On 21St September, a bench of Delhi High Court consisting of Justice Suresh Kumar Kait while hearing an arbitration petition reiterated the Supreme Court and stated that  in cases where one party has a right to appoint a sole arbitrator, its choice will always have an element of exclusivity in determining or charting the course for dispute resolution. Naturally, the person who has an interest in the outcome or decision of the dispute must not have the power to appoint a sole arbitrator.

Facts of the case:

The present petition had been filed by petitioner which is a company incorporated under the Companies Act, 1956, who is engaged in the business of manufacturing of mustard oil, seeking appointment of a Sole Arbitrator under the provisions of Section 11(6) of the Arbitration and Conciliation Act, 1996 for adjudication of disputes with the respondent which is a Government organization under the Ministry of Defence. The respondent had invited bids for supply of 20500 metric tonne (MT) edible oil. The petitioner claims to have participated in the bid and submitted the requisite documents and EMD of Rs. 1,15,13,786/. The bid of petitioner was accepted by the respondent vide its acceptance of tender letter dated 22.05.2020, reference No. 62801/20-21/RMO/APO/AT-5 to AT-13 as per the request for proposal dated 04/02/2020.

Contention of the petitioner:

The following contention has been submitted on behalf of the petitioner:

  1. It was submitted that due to Covid pandemic, lock down/curfew was imposed all over India from 25.03.2020 and due to lack of manpower and inability to procure oil seeds, the production in petitioner’s factory stopped.
  2. It is averred on behalf of petitioner that the requisite criteria laid down in clause VI of part of IV-A of request for proposal dated 04/02/2020, were fulfilled by the petitioner. However, vide letter dated 09.06.2020 and further letter dated 23.07.2020, respondent denied the claim of petitioner and terminated the contract.
  3. It was also submitted that the respondent did not release the EMD amount of Rs.1,15,13,7861- to the petitioner, which petitioner is liable to receive under the force majeure clause.
  4. The petitioner submits that Clause -16 of part-I & Clause -3 of part III of request for proposal contains the arbitration clause, according to which disputes, if any, shall be resolved through arbitration.
  5. It is also contended that the petitioner sent a compulsory 60 days’ notice to respondent, but the respondent failed to nominate any Arbitrator and so, the said notice be treated as invocation of arbitration clause under the Arbitration and Conciliation Act, 1996.

Contention of the respondent:

Mr. Vikram Jetly, learned Central Government Standing Counsel appearing on behalf of respondent submitted that the respondent has recommended a panel of three Arbitrators and disputes inter se parties can be referred to any of them for consideration.

Observation and judgement of the court:

The following observation has been made by the Hon’ble bench of the court:

  1. The court found that existence of arbitration clause under Clause -16 of part-I & Clause -3 of part III of request for proposal dated 04/02/2020 is not disputed by learned counsel for respondent.
  2. However, the proposal for recommendation of a panel of three Arbitrators on behalf of respondent could not be accepted.

Thus, finding merit in the petition the court appointed Mr. Amar Nath, District & Sessions Judge (retd.), Delhi, as the sole Arbitrator to adjudicate the dispute between the parties.

Read Judgment @Latestlaws.com 

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Anusree