Bombay High Court
Alankit Healthcare Tpa Ltd vs Nucleus Gis And Ites Ltd. And Anr on 17 August, 2015
Bench: R.D. Dhanuka
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28-ARBP919.12
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO. 919 OF 2012
M/s.Alankit Healthcare TPA Ltd. )
Alankit House, 2E/21, Jhandewalan Extn.)
New Delhi 110 055 ) ..... Petitioner
VERSUS
1. M/s.Nucleus GIS and ITES Ltd. )
Nucleus House, Saki Vihar Road, )
Andheri (East), Mumbai 400 072 )
2. Mr.Chandrakant Kamdar, ig )
301A, Poonam Chambers, 'B' Wing, )
Dr.Annie Besant Road, Worli, )
Mumbai - 400018 ) ..... Respondents
Mr.Ashish Pyasi, a/w. Ms.Ekta Tripathi, i/b. Dhir & Dhir Associates for the
Petitioner.
Mr.Praveen L.Singh, i/b. Mr.Jignesh Shah for Respondent No.1.
CORAM : R.D. DHANUKA, J.
DATED : 17th AUGUST, 2015
JUDGMENT
By this petition filed under section 34 of the Arbitration and Conciliation
Act, 1996 the petitioner has impugned the arbitral award dated 17 th April, 2012
made by the learned arbitrator allowing certain claims made by the respondents.
2. It is the case of the petitioner that pursuant to the negotiations between the
parties, the respondent no.1 had forwarded a draft agreement to the petitioner on
4th September, 2009 after making certain changes, additions, deletions in the draft
agreement. According to the said draft agreement sent by the respondents to the
petitioner, seat of the arbitration was Delhi. The respondent no.1 made further
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changes in the draft agreement and sent another draft agreement dated 22 nd
October, 2009.
3. It is the case of the petitioner that ultimately the said draft agreement
exchanged between the parties was signed by the respondent no.1 alone. The
dispute arose between the parties. On 8th July, 2010, the respondent no.1 invoked
the alleged arbitration agreement and proposed the name of the respondent no.2 as
the sole arbitrator. The petitioner vide its letter dated 22 nd July, 2010 objected to
the appointment of the arbitrator nominated by the respondent no.1 as there was no
concluded agreement between the parties. On 2 nd September, 2010, the respondent
no.2 entered upon the reference. On 16 th September, 2010, the respondent no.1
filed statement of claim before the learned arbitrator. On 18 th September, 2010, the
petitioner addressed a letter to the learned arbitrator raising its objection to the
appointment of the learned arbitrator. On 20 th October, 2010 the petitioner filed an
application under section 16(2) of the Arbitration and Conciliation Act inter alia
disputing the jurisdiction of the learned arbitrator on various grounds including the
existence of the arbitration agreement and also to the appointment of the learned
arbitrator unilaterally by respondent no.1.
4. The learned arbitrator passed an order on the said application on 27 th July,
2011 and rejected the said application under section 16(2) of the Arbitration Act
and held that the reasonings concerning the rejection of the said application would
be given in the arbitration award to be passed subsequently after hearing both
parties on merits of the disputed matter.
5. On 17th April, 2012, the learned arbitrator rendered the said impugned award
and directed the petitioner to pay Rs.19,00,071/- with interest. The said award has
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been impugned by the petitioner under section 34 of the Arbitration Act on various
grounds.
6. Learned counsel appearing for the petitioner invited my attention to the draft
agreement exchanged between the parties and would submit that admittedly the
petitioner had not signed any of such draft agreement including the draft
agreement relied upon by the respondents. He submits that the respondent no.1
had unilaterally invoked the alleged arbitration agreement by notice dated 8 th July,
2010. The petitioner replied to the said notice vide letter dated 22 nd July, 2010 and
challenged the authority of respondent no.1 to appoint an arbitrator in absence of
any agreement between the parties. Learned counsel for the petitioner submits that
though the learned arbitrator in the order passed under section 16 had directed that
the reasons would be rendered in the final award, the learned arbitrator however
has not rendered any reasons in the final award.
