Indsao Contracts Pvt. Ltd. vs Manu Creations Pvt. Limited
2004 Latest Caselaw 1273 Del

JUDGMENT

Mukul Mudgal, J.

1. This is an application under Section 11(3) read with Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of an Arbitrator. The process server report dated 23rd October, 2004 shows that there is refusal to receive the service by the respondent. Accordingly, the service is deemed to be complete. There is no appearance for the respondent. Learned counsel for the petitioner averred in this application that clause 20 of the agreement between the parties provided for settlement of disputes by way of arbitration, which reads as follows:

"20. Arbitration.

A. In the event of any dispute or difference of any kind whatsoever, arising out of the contract or the execution of the works, the same shall be referred to the award of two arbitrators, one a to be appointed by the owners and the other by the contractor. The arbitrators shall appoint an umpire in the event of a deadlock. The decision of the arbitrators or in the event of their not reaching an agreement, the decision of the umpire shall be final. The arbitration proceedings shall be governed by the provisions of law of the India Arbitration Act, 1940, or any other re-enactment or statutory modifications thereof for the time being enforced, the venue of the arbitration shall be Delhi. The work must continue during the arbitration proceedings."

2. On 9th February, 2004, a requisition for appointment of Arbitrator was made as per the said agreement and has not been responded to up to date. Accordingly, the petitioner is entitled to succeed in view of the following position of law laid down in Datar Switchgears Ltd. v. Tata Finance Ltd. & Another reported as JT 2000 (Suppl.2) SC 226 wherein the relevant para 19 reads as follows:-

"19. So far as cases falling under Section 11(6) are concerned-such as the one before us-no time limit has been prescribed under the Act, whereas a period of 30 days has been prescribed under Section 11(4) and Section 11(5) of the Act. In our view, therefore, so far as Section 11(6) 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 has moved the Court under Section 11, that would be sufficient. In other words, in cases arising under Section 11(6), if the opposite party has not made an appointment within 30 days of demand, the right to make appointment is not forfeited but continues, but an appointment has to be made before the former files application under Section 11 seeking appointment of an Arbitrator. Only then the right of the opposite party ceases. We do not, therefore, agree with the observation in the above judgments that if the appointment is not made within 30 days of demand, the right to appoint an Arbitrator under Section 11(6) is forfeited."

3. Even though the arbitration clause in the agreement provides for two Arbitrators and a possible umpire, learned counsel for the petitioner requested that a sole Arbitrator be appointed. Accordingly, Mr. H.K. Yadav, former Executive Director, HUDCO, 1/11 Kalkaji Extn., New Delhi (Mobile No. 9810016963) is appointed as an Arbitrator. The parties to appear before the Arbitrator so appointed on 16th December, 2004 at 4.30 PM on which day the statement of claim will be filed by the parties. The Arbitrator is directed to dispose of the reference not later than 6 months from the first date of hearing. The Arbitrator shall fix his fee after consulting the parties.

4. The petition stands disposed of accordingly.