Bombay High Court
I. B. Commercial Private Limited vs The Material Organization Indian ... on 7 September, 2017
Bench: G. S. Kulkarni
Muj 903-carap-9-2016.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMMERCIAL ARBITRATION APPLICATION NO. 9 OF 2016
I.B. Commercial Pvt. Ltd ....Applicant
Versus
The Material Orginazation, Indian Navy ...Respondents
and Ors
Mr. Simil Purohit a/w. Ms. Trupti Shetty and Ms. Pooja Shah I/b.
Dhruve Liladhar & Co. for the Applicant.
Mr. R.V. Govilkar and Mr. Pranil Sonawane a/w. Mr. Mihir R.
Govilkar for the Respondent Nos. 1 and 2.
Mr. Phiroze Colabawalla a/w. Ms. Anaisha Zachariah I/b. HSA
Advocates for the Respondent No.3.
CORAM: G.S. KULKARNI, J.
DATED: 07th September, 2017
JUDGEMENT:-
1. This is an application whereby the applicant prays for
appointment of an arbitrator by the Court, exercising its powers
under Section 11(6) of the Arbitration and Conciliation Act, 1996
(for short 'the Act'). After this application was heard for
sometime, on the last occasion the parties were ad-idem that the
disputes between the applicant and respondent no.2-Union of
India can be referred to arbitration of a sole arbitrator. The
dispute arises in regard to the sale of a vessel, belonging to the
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Indian Navy, namely "IMS Vikrant". This application was
adjourned for Mr. Govilkar to take instructions on the name of the
proposed arbitrator if the parties can so appoint by consent.
2. Today Mr. Govilkar, learned counsel for the respondent no.2
on instructions of Mr. S.K. Chandrakar ANSO-1 as contained in the
letter dated 05/09/2017 informs the Court, that Real Admiral Mr.
H. Gupta, (Retired) who is presently a Dean of the Amity Law
School, Amity University, Jaipur, Rajasthan be appointed as a sole
arbitrator to adjudicate the disputes between the parties.
3. On such suggestion, as being made by Mr. Govilkar on
behalf of the respondent no.2, Mr. Purohit, learned counsel for the
applicant would submit that, it would be appropriate that the
Court appoints an independent sole arbitrator as the applicant
cannot consent for the appointment, as suggested on behalf of the
Union of India. Mr. Purohit in making this submission would refer
to the amended provisions of the Arbitration and Conciliation Act,
1996 as contained in Section 12(1) read with the Seventh
Schedule, however, Mr. Govilkar, learned counsel for the
respondent no.2-Union of India would have an objection to Mr.
Purohit's submission. Mr. Govilkar submits that the proposed
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arbitrator as suggested on behalf of respondent no.2-Union of
India, is an independent arbitrator, being a retired officer and
presently holding the post of the Dean, Amity Law School. It is his
submission that the requirement of Section 12(1) read with
Seventh Schedule of the Act also stands complied, if such
appointment is made.
4. At the outset it can be noted that the applicant has
approached this Court invoking the jurisdiction under Section
11(6) of the Arbitration and Conciliation Act, 1996 on the failure
of the respondent to appoint an arbitrator. The parties would not
dispute that Section 11(6) confers a jurisdiction on this Court to
appoint an arbitrator in a situation where the parties fail to
appoint an arbitrator in accordance with the arbitration
agreement. Thus the respondents cannot make an insistence for a
particular appointment.
5. Be that as it may, the hearing of this application was
adjourned only to enable Mr. Govilkar, learned counsel for
respondent no.2-Union of India to take instructions as noted
above. To this Mr. Govilkar's response today on instructions is that
the Court appoints Real Admiral Mr. H. Gupta (Retired), Dean of
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the Amity Law School.
6. In my considered opinion, as also in view of the clear
provisions of Section 11(6) of the Act, the submission of Mr.
Govilkar certainly cannot be accepted. The amended provisions of
the Act contained in Section 12(1) read with Seventh Schedule are
required to be noted. Section 12(1) reads thus:
"12. Grounds of challenge-(1) When a person is
approached in connection with his possible
appointment as an arbitrator, he shall disclose in
writing any circumstances-
(a) such as the existence either direct or indirect, of
any past or present relationship with or interest in any
of the parties or in relation to the subject matter in
dispute, whether financial, business, professional or
other kind, which is likely to give rise to justifiable
doubts as to his independence or impartiality;"
7. The relevant provision under the 'Seventh Schedule' of the
Act is also required to be noted, which reads thus:
"1. The arbitrator is an employee, consultant, advisor
or has any other past or present business relationship
with a party."
8. Mr. Govilkar, learned counsel for the respondent no.2-Union
of India has fairly stated that the proposed arbitrator as suggested
by them was in the service of the Indian Navy upto 2015 and
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however on his retirement he is now an independent person. It is
not in dispute that the vessel in question was a vessel which was
belonging to the Indian Navy and the decision to auction the same
came to be taken in the year 2014. If these are the circumstances,
then in my opinion, the amended provisions of the Act as noted
above would certainly apply. The mandate of law as contained in
the said amended provisions is required to be considered in letter
and spirit, even if the Court, de hors the request of the respondent-
Union of India, is considering to nominate Real Admiral Mr. H.
Gupta (Retired). It would thus be appropriate that the Court
proceeds to appoint an arbitrator in exercise of the jurisdiction
required under Section 11(6) of the Arbitration and Conciliation
Act.
9. In the circumstances, the Court proposes Mr. Justice H.L.
Gokhale, Former Judge Supreme Court of India as a sole arbitrator
to adjudicate the dispute between the parties. In the first instance,
the proposed arbitrator will make a disclosure in terms of Section
11(8) read with Section 12(1) of the Arbitration and Conciliation
Act, 1996 and thereafter enter upon reference. In the event, the
disclosure is not made within a reasonable time or the disclosure
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records the inability of the proposed arbitrator to act as such, it
will be open to the parties to apply to this Court for directions.
The parties will appear before Mr. Justice H.L. Gokhale (Retired),
on a date to be fixed by him, which will be informed to the parties
atleast 15 days in advance.
10. The arbitration application is disposed of in the above terms.
No order as to costs.
11. A copy of this order be forwarded to Hon'ble Mr. Justice H.L.
Gokhale (Retired), Former Judge Supreme Court of India.
(G.S. Kulkarni, J.)
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