Can HC invoke Section 11 to adjudicate upon dispute under Sec.14 of Arbitration Act? SC replies, Read Judgment

The Supreme Court was dealing with appeal against judgement passed by the Madhya Pradesh High Court. The HC had exercised its powers under Section 11(6) of the Arbitration and Conciliation Act, 1996 to terminate the mandate of the sole Arbitrator appointed by the parties themselves in a family dispute for partition of the properties. The HC also appointed a fresh Arbitrator on the ground that the mandate of the sole Arbitrator stood terminated under Section 14(1)(a) of the A&C Act because there was unreasonable delay in proceedings.

The Supreme Court expounded that “whenever there is a dispute and/or controversy that the mandate of the arbitrator is to be terminated on the grounds mentioned in section 14(1)(a), such a controversy/dispute has to be raised before the concerned “court” only and after the decision by the concerned “court” as defined under section 2(e) of the Act, 1996 and ultimately it is held that the mandate of the arbitrator is terminated, thereafter, the arbitrator is to be substituted accordingly, that too, according to the rules that were applicable to the initial appointment of the arbitrator.”

The Apex Court further held that since the parties themselves agreed on a procedure for appointment of the arbitrator and appointed an arbitrator by mutual consent, the application under section 11(6) of the Act, 1996 was not maintainable at all. The dispute whether the mandate of the arbitrator has been terminated under section 14(1)(a) of the Act, cannot be decided in an application under section 11(6) of the Act, 1996.

The top court further clarified where the sole arbitrator is appointed by the parties by mutual consent, the arbitration agreement cannot be invoked for the second time.

Hence, the Supreme Court bench comprising Justice MR Shah and Justice BV Nagarathna quashed the High Court Judgement.

Read the Judgement @LatestLaws.com