Shant Chadha vs Kesho Ram Industries Ltd
2014 Latest Caselaw 6728 Del

Citation : 2014 Latest Caselaw 6728 Del
Judgement Date : 12 December, 2014

Delhi High Court

Shant Chadha vs Kesho Ram Industries Ltd on 12 December, 2014

$~24
*      IN THE HIGH COURT OF DELHI AT NEW DELHI
+      ARB.P. 626/2014
%                                     Date of decision : 12.12.2014
       SHANT CHADHA                                      ..... Petitioner
                          Through:    Mr.Nikhil Jain, Advocate

                          versus

       KESHO RAM INDUSTRIES LTD                          ..... Respondent
                    Through

       CORAM:
       HON'BLE MS. JUSTICE DEEPA SHARMA

       JUDGMENT (ORAL)

1. This petition under Section 11 of the Arbitration and

Conciliation Act (hereinafter referred to as 'the Act") has been filed

for appointment of an arbitrator. It is submitted that an agreement

dated 01.02.2009 was entered into between the parties. In the said

agreement the petitioner was appointed as a Canvassing Agent upon

certain terms and conditions and the period of appointment was of 12

months with effect from 01.02.2009. During the existence of this

agreement certain disputes had arisen between the parties. As per

clause 16 of the agreement, parties had agreed to the appointment of

Sole arbitrator Sh.N.G.Khaitan. A letter dated 01.06.2013 was

written to the respondent wherein the respondent was informed that

the petitioner doubts the integrity of named arbitrator Mr.N.G.Kaitan

who is an advocate and handling the legal matters of the respondent.

2. A reply dated 26.07.2013 had been received from the

respondent. In the reply the respondent has stated that

Sh.N.G.Khaitan, Advocate had been accepted by both the parties at

the time of entering into the contract and therefore he cannot be

changed.

3. The present petition has been filed by the petitioner with the

prayer to appoint a sole arbitrator and to refer the dispute to him on

the ground that Mr.N.G.Khaitan, Advocate is working with M/s

S.Andersons & Morgans, Advocates and Solicitors, a legal firm

which is handling all the matters of the respondent company and the

petitioner apprehends that he would not be able to adjudicate the

dispute between the parties fairly and shall be biased towards the

respondent.

4. I have heard arguments and perused the record.

5. The present petition has been filed under Section 11 of the Act.

Section 11 of the Act empowers the court to appoint an arbitrator

where the arbitration clause is invoked and the opposite party fails to

appoint an arbitrator in terms of arbitral agreement.

6. In the present case, the parties by mutual agreement had agreed

to the name of arbitrator. Where, thus, the arbitrator has already been

named in the agreement, the courts have no jurisdiction to appoint an

arbitrator under Section 11 of the Act, because there is no failure of

appointment of an arbitrator.

7. The petitioner has come up with the request to change the

named arbitrator as he doubts his integrity. Now the question is if this

court under Section 11 of the Act has jurisdiction to change the

named arbitrator and appoint another one, on the ground that one of

the party has no faith in named arbitrator? The answer is no.

8. Sections 12, 13, 14 & 15 of the Act deal with such situation.

Section 12 of the Act clearly requires that an arbitrator who has been

appointed is required in writing to disclose to the parties any

circumstances likely to give rise to the justifiable doubts as to his

independence or impartiality. Clause (3) of Section 12 of the Act is

reproduced as under:

Section 12 (3) An arbitrator may be challenged only

if--

(a) circumstances exist that give rise to justifiable doubts as to his independence or impartiality, or

(b) he does not possess the qualifications agreed to by the parties.

9. Plain reading shows that it is this clause which deals with the

situation where one party doubts the integrity of arbitrator. Clause (3)

of Section 12 provides the procedure to such challenge and also the

remedies available, in case arbitrator refuses to recuse. Section 13 of

the Act reproduces as under:

13. Challenge procedure.--

(1) Subject to sub-section (4), the parties are free to agree on a procedure for challenging an arbitrator.

(2) Failing any agreement referred to in sub-section (1), a party who intends to challenge an arbitrator shall, within fifteen days after becoming aware of the constitution of the arbitral tribunal or after becoming aware of any circumstances referred to in sub-section (3) of section 12, send a written statement of the reasons for the challenge to the arbitral tribunal.

(3) Unless the arbitrator challenged under sub-section (2) withdraws from his office or the other party agrees to the challenge, the arbitral tribunal shall decide on the challenge.

(4) If a challenge under any procedure agreed upon by the parties or under the procedure under sub-section (2)

is not successful, the arbitral tribunal shall continue the arbitral proceedings and make an arbitral award.

(5) Where an arbitral award is made under sub-section (4), the party challenging the arbitrator may make an application for setting aside such an arbitral award in accordance with section 34.

10. Thus, where one of the party challenges the appointment of an

arbitrator, he can do so before the arbitrator only and the arbitrator if

decides the challenge against him and continue with the arbitral

proceedings and make an arbitral award, such an award is

challengeable under Section 34 of the Act.

11. Section 14 deals with the circumstances under which the

mandate of an arbitrator can be terminated by the court. It can be

terminated only when the arbitrator has become de jure or de facto

unable to perform his functions or for other reasons fails to act

without undue delay and he withdraws from his office or the parties

agree to the termination of his mandate.

12. The petitioner has not approached this court under Section 14