Shri Ravinder Singh Chauhan vs Shri Prashant Mamgain & Anr.
2009 Latest Caselaw 3591 Del

     *            IN THE HIGH COURT OF DELHI AT NEW DELHI

                             Date of Reserve: September 01, 2009
                             Date of Order: September 07, 2009
+ AA No.270/2008
%                                                     07.09.2009
     SHRI RAVINDER SINGH CHAUHAN                      .... Petitioner
              Through : Mr. K.K.Jha, Adv.

         Versus

         SHRI PRASHANT MAMGAIN & ANR.          .... Respondents
                  Through: Mr. Varun Agarwal, Adv.


         JUSTICE SHIV NARAYAN DHINGRA


1.       Whether reporters of local papers may be allowed to see the
         judgment?

2.       To be referred to the reporter or not?

3.       Whether judgment should be reported in Digest?

         JUDGMENT

1. This petition has been filed under Section 8 of the

Arbitration and Conciliation Act. Section 8 has been wrongly

mentioned while the petition is under Section 14 of the Arbitration and

Conciliation Act wherein the petitioner has made a prayer that the

Court should appoint an independent Arbitrator to resolve the dispute

between the parties and the arbitration proceedings initiated by Mr.

M.L. Aggarwal be stayed since Mr. M.L.Aggarwal had no mandate to

arbitrate between the parties.

2. Brief facts relevant for purpose of deciding this petition are

that agreement dated 15th March, 2009 between the parties provided

for appointment of Arbitrator in following terms:-

"And whereas if any time any dispute may arise between the parties, then they shall appoint a mutually decided person, whose decision shall be binding on both the parties or Shri ________________(left blank)_________ shall act as a arbitrator, whose decision will be binding on both the parties in every circumstances."

3. The petitioner herein vide a notice dated 17th June, 2006

invoked arbitration clause and called upon the respondent to appoint

an independent Arbitrator in terms of the agreement for resolution of

the dispute. The respondent vide letter dated 8th May, 2008 informed

the petitioner that he has appointed Mr. M.L.Aggarwal, a retired Judge

of UP Higher Judicial Services as the Arbitrator for hearing and

adjudicating the dispute. Thereafter, Mr. M.L. Aggarwal, initiated

proceedings and the petitioner sought an adjournment from the

Arbitrator and later on counsel for the petitioner vide notice informed

the Arbitrator that the appointment of the Arbitrator was not in terms

of the agreement. The Arbitrator was to be appointed with the consent

of both the parties and since he was not appointed with consent of the

petitioner therefore the petitioner would be approaching the

appropriate forum for appointment of an independent Arbitrator and

told the Arbitrator to adjourn the proceedings. The present petition has

been filed by the petitioner, though under Section 8, with a request

that Court should appoint an independent Arbitrator since the

Arbitrator, Mr. M.L.Aggarwal does not have mandate to proceed with

the arbitration proceedings.

4. The respondent pleaded that the Arbitrator was appointed

in response to the petitioner's letter to the respondent for appointment

of Arbitrator, the petitioner cannot take a plea that consent of the

petitioner was not obtained since the petitioner himself wrote to the

respondent for appointment of an independent Arbitrator.

5. An Arbitrator has to be appointed in accordance with the

terms of the agreement. The agreement provided that an Arbitrator

has to be a person mutually decided by both the parties. In the

present case, the respondent did not obtain consent of the petitioner

for appointing Mr. M.L.Aggarwal and did not ask if the name of Mr.

M.L.Aggarwal was agreeable to him or not and appointed Mr.

M.L.Agarwal as the Arbitrator. Section 11(5) provides that where an

agreement is there between the parties for appointing the Arbitrator,

the parties have to abide by the agreement and in case there was no

agreement between the parties regarding appointment of the sole

Arbitrator by mutual agreement and parties fail to agree on the

Arbitrator within 30 days from receipt of a request by one party from

the other party, the appointment shall be made on the request of a

party, by the Chief Justice or any person or institution designated by

him.

6. Thus, section 11(5) provides the remedy where notice is

given by one party to appoint an Arbitrator in terms of the arbitration

agreement (by mutual consent) but the other party does not act on

this notice. The remedy is to approach the Court for appointment of

Arbitrator. The respondent in this case was obliged to obtain the

consent of the petitioner on the name of Mr. M.L. Aggarwal and in case

the petitioner gave his consent then only Mr. M.L.Aggarwal could have

acted as an Arbitrator. Merely because Mr. M.L. Aggarwal, on being

appointed by the respondent, started arbitration proceedings and the

petitioner appeared before him and sought an adjournment would not

mean that the petitioner gave consent to the name of

Mr.M.L.Aggarwal. The petitioner in this case practically did not

participate in the arbitration proceedings and on the first hearing itself

he sought an adjournment though on the ground of illness but the next

step taken by the petitioner was to send a notice to the Arbitrator and

to the respondent that he was not agreeable to the name of the

Arbitrator. Under these circumstances, I consider that the Arbitrator

appointed by the respondent, without consent of the petitioner, had no

authority to proceed with the arbitration proceedings and de jure was

not an Arbitrator in accordance with the terms of the agreement

between the parties. I therefore allow this application and the

mandate of Mr. M.L. Aggarwal, Arbitrator is terminated. Since a

request has also been made for appointment of an Arbitrator in terms

of Section 11(5), I appoint Sh.D.S.Pawaria, retired Additional District

Judge (Mobile No. 9810433390) as the Arbitrator between the parties

to adjudicate the dispute.

The parties shall appear before Sh.D.S.Pawaria within 30

days of this order and file their respective claims and counter claims.

The Arbitrator shall fix his own reasonable fee.

September 07, 2009                  SHIV NARAYAN DHINGRA J.
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