Recently, the Gauhati High Court held that if one party demands the opposite party to appoint an arbitrator and the opposite party does not make an appointment within 30 days of the demand, the right to appointment does not get automatically forfeited after expiry of 30 days. If the opposite party makes an appointment even after 30 days of the demand but before the first party moves the Court under Section 11, that would be sufficient.
Brief facts:
The factual matrix of the case is that the Petitioner entered into an agreement with the government of Nagaland through the respondent no. 2 and the Petitioner/Company through its Managing Director for the printing of lottery tickets for the respondent State. The Petitioner executed the contract to the extent of Rs. 47,88,395/, the bills which have already been submitted to the respondents; however, the Respondent failed to pay the amount of Rs. 41,88,395/. The present application is filed under Section 11(5) read with Section 11(6) of the Arbitration and Conciliation Act, 1996 for the appointment of an arbitrator.
Observations of the Court:
The Court agreed to the submissions made by the Petitioner wherein the Petitioner relied upon the judgment titled Datar Switchgears Ltd. vs. Tata Finance Ltd. and Another in which it was laid down by the Apex Court that, “as far as Section 11(6) of the Arbitration and Conciliation Act, 1996 is concerned if one party demands the opposite party to appoint an arbitrator and the opposite party does not make an appointment within 30 days of the demand, the right to appointment does not get automatically forfeited after expiry of 30 days. If the opposite party makes an appointment even after 30 days of the demand but before the first party moves the Court under Section 11, that would be sufficient.”
The court noted that in the present case, the appointment has not been made by the State respondents before the petitioner herein approached this Court under Section 11 seeking appointment of an arbitrator. Furthermore, the dispute between the parties is arbitrable in nature and the clause 23 of the agreement provides for the arbitration.
Based on these considerations, the Court was of the opinion that the parties should be referred to arbitration.
The decision of the Court:
With the above direction, the Court appointed Mr. Khape Koza, Retired District and Sessions Judge of Nagaland as the arbitrator to arbitrate the dispute between the parties, subject to his consent and disclosure.
Case Title: M/s Druckgrafen India Limited v. The State of Nagaland
Coram: Justice Yarenjungla Longkumer
Case No: Arb.P./4/2024
Advocate for the Petitioner: Amit Parashar, M Solo, J Newmai
Read Judgment @Latestlaws.com
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