Ms. Pooja Gambhir & Ors. vs Mr. Parveen Jain & Ors.
2009 Latest Caselaw 3885 Del

     *IN THE HIGH COURT OF DELHI AT NEW DELHI

+                Arb.P. No.191/2009

%                                Date of decision:22.09.2009

MS. POOJA GAMBHIR & ORS.                         ....Petitioners
                       Through: Mr. Harish Malhotra, Sr. Advocate with
                                Mr. Vipul Gupta & Mr. Naveen R.
                                Nath, Advocates for the Petitioner.


                               Versus

MR. PARVEEN JAIN & ORS.                         ... Respondents
                       Through: Mr. Ashish Aggarwal, Advocate for the
                                Respondents No.1,4,5 & 7.
                                Mr. Rajesh Rattan, Advocate for
                                Respondents No.3&6.


CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

1.    Whether reporters of Local papers may
      be allowed to see the judgment?                No

2.    To be referred to the reporter or not?         No

3.    Whether the judgment should be reported        No
      in the Digest?


RAJIV SAHAI ENDLAW, J.

1. The petition has been preferred under Section 11 of the

Arbitration Act, 1996. A petition under Section 9 of the Act qua the

same agreement being OMP No.74/2009 is also listed today. In that

OMP the counsel for the respondents No.3&6 herein has moved an

application for transfer of that OMP to the court of Justice S.N.

Dhingra before whom another petition under Section 9 of the Act

arising from the same agreement is stated to have been listed. The

counsel for the respondents No.3&6 at the outset sought transfer of

this petition also to the court of Justice S.N. Dhingra. The same has

been opposed by the senior counsel for the petitioner. I do not find

any ground for transfer of this petition as orally sought. The matter

of appointment of an arbitrator is different from the interim

measures. As such, the counsels have been heard.

2. The parties hereto were parties to an MOU dated 6th

September, 2008. The same was between the petitioner on the one

hand and the respondents on the other hand. Clause 17 thereof

provided for arbitration as under:-

"17. ARBITRATION: That in case of any dispute, the matter will be referred to arbitration and provisions of Indian Arbitration Act will be applicable. It has been mutually decided to appoint (1) Mr. R.K. Tuli CA (2) Mr. Rattan Ji (3) Rishi Ji (4) Mangilal Bishnoi CA, to act as arbitrators and decision of the arbitrators will be final and binding on the parties. However in case of any dispute amongst the arbitrators on any of the clauses of this MOU, the matter will be referred to court of law and same will fall under the jurisdiction of Delhi Court."

3. It is the admitted position that of the four named arbitrators

Mr. R.K. Tuli, Chartered Accountant and Mr. Rishi Ji have refused to

act as arbitrator. Mr. Rattan Ji and Mr. Mangilal Bishnoi, Chartered

Accountant, have agreed to act as arbitrators.

4. The counsel for the respondents No.3&6 has contended that

the Arbitrator Tribunal be constituted of the said two arbitrators

with a retired judge of this court being appointed as the presiding

arbitrator. The counsel for the respondents No.1,4,5&7 has

contended that an Arbitral Tribunal of three independent arbitrators,

one of them being Chartered Accountant, be constituted since the

matter requires disputes as to accounting. The senior counsel for the

petitioner has contended that Mr. Mangilal Bishnoi is the Chartered

Accountant of the respondents No.3&6. The counsel for the

respondents No.3&6 states that he has no instructions in this regard.

5. The respondent No.2 had been served and has failed to appear.

Though there is no order in this petition for proceeding ex-parte

against him, the counsel for the respondents No.3&6 states that the

respondent No.2 has retired from the Board of Directors of the

company in dispute and is no longer interested in the present

disputes.

