H.D.F.C Bank Ltd. vs Ramesh Kumar & Ors.
2011 Latest Caselaw 2185 Del

*             IN THE HIGH COURT OF DELHI AT NEW DELHI

+                         FAO 316/2010 & FAO 317/2010
%

                                                        25th April,2011

1.       FAO 316/2010

H.D.F.C Bank Ltd.                                      ...... Appellant
                          Through:    Mr. Hem Kumar, Advocate for Mr.
                                      J.K.Chaudhary, Advocate


                          VERSUS

Ramesh Kumar & Ors.                                      ...... Respondents
                          Through:     Mr. V.K.Jain, Advocate.

2.       FAO 317/2010

H.D.F.C Bank Ltd.                                      ...... Appellant
                          Through:    Mr. Hem Kumar, Advocate for Mr.
                                      J.K.Chaudhary, Advocate


                          VERSUS

Ramesh Kumar & Ors.                                      ...... Respondents
                          Through:     Mr. V.K.Jain, Advocate.



CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA

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

    2.   To be referred to the Reporter or not?

    3.   Whether the judgment should be reported in the Digest?




FAO 316&317/2010.                                                         Page 1 of 4
 VALMIKI J. MEHTA, J (ORAL)

1.      These appeals are being disposed of by this common judgment

because parties and issues are same and they arise from identical impugned

judgments of the trial court.


2.      By means of these appeals under Section 37 of the Arbitration and

Conciliation Act, 1996 (hereinafter referred to as the „said Act‟) challenge is

laid to the impugned order dated 5.5.2010 whereby the objections under

Section 34 of the Act, of respondent herein, petitioner in the trial court, were

allowed and the Award was set aside. The Award has been set aside on the

sole ground that the arbitration clause did not appoint an Arbitrator by name

and therefore it was necessary to issue a notice to the petitioner for

appointment of an arbitrator and thereafter approach the court for

appointment of an arbitrator under Section 11 of the Act and which was not

done.


3.      In order to appreciate the controversy, the language of the arbitration

clause would be relevant, and therefore, the same is reproduced as under:-


              "All disputes, differences and/or claim arising out of or
         touching upon this Agreement whether during its subsistence
         or thereafter shall be settled by arbitration in accordance with
         the provisions of the Arbitration and Conciliation Act, 1996, or
         any statutory amendments thereof and shall be referred to
         the sole Arbitration of an Arbitrator nominated by the Bank.
         The award given by such an Arbitrator shall be final and
         binding on the Borrower and Guarantor to this Agreement."



FAO 316&317/2010.                                                       Page 2 of 4
       The reference of the aforesaid Clause leaves no manner of doubt that

though there was no arbitration by a named Arbitrator, however, the

procedure for appointment of an arbitrator was clearly laid down by the

clause, and, which was that the arbitrator will be appointed by the petitioner.

The arbitrator was in fact appointed by the petitioner and who conducted the

arbitration proceedings.    Since there is a prescribed procedure as per

agreement, there does not arise any issue of issuing notice to the opposite

party for appointment of an arbitrator by the petitioner bank and thereafter

approaching the court for appointment of an arbitrator.


4.    The impugned order is thus clearly violative of the provision of Section

11 of the Act along with its sub-sections, more particularly sub-section (2),

which specifies that parties can have an agreed procedure for appointment

of an arbitrator.    In the present case, the agreed procedure is the

appointment of an arbitrator by the petitioner. Since the impugned order

does not otherwise deal with the objections on merits, I would therefore

remand the case back to the trial court for decision on merits with regard to

the objections which have been filed to the Award. The only finding which

has been given by this court is that it cannot be said that the arbitration

proceedings are liable to be set aside because arbitrator was not appointed

in accordance with the arbitration clause. Parties to appear before the trial

court on 24th May, 2011. Copy of this order be given dasti to counsel for the




FAO 316&317/2010.                                                     Page 3 of 4
 parties. The trial court is directed to dispose of the objections under Section

34 of the Act in accordance with law.




APRIL 25, 2011                                  VALMIKI J. MEHTA, J.

ib