Delhi High Court
Stresscon Industries Ltd. vs Ircon International Ltd. on 5 December, 2007
Equivalent citations: 2008 (1) ARBLR 47 Delhi
Author: A Kumar
Bench: A Kumar
JUDGMENT
Anil Kumar, J.
1. This is an application by the petitioner for substitution of an independent arbitrator in place of Mr. Justice O.P. Dwivedi (Retd) who was appointed as an arbitrator by an order dated 12th May, 2006.
2. The petitioner had filed an arbitration petition No. 34/2005 under Section 11 of the Arbitration & Conciliation Act, 1996 where this Court relying on Rite Approach Group Ltd. v. Rosoboronexport had appointed Mr. Justice O.P. Dwivedi (Retd) Judge as an arbitrator.
3. Against the appointment of Mr. Justice O.P. Dwivedi (Retd) as an arbitrator, the respondent had preferred a Special Leave Petition being SLP No. 11907/2006 before the Supreme Court which was dismissed by order dated 31st July, 2006.
4. The learned arbitrator, Mr. Justice O.P. Dwivedi (Retd) even after dismissal of the special leave petition did not start the arbitration proceedings and consequently a formal request was made by letter dated 20th March, 2007 and thereafter a reminder dated 23rd May, 2007 was sent.
5. Since Mr. Justice O.P. Dwivedi (Retd) was appointed as a Chairman of MRTP Commission, therefore, by his letter dated 27th July, 2007 he expressed his inability to act as an arbitrator due to his present assignment.
6. In the circumstances it is contended on behalf of petitioner that a vacancy has occurred as contemplated under Section 15(a) of the Act. The relevant Section 15 of the Arbitration & Conciliation Act, 1996 is as under:
15. Termination of mandate and substitution of arbitrator: 1) In addition to the circumstances referred to in Section 13 or Section 14, the mandate of an arbitrator shall terminate-
a) where he withdraws from office for any reason; or
b) by or pursuant to agreement of the parties.
2) Where the mandate of an arbitrator terminates, a substitute arbitrator shall be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced.
3) Unless otherwise agreed by the parties, where an arbitrator is replaced under Sub-section (2), any hearings previously held may be repeated at the discretion of the arbitral tribunal.
4) Unless otherwise agreed by the parties, an order or ruling of the arbitral tribunal made prior to the replacement of an arbitrator under this section shall not be invalid solely because there has been a change in the composition of the arbitral tribunal.
7. Since a vacancy has arisen as the learned arbitrator appointed by this Court has declined to act as an arbitrator on account of his appointment as a Chairman of MRTP Commission, the petitioner has become entitled for a substituted arbitrator in place of the arbitrator Mr. Justice O.P. Dwivedi (Retd) appointed by order dated 12th May, 2006.
8. The petitioner has filed this application under Section 151 of the Code of Civil Procedure but after some arguments the learned Counsel for the petitioner states that the application be treated as a petition under Section 15(2) of the Arbitration & Conciliation Act. The counsel for the respondent has no objection, in case the application is treated as a petition under Section 15(2) of the Arbitration and Conciliation Act, 1996.
9. The learned Counsel for the petitioner has also relied on 2004(3) Arb.L.R.483, Jagdish Prasad Agarwal v. Cimmco Birla Ltd.; Indian Compressors Ltd. v. Govt. of NCT of Delhi and Ors. decided on 20th September, 2007 in W.P(C) No. 5546/2004 and 2004(1) R.A.J 464 (Cal.) Magma Leasing Ltd. v. Tonganagaon Tea Co. Pvt. Ltd. to contend that this application which has been filed under Section 151 of the Code of Civil Procedure can be treated as an application under Section 15(2) of the Arbitration & Conciliation Act, 1996 and a substituted arbitrator can be appointed.
10. In Jagdish Prasad Agarwal (Supra) a learned Single Judge has proceeded on the premise that under Section 11 of the Arbitration and Conciliation Act, 1996 the Court discharges its administrative function and on the premise that even a notice to the opposite party may not be necessary. In this matter it was held that the Court is not bound in any manner whatsoever to exercise powers only under the section invoked by an applicant. Instead it must fulfilll the functions expected of the Court by statute. It was further held that where a vacancy has arisen which requires to be filled up under Section 11 of the Act, a reference to Section 15 is irrelevant and on this view of the matter, a substituted arbitrator was appointed. It will be worth noting that the Supreme Court in the matter of S.B.P. Company v. Patel Engineering Limited and Anr. had held that the power exercised by the Chief Justice of the High Court of the Chief Justice of India under Section 11(6) of the Act is not an administrative power but it is a judicial power and the Court has the right to decide the preliminary aspect which will be his own jurisdiction to entertain the request, the existence of a valid arbitration agreement, the existence or otherwise of a live claim and the existence of the condition for the exercise of his power and also the qualification of the arbitrator or arbitrators. In M/s Indian Compressors Ltd. (Supra) an application was filed under Section 15(a) of the Arbitration & Conciliation Act, 1996 for appointment of a substituted arbitrator as Hon'ble Mr. Justice O.P. Dwivedi (Retd) had declined to act as an arbitrator on his being appointed as a Chairman of MRTP Commission and, therefore, by order dated 20th September, 2007 a substituted arbitrator was appointed in place of the said arbitrator.
11. In Magma Leasing Ltd. (Supra) a Single Judge of the Calcutta High Court while dealing with an application under Section 11 of the Act had appointed a substituted arbitrator under Section 15(2) of the Arbitration & Conciliation Act as the named arbitrator had refused to act.
12. The application by the petitioner to appoint a substituted arbitrator under Section 15(2) of the Arbitration & Conciliation Act has not been contested by the respondent as no reply has been filed and even the counsel for the respondent has not contested the petition appointing a substituted arbitrator on refusal of Mr. Justice O.P. Dwivedi (Retd) to act as an arbitrator.
13. Considering the facts and circumstances, I appoint Shri S.M. Chopra, Advocate, (Additional District Judge, Retd.),181, Deshbandhu Apartment, Kalkaji, New Delhi-110019 (Mob: 9213230349, Res.: 26484158) as an Arbitrator (substituted Arbitrator). The fees of the arbitrator shall be Rs. 10,000/- per hearing subject to a maximum fees of Rs. 3 lakhs. The fees shall be borne and paid equally by the parties. Parties shall appear before the Arbitrator on 18th December, 2007 at 4.30 PM. Registry to send a copy of this order to the Arbitrator forthwith. Parties are also directed to intimate the Arbitrator about the order. Copies of this order be also given to the parties dusty.
