Allahabad High Court
Ghazala Khatoon vs U.P. State Road Transport ... on 8 August, 2023
Bench: Jaspreet Singh
HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH
?Neutral Citation No. - 2023:AHC-LKO:52485
Court No. - 19
Case :- CIVIL MISC. ARBITRATION APPLICATION No. - 68 of 2021
Applicant :- Ghazala Khatoon
Opposite Party :- U.P. State Road Transport Corporation Ltd. Thru. M.D.
Counsel for Applicant :- Rohit Tripathi,Ruhi Gill
Counsel for Opposite Party :- Ratnesh Chandra
Alongwith
Case :- CIVIL MISC. ARBITRATION APPLICATION No. - 77 of 2021
Applicant :- Imran Husain Siddiqui
Opposite Party :- U.P. State Road Transport Corp. Thru. M.D. Lko.
Counsel for Applicant :- Rohit Tripathi,Shishir Srivastava,Syed Zulfiqar Husain Naqv
Counsel for Opposite Party :- Ratnesh Chandra
Alongwith
Case :- CIVIL MISC. ARBITRATION APPLICATION No. - 78 of 2021
Applicant :- Upma Singh
Opposite Party :- U.P. State Road Transport Corp. Thru. M.D. Lko.
Counsel for Applicant :- Rohit Tripathi,Shishir Srivastava,Syed Zulfiqar Husain Naqv
Counsel for Opposite Party :- Ratnesh Chandra
Hon'ble Jaspreet Singh,J.
1. Heard Shri Rohit Tripathi, learned counsel for the petitioners in all the three petitions and Ms. Shivani, holding brief of Shri Ratnesh Chandra, learned counsel for the respondent.
2. The issue involved in the three petitions is identical and accordingly it is being decided by means of this common judgment.
3. It is an admitted case between the parties that an agreement dated 22.08.2019 and 09.07.2020 were entered between the parties. The said agreement contains an arbitration clause in 34 to the effect that in case of any disputes, the parties can refer to the matter to a sole arbitrator in terms of the Arbitration and Conciliation Act, 1996. However, the clause further provided that the Managing Director of the respondent-Corporation would have the right to appoint an arbitrator.
4. It is also the case of the petitioners that there was certain disputes which required resolution and therefore the petitioners invoked the arbitration clause straightway by filing the petition under 11(6) of the Arbitration and Conciliation Act, 1996.
5. It is also urged that since the arbitration clause contained in the agreement was in teeth of Section 12(5) as amended by the 2015 amendment in the Arbitration and Conciliation Act 1996, therefore, it was a futile exercise for the petitioners to have first approached the Managing Director to get an arbitrator appointed.
6. The Contention is that in case in terms of 12(5) read with schedule-7, a person cannot be appointed as an arbitrator, consequently the persons who is ineligible to act as an arbitrator is also ineligible to appoint an arbitrator and thus for the said reason, the petitioners have approached the Court. In support of his submissions, he has relied upon 2021 SCC OnLine SC 730, Jaipur Zila Dugdh Utpadak Sahkari Sangh Limited and others Vs. Ajay Sales & Suppliers and the decision of this Court in Shiv Shakti Enterprises Lko. Vs. Union of India, 2016 SCC OnLine All 848.
7. Ms. Shivani learned counsel appearing for the respondent, on the other hand, has raised an objection that Section 11 (6) is basically a default clause. Unless and until the requirements which enables the parties to trigger that provision is complied with, it is not open for any party to straightway approach the Court. In the instant case, it is not disputed that there is an arbitration clause. However, since there is nothing on record to indicate that the petitioners ever invoked the arbitration clause hence without invocation there cannot be a failure in the appointment process and therefore there is no triggering point for the petitioners to approach this Court in terms of Section 11(6) of the Act of 1996.
8. The Court has considered the rival submissions and perused the material on record.
9. The undisputed facts which can be culled out from the material on record are:- (i) There is an agreement between the parties which contains an arbitration clause; (ii) the arbitration clause provides that the parties can get their disputes resolved through arbitration, however, the Arbitrator is to be appointed by the Managing Director of the Corporation; (iii) Section 12(5) of the Arbitration & Conciliation Act, 1996 has been incorporated by an Amendment in the Act in they year 2015 read with schedule-7 which does not permit the departmental Arbitrator.
10. In view of the aforesaid undisputed facts, the question is whether if the arbitration clause provides that the Arbitrator is to be appointed by the Corporation then whether the entire clause itself becomes bad or the parties are required to seek the appointment ignoring the fact that the Arbitrator is to be appointed by the Corporation.
11. In the aforesaid context, if the submissions of the learned counsel for the petitioner is noticed, it would be found that the same is without substance for the reason that Section 11(6) is a default clause and it only comes into the picture once the parties fail to get an Arbitrator appointed in terms of the clause or the rules as applicable to them. The entire clause by itself does not become bad solely because of the reason that the Arbitrator is to be appointed by the Corporation.
12. It was always open for the petitioners to have invoked the arbitration clause appropriately and seek the good offices of the respondent for arriving at a consensus for appointing an Arbitrator by mutual discussions. Unless this step is taken, there can be no satisfaction that the appointment procedure has failed which could trigger a party to invoke Section 11(6) of the Arbitration & Conciliation Act, 1996.
13. In view of the aforesaid, since it is undisputed that the petitioners did not approach the respondent to get an Arbitrator appointed with mutual discussions, accordingly, triggering point has yet not reached and the instant petition seeking appointment of Arbitrator is premature.
14. In light of the aforesaid, all the three petitions are dismissed leaving it open for the petitioners to invoke the arbitration clause appropriately and in case if there is any failure in the appointment procedure or process, it shall be open for the petitioners to approach the Court in accordance with law.
15. With the aforesaid, the petitions are dismissed. There shall be no order as to costs.
Order Date :- 8.8.2023
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