Sudhir Gensets Ltd. vs Union Of India (Uoi) And Anr.
2005 Latest Caselaw 1667 Del

JUDGMENT

Sanjay Kishan Kaul, J.

Page 2567

1. The matter has been passed over once and called for second time. None has appeared for the respondents.

2. The petition has been filed under Section 11 of the Arbitration and Conciliation Act, 1996, for appointment of an arbitrator. The disputes relate to the telephone connections of the petitioner which were disconnected on account of non-payment of dues. It is the submission of the petitioner that the petitioner is not liable to pay the dues. The disputes are mentioned in para 15 of the petition. The petitioner served a notice on 01.02.2003 on the respondents to appoint an arbitrator in terms of arbitration clause 7B of the Indian Telegraph Act, 1885. No reply was forthcoming and thus the petition has been filed.

3. In reply to the petition, it has been stated by the respondents that Shri R.C. Sen, DGM (Accounts) CO-MTNL, Jeevan Bahrti Building, was appointed as an arbitrator in terms of the order dated 03.06.2003.

4. The only issue to be considered is whether Mr. Sen has to proceed with the arbitration or some other independent arbitrator has to be appointed. In this behalf, learned counsel for the petitioner submits that once the respondent fails to appoint the arbitrator within the stipulated time of 30 days of the service of notice, the respondent lose the right of appointment of an arbitrator and it is for this Court to appoint an arbitrator. Learned counsel has referred to the judgment of the learned Single Judge in Haryana Telecom Ltd. v. Union of India and Anr., 2004 (3) RAJ 147, where it was held that since the respondent had failed to appoint an arbitrator within the stipulated time of 30 days of the notice, and even the petition had been filed under Section 11 of the Act, it is for the Court to appoint an arbitrator. Learned counsel states that this is a similar position, since in the present case notice was issued to the respondents on 23.05.2003 and was served on the respondent prior to the order of appointment of the arbitrator.

5. Learned counsel has also referred to the judgment of the Division Bench of this Court in Delkon (India) Pvt. Ltd. v. G.M., Bharat Heavy Electricals Ltd., , where it was observed in paras 4 and 5 as under:

"4. We have given our careful consideration to the arguments advanced by learned counsel for both the parties. In view of the law laid down in the case of Datar Switchgears Ltd. v. Tata Finance Ltd. and Anr. IV (23000) CLT 191 (SC) : VII (2000) SLT 543 : JT 2000 (suppl.2) SC 226 it is no more res integra that the vacancy can be supplied by a party pursuant to the arbitration agreement even after third days of the receipt of the notice. However, onces a party approaches the Court and files a petition for appointment by the designated authority of the Chief Justice of that Court under Section 11(6) of the Arbitration and Conciliation Act, the right to supply vacancy by the opposite party is extinguished. If that right stood Page 2568 extinguished on filing of the petition under Section 11(6) of the Arbitration and Conciliation Act, in September 1998 the appointment of an Arbitrator on 3rd May, 1999 could not be made, therefore in our view, the order passed by the learned Single judge on 7th May, 1999 suffers from patent illegality. Therefore, the submission of the respondent that the petitioner had appeared before the arbitrator and the application of the petitioner raising preliminary objections is pending adjudication which inter alia challenges the jurisdiction of the arbitrator to decide the dispute is of no consequence as from the order reproduced above it was pursuant to the directions passed by the learned Single Judge that the parties were directed to appear before the Arbitrator. The petitioner had no other option but to appear before the arbitrator and after appearing before the arbitrator the petitioner has not submitted to the jurisdiction of the arbitrator, rather has at first opportunity taken the objection that the arbitrator had no jurisdiction to proceed with the matter.

5. In this regard we are following the view which we have taken in Union of India v. R.R. Industries 9SP (C) No. 8204/2005 decided on 19.05.2005} where we have held that once a party does not supply the vacancy or fails to supply the vacancy before filing of a petition under Section 11(6) of the Arbitration and Conciliation act, loses the right to supply the vacancy in terms of the arbitration clause. What remains is only the arbitration clause, i.e. the dispute has to be resolved under the mechanism of alternative disputed redressal scheme but no right survives to the respondent to supply the named arbitrator in the arbitration clause."

6. Mr. D.S. Paweriya, Addl. Distt. & Sessions Judge (Retd.), Delhi is appointed as the Sole Arbitrator. The fee of the arbitrator shall be Rs. 80,000/-. 25% of the fee is to be paid at the commencement of arbitration, 25% at the commencement of evidence, 25% at the commencement of arguments and the balance before the publication of the award.

7. The fee of the arbitrator shall be shared equally by both the parties.

8. The petition stands disposed of.