Delkon (India) Pvt. Ltd. vs The General Manager, Bharat Heavy ...
2005 Latest Caselaw 862 Del

JUDGMENT

Vijender Jain, J.

1. This writ petition under Article 226 of the Constitution of India, inter alia, impugns the order passed by the learned Single Judge on May 7, 1999. Briefly the facts are that the petitioner had issued notice invoking the Arbitration Clause for appointment of Arbitrator on 23rd September, 1997. Arbitrator was not appointed by the respondent. The petitioner was constrained to file a petition under Section 11(6) of the Arbitration & Conciliation Act, 1996 in September, 1998. It seems that after filing of the petition in the High Court under Section 11(6) for appointment of an Arbitrator the respondent appointed the arbitrator on 3rd May, 1999. When the arbitrator was appointed by the respondent, the petitioner filed A.A. No.371/98. The learned Single Judge dismissed the petition in the following words :-

"This petition is for the appointment of arbitrator. Learned counsel for the respondent has placed on record a copy of fax letter dated 3.5.99 by which an arbitrator has been appointed. In this view of the matter, this petition has become infructuous and is dismissed accordingly.

Parties are directed to appear before the Arbitrator on 21st May, the date already fixed."

2. Learned counsel for the respondent has vehemently contended that after the appointment of the Arbitrator by the respondent, counsel for the petitioner appeared before the Arbitrator and invoked Section 16 of the Arbitration & Conciliation Act, 1996, to challenge the jurisdiction of the Arbitrator and that application is still pending and has not been decided by the Arbitrator. Therefore, on the basis of submission of learned counsel for the respondent, once the petitioner had submitted to the jurisdiction of the arbitrator, the writ petition impugning the order passed on 7.5.1999 is not maintainable.

3. Another limb of the arguments is that the petitioner filed an FAO against the order dated 7.5.1999 and that FAO being not maintainable was dismissed. Learned counsel for the respondent has relied upon State of Orissa and Ors. v. Gokulananda Jena (2003) 6 SCC 465 and Konkan Railway Corpn. Ltd. v. Mehul Construction Company (2000) 7 SCC 201.

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. 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 thirty days of the receipt of the notice. However, once 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 & Conciliation Act, the right to supply vacancy by the opposite party is extinguished. If that right stood extinguished on filing of the petition under Section 11(6) of the Arbitration & 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 [WP (C) No.8204/2005 decided on 19.5.2005] 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 & 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 dispute redressal scheme but no right survives to the respondent to supply the named arbitrator in the arbitration clause.

6. There is no merit in the submission of the learned counsel for the respondent. For the reasons stated above, the petition is allowed. Appointment of the arbitrator appointed by the respondent is quashed. We appoint Justice J.K. Mehra, retired Judge of this Court as arbitrator to adjudicate upon the disputes between the parties. Parties are directed to appear before the arbitrator on 12th July, 2005. Arbitrator will fix his own fees.