom the parties have chosen under the terms of the contract unless legal misconduct of the arbitrator, fraud, disqualification etc. is pleaded and proved. It is not in the power of the party at his own will or pleasure to revoke the authority of the arbitrator appointed with his consent. There must be just and sufficient cause for revocation." The said principle has to abide by in the normal course. However, considering the peculiar conditions in the present case, whereby the arbi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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