Calcutta High Court
Techno Electric And Engineering ... vs Bengal Energy Limited on 20 July, 2021
ODC-6
ORDER SHEET
AP/270/2021
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
ORIGINAL SIDE
TECHNO ELECTRIC AND ENGINEERING COMPANY LIMITED
Versus
BENGAL ENERGY LIMITED
BEFORE:
The Hon'ble JUSTICE MOUSHUMI BHATTACHARYA
Date : 20th July, 2021.
[Via video conference]
Appearance:
Mr. Jishnu Saha, Sr. Adv.
Mr. Sourav Kumar Mukherjee, Adv.
Mr. Ishaan Saha, Adv.
Mr. Debdeep Sinha, Adv.
Mr. Priyankar Saha, Adv.
Ms. Urmila Chakraborty, Adv.
Mr. Aasish Chowdhury, Adv.
Mrs. Aindrila Basu, Adv.
Ms. Puja Tripathi, Adv.
The Court: This is an application under Section 15(2) of The
Arbitration and Conciliation Act, 1996 (the Act) for appointing an Arbitrator in
place and stead of the learned Sole Arbitrator who was appointed in an
application filed under Section 11(6) of the Act by the petitioner herein who is
also the Claimant before the Arbitrator.
The trigger to this application is a letter of the Arbitrator dated 19th
June, 2021 which records the inability of the applicant to file its Statement of
2
Claim within the stipulated date and the Arbitrator expressing his inability to
devote sufficient time to the arbitration and complete the same within a period
of 12 months. The Arbitrator has referred to Section 12 and the Sixth Schedule
to the Act in reference to his position. The order by which the Arbitrator was
appointed was passed by a learned single Judge of this Court on 13th
December, 2019 in an application under Section 11.
Learned counsel appearing for the respondent, both here as well as
in the arbitration, submits that the process of substituting the present
Arbitrator for a new Arbitrator can only be done in accordance with the Rules
that were applicable to the appointment of the Arbitrator who was being
replaced. Counsel places emphasis on Section 15(2) of the Act which requires
the aforesaid to be followed. It is also submitted that the petitioner who was
engaged for a project by the respondent was appointed in terms of purchase
orders and a work order, some of which documents do not contain an
arbitration clause. Counsel again refers to those documents to contend that it
is arguable whether arbitration can continue at all. It is also submitted that
the dispute of unpaid bills etc. is of 2012 and the entire issue may be barred
by limitation. Counsel relies on (2006) 10 SCC 763 [National Highways
Authority of India vs. Bumihiway DDB Ltd. (JV)] to urge that Section 15(2) is
different from Section 11(6) and that a Court appointing a substitute Arbitrator
cannot disregard the Rules which were relevant for the appointment of the
Arbitrator in a proceeding.
Upon hearing learned counsel appearing for the parties, this Court is
of the view that the resistance to the application is without any statutory basis.
Section 15(2) provides for a specific situation, namely, where the mandate of
an Arbitrator is terminated and the situation calls for appointment of a
substitute Arbitrator. Section 15 can be seen as an additional provision to
Sections 13 and 14 which also provide for situations where it becomes
impossible for the Arbitrator to act and the mandate is terminated on that
basis. The language of Section 15(2) with regard to the relevance of Rules for
appointing a substitute Arbitrator would become pointless if the submissions
made on behalf of the respondent are seen as correct. The issue of a few of the
documents on which the parties agreed to enter into a contract not containing
an arbitration clause was taken into account by the learned single Judge in
the application under Section 11 and specifically decided. Relevant portions of
the judgment of the learned single Judge would show that the Court agreed
with the contentions of the petitioner that disputes and differences between
the parties arose out of the said purchase orders which were covered by the
arbitration clause contained in the first purchase order and that such
disputes, therefore, should be referred to arbitration. The judgment further
proceeds to point out that the respondent in its letter dated 16th July, 2019
had also expressed its intention to refer the disputes and differences to
arbitration and had even suggested the name of an Advocate who would be
appointed as the Arbitrator. It cannot be disputed under any circumstances
that the categorical finding of the learned Judge was that there exists an
arbitration agreement between the parties for adjudication of the disputes and
differences relating to all the four purchase orders. A Sole Arbitrator was
appointed on this basis. The issue with regard to the claim being belated also
cannot be gone into at this stage since every possible objection to appointment
of an Arbitrator was gone into by the learned single Judge in the Judgment
dated 13th December, 2019.
The simple fact which has to be taken into account in the present
application is the learned Arbitrator expressing his difficulty in acting in the
matter on the ground of Section 12 read with the Sixth Schedule which takes
into account circumstances which are likely to affect the ability of the
Arbitrator to devote sufficient time to the arbitration and, in particular, to
finish the entire arbitration within 12 months. In paragraph 44 of National
Highways, the Supreme Court noted that it was only after the two nominated
Arbitrators were unable to reach a consensus on the third Arbitrator and on
their failure to arrive at such consensus that the High Court could appoint the
third Arbitrator under Section 11(6) of the Act. Moreover, there is a
fundamental difference between the contemplation of the legislature in
Sections 11(6) and 15(2) of the Act. Section 11(6) outlines the scenario where
there is a failure of the parties or of the two appointed Arbitrators to decide on
a Sole Arbitrator or a third Arbitrator while Section 15(2) is only concerned
with appointment of a substitute Arbitrator when the mandate of an existing
Arbitrator comes to an end. The difference in the two provisions has been
stated to address the concern of counsel appearing for the respondent that a
Court cannot step for appointing an Arbitrator without first referring to the
Rules for such.
This Court is therefore completely disinclined to turn the clock back
and put the parties to the position where they were before the Arbitrator was
appointed in an application filed under Section 11(6) of the Act.
AP No. 270 of 2021 is hence disposed of in terms of prayer (a); prayer
(a) being for recording the termination of the mandate of the learned Sole
Arbitrator and for appointing an Arbitrator in his place and stead for
adjudicating the disputes and differences between the parties. Mr. Syama
Prosad Sarkar of the Bar Library Club is appointed Arbitrator in place and
stead of Mr. Malay Kumar Ghosh.
Needless to say that the parties will be at liberty to urge all points
including that of limitation before the learned Arbitrator.
(MOUSHUMI BHATTACHARYA, J.)
sg.