6. Attention of the counsels for the appearing respondents was

drawn to Section 10 of the Act. This court in (i) Marine Container

Services (South) Pvt. Ltd. Vs. Atma Steels,

MANU/DE/1317/2000, (ii) Dr. Deepashree Vs. Sultan Chand &

Sons AIR 2009 DEL 85, (iii) Rapti Contractors Vs. Reliance

Energy Ltd., MANU/DE/0144/2009 and the Andhra Pradesh High

Court also in (i) Ashok Engineering Co. Vs. General Manager,

South Central Railway, Secunderabad MANU/AP/0172/2001 and

(ii) North East Securities Ltd. Vs. Sri Nageswara Chemicals

and Drugs Pvt. Ltd., MANU/AP/0635/2000 has held that an

agreement for appointment of an even number of arbitrators is not

an agreement within the meaning of Section 10 (1) of the Act and

hence will constitute an agreement for appointment of a sole

arbitrator. The counsel for the respondents No.1,4,5&7 has drawn

attention to Narayan Prasad Lohia Vs. Nikunj Kumar Lohia AIR

2003 SC 1065 in para 17 whereof it has been held that Section 10 is

a derogable provision and can be waived. Though that was a case of

an even number of arbitrators, however, challenge to the award on

that ground under Section 34 of the Act was for consideration.

It was in that context that the aforesaid observation came to be

made. However, in the present case since the senior counsel for the

petitioner has opposed the claim of the respondents No.3&6 for the

Arbitral Tribunal to comprise of the two arbitrators who have agreed

to act and of claim of other respondents of an arbitral tribunal of

three arbitrators, the question of waiver does not arise at all.

7. The counsel for the respondents No.1,4,5&7 has also referred

to Northern Railway Administration, Ministry of Railway, New

Delhi Vs. Patel Engineering Company Ltd. 2008(4) RAJ 113 (SC).

However, that was a case concerning the qualifications of an

arbitrator within the meaning of Section 11 (8) of the Act. The

agreement in the present case does not prescribe any qualifications.

Merely because two of the arbitrators are Chartered Accountants

does not mean that the parties had agreed to such a qualification of

the members of the Arbitral Tribunal. The other two arbitrators

agreed upon by the parties are admittedly not Chartered

Accountants. The senior counsel for the petitioner has also

contended that merely because determination of a dispute entails

determination of accounts is no ground for a retired judge of this

court being not appointed as the sole arbitrator.

8. In my view, the contention of the counsel for the respondents

No.3 & 6 of including two out of the four arbitrators in the Arbitral

Tribunal cannot be accepted also for the reason that when the

parties have agreed upon four arbitrators, two of whom have refused

to act, the parties cannot be permitted to insist upon the other two to

continue in the Tribunal in as much as the agreement was for those

persons together to act as the Tribunal and not to some of them only

being in the Arbitral Tribunal. Though, it is not so recorded in the

agreement, ordinarily when the agreement is of appointment of

Arbitral Tribunal in such manner, the different members of the

Arbitral Tribunal are nominated by the different parties to the

agreement and in case of some of them refusing to act, allowing

others to act would amount to giving unfair advantage to the parties

whose nominees agree to act as the arbitrator.

9. I also do not find that the parties had in the present case

agreed to any qualifications of the arbitrator. Constituting a Tribunal

of three arbitrators with one of them being a Chartered Accountant

as suggested would not only be too expensive but also may delay the

arbitration proceedings. More so, when the provisions of Section 10

are clear and the agreement is found to be of a sole arbitrator only.

10. Justice R.C. Chopra (Retd.) is appointed as sole arbitrator to

adjudicate the disputes arising out of the arbitration clause in the

MOU dated 6th September, 2008 (Supra). His fee is to be shared

equally by the petitioner constituting one group and the respondents

constituting the other group, subject to award as to costs. The

Arbitral Tribunal to fix its remuneration in consultation with the

counsels for the parties. All counsels agree that they will cooperate

in the arbitration and will assist the Arbitral Tribunal in concluding

the arbitration within six months from the date of first appearance

before the Arbitral Tribunal. The parties to appear before the

Arbitral Tribunal with prior appointment on 10th October, 2009.

Dasti under the signatures of Court Master to counsel for

parties.

RAJIV SAHAI ENDLAW (JUDGE)

September 22nd, 2009 PP