7. It is submitted by the learned counsel for the petitioner that since there was
no arbitration agreement between the parties, the learned arbitrator had no
jurisdiction to adjudicate upon the claims made by the respondent no.1. It is
submitted that in any event since the petitioner had refused to appoint an arbitrator
and did not agree to the name suggested by the respondent no.1, the respondent
no.1 could not have appointed the respondent no.2 unilaterally as an arbitrator. He
submits that the respondent no.1 ought to have filed an application under section
11(6) of the Arbitration and Conciliation Act, 1996 before the Hon'ble Chief
Justice.
8. Learned counsel appearing for the respondent no.1 on the other hand
submits that the learned arbitrator has already rejected the application filed by the
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petitioner under section 16 as far back as on 27 th July, 2011 and since the petitioner
did not challenge the said decision rendered on 27th July, 2011, immediately by
filing a petition, the petitioner cannot be allowed to challenge the said decision in
the present proceedings.
9. The next submission of the learned counsel for the respondent no.1 is that
though the respondent no.1 had given an opportunity to the petitioner to suggest a
name for the purpose of appointment of a sole arbitrator, the petitioner did not
nominate any arbitrator or did not suggest any other name of the arbitrator, the
appointment made by the respondent no.1 of the arbitrator was in order and he was
entitled to act as the sole arbitrator.
10. It is not in dispute that the draft agreement relied upon by the respondent
no.1 was not signed by the petitioner. In my view, the said draft agreement was
not an agreement as defined under section 7 of the Arbitration and Conciliation
Act, 1996. The learned arbitrator did not have jurisdiction to adjudicate upon the
disputes made by the respondent no.1 on that ground alone.
11. Be that as it may, the fact remains that the petitioner had disputed the
authority of the respondent no.1 to appoint any arbitrator for want of existence of
the arbitration agreement or even otherwise. Even if there was any arbitration
agreement entered into between the parties, the respondent no.1 could not have
appointed any arbitrator unilaterally. The respondent no.1 was required to file an
application under section 11(6) of the Arbitration and Conciliation Act, 1996
before the Chief Justice of this Court for appointment of an arbitrator. The
appointment of the learned arbitrator by the respondent no.1 unilaterally was thus
illegal and without jurisdiction. In my view, the entire award thus rendered by the
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learned arbitrator is without jurisdiction and nullity.
12. Insofar as submission of the learned counsel for the respondent no.1 that
though an opportunity was given by the respondent no.1 to the petitioner to
appoint an arbitrator and since the petitioner did not appoint any arbitrator, the
respondent no.1 could have appointed an arbitrator unilaterally is concerned, this
submission of the learned counsel for the respondent no.1 is totally contrary to
section 11 of the Arbitration and Conciliation Act, 1996. A perusal of the so called
arbitration agreement in the draft agreement also does not empower the respondent
no.1 to appoint an arbitrator unilaterally.
13. Insofar as submission of the learned counsel for the respondent no.1 that
since the petitioner ought to have challenged the impugned order passed by the
learned arbitrator under section 16 when the said order was passed by filing an
arbitration petition and not having challenged, the same cannot be allowed to be
challenged at this stage in this petition is concerned, the said contention is totally
frivolous and contrary to section 16(5) read with section 16(6) read and section 34
of the Arbitration and Conciliation Act, 1996.
14. Under section 16(5) if an arbitrator rejects the application made by a party
raising issue of jurisdiction, he has to continue with the arbitral proceedings and
make an arbitral award. Under section 16(6) of the Arbitration Act if such party is
aggrieved by such an arbitral award he has to make an application for setting aside
the said arbitral award in accordance with section 34. The learned arbitrator has
now rendered an award which has been rightly impugned by the petitioner under
section 34 of the Arbitration and Conciliation Act, 1996 alongwith the said order.
In my view there is thus no merit in this submission of the learned counsel for the
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respondent no.1. A perusal of the award indicates that the learned arbitrator has
not given any reasons in the impugned award on the issue of jurisdiction.
15. In my view since the arbitration agreement between the parties did not exist
and in any event since the appointment of the learned arbitrator was made
unilaterally by the respondent no.1 illegally, on that ground the award is set aside. I
have therefore not heard the learned counsel for the petitioner on the other issues
raised by the petitioner in the arbitration petition.
16. I, therefore, pass the following order :-
(a) Impugned award dated 17th April, 2012 is set
aside.
(b) Petition is made absolute in the aforesaid terms.
There shall be no order as to costs.
[R.D. DHANUKA, J.]
