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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 ..... ntracts between Petitioner and Respondent were entered into. The name of the said division was changed from Delnel Eloptro to Denel Ptonics with effect from 1st April, 2004. The Optronics division was not a separate legal entity, but was only a business unit of the Petitioner. 5. The Respondent in the year 2004, placed certain purchase orders with Denel Eloptro for supply of various electronic equipments which are listed as under: 1. PUR/PN/C1/621977 dated 28th July 2004 2. PUR/PN/CN/621973 dated 28th July 2004 3. PUR/PN/C1/622029 dated 11th December 2004 6. The `General Terms and Conditions of the Purchase Order (Foreign) contains an Arbitration Clause. Clause 10 of the Purchase Order, inter-alia, provides for arbitration in case of dispute arising from the interpretation or from any matter relating to the rights and obligations of the parties. It also refers to the appointment of the `Managing Director or his nominee' of the respondent as the arbitrator. It is not in dispute that the said Clause in the Purchase Order is a valid arbitration agreement in terms of Section 2(b) read with Section 7 of the Act. The Petitioner before the delivery of the goods to the Respondent as p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Director through fax on 30th May 2009 and through speed post and courier on 2nd June 2009 and 6th June 2009, respectively. In the said notice, the petitioner cited Clause 10 of the General Terms and Conditions of the Purchase Orders which provides for reference of disputes to arbitration and accordingly requested the respondent, to refer the disputes for adjudication in accordance with Arbitration and Conciliation Act, 1996. It was also stated, that, since the arbitration clause provides only for the appointment of Managing Director or his nominee, instead of mutually agreed independent arbitrator, the said clause is invalid and accordingly requested the respondent for appointment of mutually agreed independent arbitrator to adjudicate the disputes which have arisen between the petitioner and respondent. 13. In response to the notice issued by the petitioner, the respondent by its letter dated 24th June 2009 for the first time disputed its liability for the payment of the amount demanded by the petitioner. It was also stated, that the names proposed by the petitioner for the appointment of the arbitrator was not acceptable, as Clause 10 of the General Terms and Conditions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hough a senior officer of the Government/statutory body/government company, had nothing to do with the execution of the subject contract, there can be no justification for anyone doubting his independence or impartiality, in the absence of any specific evidence. Therefore, senior officer(s) (usually Heads of Department or equivalent) of a Government/ statutory corporation/ public sector undertaking, not associated with the contract, are considered to be independent and impartial and are not barred from functioning as arbitrators merely because their employer is a party to the contract. 36. The position may be different where the person named as the arbitrator is an employee of a company or body or individual other than the State and its instrumentalities. For example, if the Director of a private company (which is a party to the arbitration agreement), is named as the arbitrator, there may be a valid and reasonable apprehension of bias in view of his position and interest, and he may be unsuitable to act as an arbitrator in an arbitration involving his company. If any circumstance exists to create a reasonable apprehension about the impartiality or independence of the agreed or na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent of the Indian Roads Congress." 18. The petitioner has prayed before this Court for the appointment of the sole arbitrator. The petitioner has submitted, that, it is clear from the invoices and the correspondence between the parties particularly dated 4th May 2005 and 8th June 2006, that the respondent has not disputed the liability of payment due to the petitioner. Therefore, as the respondent now seeks to avoid the payment of the amount due to the petitioner, there is dispute between the parties which requires to be referred for arbitration before the arbitrator. 19. Clause 10 of the `General Terms and Conditions to Purchase Order' does constitute a valid arbitration clause as it shows the intention of the parties to appoint an arbitrator and refer the dispute between the parties for the arbitration proceedings under the Arbitration and Conciliation Act 1996. The wordings of Clause 10 are as follows: "ARBITRATION: All disputes regarding this order shall be referred to our Managing Director or his nominee for arbitration who shall have all powers conferred by Indian Arbitration and Conciliation Bill, 1996 for the time in force." 20. Section 11 of the Act provides for the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion issued by his superior authorities. It is also the case of the respondent in the reply to the notice issued by the respondent, though it is liable to pay the amount due under the Purchase Orders, it is not in a position to settle the dues only because of the directions issued by Ministry of Defence, Government of India. It only shows that the Managing Director may not be in a position to independently decide the dispute between the parties. 23. The facts narrated by me would clearly demonstrate that there is a dispute between the parties in regard to payment of certain amounts towards Purchase Orders/Invoice. Since, there is a failure on the part of the respondent in making appointment of an arbitrator for resolving the dispute in accordance with the understanding of the parties which is reflected in the Purchase Order, the prayer of the petitioner requires to be granted. 24. Before parting with the case, in my considered opinion, the decision on which reliance is placed by Shri S.N. Bhat, learned counsel for the respondent, would not assist him to drive home his point. 25. Therefore, in the light of the peculiar facts and circumstances of this case, it would be in the inte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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