Puneet Kumar Jain vs Mstc Limited & Ors
2014 Latest Caselaw 2310 Del

$~11.
*       IN THE HIGH COURT OF DELHI AT NEW DELHI

+                        Date of Decision: 07.05.2014

%       ARB.P. 160/2014 and I.A. No.6133/2014

        PUNEET KUMAR JAIN
                                                               ..... Petitioner
                           Through:     Mr. S.D. Singh, Rahul Singh, Jitender
                                        Singh and Kamla Prasad, Advocates
                           versus

        MSTC LIMITED & ORS
                                                           ..... Respondents
                           Through:     Ms. Heena Mongia for R-1&2
                                        Mr. Rohan Sharma and Aakarshan
                                        Sahay for R-3


        CORAM:
        HON'BLE MR. JUSTICE VIPIN SANGHI


VIPIN SANGHI, J. (ORAL)

1. The present appeal has been preferred under section 37 of the Arbitration & Conciliation Act, 1996 to assail the order dated 04.03.2014 passed by the learned arbitrator, whereby the appellants application under section 17 of the Act to seek interim measures has been dismissed by holding that the same is not maintainable.

2. The appellant had participated in an e-auction for purchase of an asset, viz. Syn Gas Compressor complete unit along with auxiliaries and spares

pertaining to mechanical, instrument and electrical of Ammonia-V plant of RC Trombay Unit (the asset).

3. The disputes between the parties essentially pertain to the currency in which the bid was made by the petitioner. According to the appellant, the appellant had made the bid in Indian rupees, and the respondent had also issued communications dated 09.11.2012, 11.11.2012 and 12.11.2012 requiring the petitioner to deposit the amount of Rs.13,63,514/-.

4. On the other hand, the submission of the respondent was that the tender itself had stated that the same was a global e-auction and that the bids shall be in US dollars. The floor price was stipulated as US dollar equivalent to Rs.1,60,99,889/- considering the exchange rate published by SBI (TT buying rate) on the date of e-auction. According to the respondent, the aforesaid communication relied upon by the petitioner were automated computer generated communications, and did not reflect the correct position.

5. The petitioner had initially preferred a petition under section 9 of the Act to seek interim measures being O.M.P. No.1147/2012. In this petition, the appellant had, inter alia, sought the relief that the subject matter of the dispute, namely, the asset be not dealt with by the respondent by creating any third party interest.

6. This court vide order dated 02.07.2013 disposed of the aforesaid O.M.P. No.1147/2012. The court took note of the fact that the arbitrator had been appointed in terms of the arbitration clause to resolve the disputes between the parties. Accordingly, the court directed that the petition under section 9 of the Act be treated as an application under section 17 of the Act.

It was further directed that pending the adjudication of the application, the subject matter, i.e. the asset referred to in clause (a) of the prayer clause, be not disposed of or dealt with.

7. In this background, the learned arbitrator proceeded to deal with the appellants application. A perusal of the impugned order shows that the learned arbitrator has proceeded to pass the impugned order, firstly, on the premise that the respondents are government corporations and the onus to arrive at an amicable settlement of the dispute between the parties was mainly on the appellant/claimant, and that the claimant had lost the opportunity for reasons best known to them. The arbitrator also observed that the compressor which was auctioned has to be removed to empty the place, as otherwise it may jeopardise the future plans of expansion. The submission of respondent No.2 that they were incurring perennial expenses towards maintenance of the asset in question, in keeping it operational for no fault of theirs, was also noticed. The arbitral tribunal then proceeded to observe that the application under section 17 "is not maintainable and is accordingly dismissed".

8. Having perused the impugned award and heard learned counsels, I am of the view that the impugned order is patently illegal and is liable to be set aside. The consideration that the appellant had failed to arrive at an amicable settlement - on the ground that the onus was on the appellant to arrive at such a settlement, is a wholly extraneous consideration, to decide the interim application by the arbitral tribunal. The arbitral tribunal has not at all considered the submissions of both the parties on merits to, prima facie, evaluate the respective cases of the parties. The only other aspect

taken into consideration is that respondent No.2 is suffering on account of the asset not being removed from its location and that the said respondent is incurring expenses towards maintenance of the asset.

9. In any event, there was no question of holding that the interim application under section 17 was not maintainable. It is one thing to say that the application merits dismissal on a consideration of the prima facie cases of the parties, and it is another thing to say that the application is not maintainable.

10. Accordingly, the appeal is allowed and the order dated 04.03.2014 passed by the arbitral tribunal is set aside. The order dated 02.07.2013 passed in O.M.P. No. 1147/2012 stands restored. The arbitral tribunal shall now reconsider the application under section 17 on its own merits and pass a reasoned and considered order. While doing so, the arbitral tribunal shall not be influenced by the order dated 02.07.2013 or by this order, as this court has not expressed any view, prima facie, or otherwise, on the merits of the disputes between the parties.

11. I am pained to observe that the appointing authority of the arbitral tribunal, namely, the CMD of the MSTC Ltd. of Kolkata does not appear to have taken care to appoint an arbitrator who has any understanding of law and procedure. The power to appoint an arbitrator is, in fact, a serious and important responsibility placed on the appointing authority. When the parties invest the appointing authority to nominate the arbitrator, they repose trust and faith in the appointing authority to appoint/ nominate an independent and competent arbitrator. When an arbitrator is appointed by the appointing authority, he discharges the trust reposed in him, by

appointing an arbitrator. The power to appoint an arbitrator cannot be turned into an opportunity by the nominating authority to appoint an arbitrator, for any other extraneous considerations.

12. A copy of this order be communicated to the appointing authority, namely, the CMD of the respondent at Kolkata. It is hoped that he shall take corrective steps to ensure that the arbitration is a genuine and serious endeavour to resolve the disputes between the parties in a fair, transparent and judicious manner, and that arbitration is not reduced to a farce on account of lack of competence or independence of the arbitral tribunal.

13. Petition stands disposed of.

VIPIN SANGHI, J.

MAY 07, 2014 sr