9911796707
TMI Blog2006 (4) TMI 491X X X X Extracts X X X X X X X X Extracts X X X X ..... dering this fact, it would be appropriate if Mr. Manabu Nonoguchi, Area Manager, Sales Department, Murata Machinery Ltd., Textile Machinery Department, Osaka 541-0041, Japan is appointed as an Arbitrator to adjudicate upon the disputes arising between the parties. I, accordingly, appoint him as Arbitrator. He shall take up the steps in accordance with law and shall make all possible endeavour to decide the disputes expeditiously. Arbitration Application Nos. 8 and 9 of 2005 stand disposed of. - ARBITRATION P. 8 OF 2005 - - - Dated:- 28-4-2006 - P.P. NAOLEKAR, J. JUDGMENT These applications have been filed by the applicant under Section 11(6)(c) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act ) to seek appointment of an arbitrator in view of the inability expressed by Mr. Manabu Nonoguchi to act as an arbitrator. The prayer made in the applications is to appoint a suitable person to act as the sole arbitrator in place of the nominated arbitrator under Clause 6 of the Deed of Reserve and Charge of Property dated 22nd February, 2002 (for short the Deed ) and to refer the disputes between the parties to him. The arbitration applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 4th August, 2003 before the BIFR for recovery of its unpaid dues and sought impleadment and interim receivership. The applicant sent a notice of demand and arbitration dated 10th December, 2004 to the respondent for return of physical custody and possession of the machines which has not been complied with. As per the applicant, the dispute between the parties is arbitrable and since the title in the hire purchased machines has always been and is with the applicant the machines are not the assets or property of the company so as to be under the purview of the BIFR. The applicant submitted that no other petition under Section 11(6) of the Act in respect of the arbitration clause has been filed or is pending in any other court and since the present applications relate to an international commercial arbitration, the applicant being a body corporate incorporated outside India, the applicant is moving the applications under Section 11(6)(c) of the Act. The applicant prayed for relief as mentioned hereinabove. The respondent entered appearance and submitted counter statement. Although the sale and export under two shipments respectively on 10th July, 2001 and 5th October, 2001 and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sputes between the parties. It is urged by the learned counsel for the respondent that mere reading of Clause 6 of the Deed makes it clear that the parties intended that the arbitration was to be conducted only by Mr. Manabu Nonoguchi and, therefore, no other procedure for appointment of another arbitrator has been provided for under the said clause or anywhere in the agreement. The intention of the parties is clear that none other than Mr. Manabu Nonoguchi `shall' be the arbitrator to adjudicate upon the disputes arising between the parties. When the named arbitrator withdrew from the office of arbitrator, Clause 6 of the Deed providing for arbitration got exhausted and could not be revived under Section 11(6)(c) of the Act. It is further contended that the respondent company being declared a sick industrial concern, the BIFR being seized of the matter and the dispute between the parties being covered under the provisions of SICA, no arbitrator could be appointed in view of Section 22(1) of SICA. In rejoinder, it is submitted by the counsel for the applicant that the agreement read as a whole does not either expressly or by implication indicate that the vacancy should not be s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arbitrator being replaced. The procedure for filling the vacancy arising out of the arbitrator's withdrawal from office is provided under Section 15. It says that in addition to the grounds covered by Sections 13 and 14, the mandate of an arbitrator shall terminate when he withdraws from his office for any reason or under an agreement of the parties. The Section provides that the substitute arbitrator is to be appointed according to the same rules which were applicable to the appointment of the arbitrator who is to be replaced. Sub-section (2) of Section 15 contemplates appointment of the substitute arbitrator in place of the arbitrator who refuses to act as an arbitrator, as per the rules applicable to the appointment of the arbitrator. Sub-section (2) of Section 11 of the Act provides that in the absence of any agreed procedure for appointment of the arbitrator or arbitrators, sub-section (6) of Section 11 would apply whereunder a party may request the Chief Justice or any person or institution designated by him to take necessary measures, unless the agreement on the appointment procedure provides other means for securing the appointment. By virtue of sub-section (12) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al company is pending, then, notwithstanding any other law or the memorandum and articles of association of the industrial company or any other instrument having effect under the Companies Act or other law, no proceedings for the winding up of the industrial company or for execution, distress or the like against any of the properties of the industrial company, shall lie or be proceeded with except with the consent of BIFR. The proceedings in suit for the recovery of money or for the enforcement of any security against the industrial company or of any guarantee in respect of any loans or advances granted to the industrial company is prohibited unless consent of BIFR is obtained. Section 22(1) of SICA has specified certain types of proceedings which would come within the purview of the Section, namely, the proceedings for winding up of the company or for execution, distress or the like against any of the properties of the industrial company or for the appointment of a Receiver in respect of the properties of the industrial company. In Maharashtra Tubes Ltd. vs. State Industrial Investment Corporation of Maharashtra Ltd. and Another., (1993) 2 SCC 144 (in para 10), it is held by thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. Pradeshiya Industrial Investment Corporation of U.P. Ltd. and Another, (2003) 4 SCC 305, the question arose as to the scope of the protection afforded to the guarantors under Section 22(1) of SICA. The company was declared sick by BIFR in terms of Section 3(1)(o) of SICA. An operating agency was appointed under Section 17(3). While the proceedings before BIFR were pending, three separate notices of demand were served on the appellants as personal guarantors in respect of the loans granted to the company by the respondent Pradeshiya Industrial Investment Corporation of U.P. Ltd. and it was said in the notices that the Corporation would take legal measures to recover its outstanding dues from each guarantor. It was contended by the guarantors that in view of Section 22(1) of SICA, the Corporation could not enforce its demand against the appellants under the permission of BIFR is obtained. This Court has drawn a distinction between the proceedings taken up under the U.P. Public Moneys (Recovery of Dues) Act, 1972 and a suit contemplated under Section 22 of SICA. This Court has held in Kailash Nath Agarwal (supra) that having regard to the judicial interpretation of the word `s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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