Madras High Court

D. Ramachandran vs Ig3 Infra Limited on 18 August, 2023

ARB.O.P.(Com.Div) No.21 of 2023

IN THE HIGH COURT OF JUDICATURE AT MADRAS

DATED: 18.08.2023

CORAM:

THE HON'BLE MR. JUSTICE ABDUL QUDDHOSE

Arb.O.P.(Com.Div) No.21 of 2023

D. Ramachandran ... Petitioner

Vs.

IG3 Infra Limited
(Formerly known as ETL Infrastructure Services
Limited & also as Indian Green Grid Group Limited)
“Chennai One”
Pallavaram-Thoraipakkam 200 Feet Road,
Thoraipakkam, Chennai – 600 097. ... Respondent

Prayer : Arbitration Original Petition (Commercial Division) filed under
Section 14(2) r/w. Sections 15(1)(a) & 15(2) r/w. Section 11(5) r/w.
Section 29-A of the Arbitration and Conciliation Act, 1996, praying to
substitute/appoint a Sole Arbitrator in the place of the erstwhile Sole
Arbitrator, to continue and adjudicate the disputes that have arisen between
the parties in connection with the Agreement dated 03.04.2005.

For Petitioner : Mr.Palaniandavan

For Respondent : Mr.George Cheriyan

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ARB.O.P.(Com.Div) No.21 of 2023

ORDER

This petition has been filed under Sections 14 & 15 of the

Arbitration and Conciliation Act (hereinafter called as 'the Act'), seeking

for termination of the Arbitrator and for substitution of a new Arbitrator.

2. Admittedly, there is a dispute between the petitioner and the

respondent arising out of the Development Agreement dated 03.04.2005.

Since there is an arbitration clause available in the Development

Agreement dated 03.04.2005, this Court appointed a Sole Arbitrator, who

is a Former Judge of this Court, to adjudicate the dispute between the

parties arising out of the Development Agreement dated 03.04.2005. Due

to his ill health, the Sole Arbitrator appointed by this Court has withdrawn

himself from arbitration as seen from his e-mail dated 01.12.2022 and the

letter dated 02.12.2022. In such circumstances, this petition has been filed

under Sections 14 & 15 of the Act seeking to terminate the mandate of the

Sole Arbitrator and also sought for extension of time for the new Arbitrator

to be appointed by this Court, to pass the Arbitral Award in terms of

Section 29-A of the Act.

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3. A counter-affidavit has been filed by the respondent disputing the

maintainability of this petition. According to them, the question of

limitation, locus-standi, jurisdiction and arbitrability of the dispute can be

raised once again by the respondent in this petition also. It is further

contended by the respondent that since the petition has been filed also

under Section 11(5) of the Act, all the defences that were available to the

respondent earlier, are also available even now since the defences raised by

the respondent goes to the root of the matter.

4. It is not in dispute that the Sole Arbitrator appointed by this Court

has withdrawn himself from arbitration. It is also not in dispute that the

respondent participated in the arbitration before the Sole Arbitrator who

has withdrawn himself from the arbitration. Infact, as seen from the

documents, the respondent had challenged the jurisdiction of the Sole

Arbitrator by filing an application under Section 16 of the Act, which came

to be dismissed by the Sole Arbitrator on 26.03.2021. The same was also

challenged by the respondent by filing a Civil Revision Petition before this

Court in C.R.P.No.897 of 2021. A learned Single Judge of this Court had

also disposed of the said Civil Revision Petition on 28.07.2021, by

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ARB.O.P.(Com.Div) No.21 of 2023

directing the Sole Arbitrator to frame the limitation issue raised by the

respondent as a preliminary issue and render a finding thereon. Before the

Sole Arbitrator could frame the preliminary issue and give a finding

thereon, he has withdrawn himself from arbitration as seen from his e-mail

sent to both the parties in December, 2022. Since the Sole Arbitrator has

withdrawn himself from arbitration, the petitioner was constrained to file

this petition seeking for termination of the mandate of the existing

Arbitrator and for substitution of another new Arbitrator in his place.

5. The learned counsel appearing for the respondent relies upon the

following authorities in support of his contention that the issues that were

raised earlier, both before the Arbitrator as well as before this Court in the

earlier application filed by the petitioner under Section 11 of the Act, can

once again be raised.

(a) A decision of the Hon'ble Supreme Court in the case of 'Geo Miller

& Company Pvt. Ltd. Vs. Chairman, Rajasthan Vidyut Utpadan

Nigam Ltd.' reported in '(2020) 14 SCC 643';

(b) A decision of the Hon'ble Supreme Court in the case of 'Chief

General Manager (IPC), Madhya Pradesh Power Trading

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Company Ltd & another Vs. Narmada Equipments Pvt. Ltd.,'

reported in '(2021) 14 SCC 548';

Vs. SPML Infra Ltd.' reported in '2023 SCC OnLine SC 389';

(d) A decision of the Hon'ble Supreme Court in the case of 'M/s.B and

T AG Vs. Ministry of Defence' passed in Arbitration Petition (C)

No.13 of 2023.

6. In all the aforesaid decisions, Section 14 or Section 15 of the Act

was not the subject matter of consideration by the Hon'ble Supreme Court.

All the aforesaid decisions per se dealt with applications under Section 11

of the Act.

7. Sections 14 & 15 of the Arbitration and Conciliation Act, 1956,

reads as follows:-

"14. Failure or impossibility to act. – (1) The mandate of an arbitrator shall terminate and he shall be substituted by another arbitrator, if-

(a) He becomes de jure or de facto unable to perform his functions or for other reasons fails to act without undue

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ARB.O.P.(Com.Div) No.21 of 2023

delay; and

(b) He withdraws from his office or the parties agree to the termination of his mandate.

(2) If a controversy remains concerning any of the grounds referred to in clause (a) of sub-section (1), a party may, unless otherwise agreed by the parties, apply to the court to decide on the termination of the mandate.

(3) If, under this section or sub-section (3) of section 13, an arbitrator withdraws from his office or a party agrees to the termination of the mandate of an arbitrator, it shall not imply acceptance of the validity of any ground referred to in this section or sub-section (3) of section 12.

15. Termination of mandate and substitution of Arbitrator. -

(1) In addition to the circumstances referred to in section 13 or section 14, the mandate of an arbitrator shall terminate -

(a) Where he withdraws from office for any reason; or

(b) By or pursuant to agreement of the parties.

(2) Where the mandate of an arbitrator terminates, a substitute arbitrator shall be appointed according to the

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ARB.O.P.(Com.Div) No.21 of 2023

rules that were applicable to the appointment of the arbitrator being replaced.

(3) Unless otherwise agreed by the parties, where an arbitrator is replaced under subsection (2), any hearings previously held may be repeated at the discretion of the arbitral tribunal.

(4) Unless otherwise agreed by the parties, an order or ruling of the arbitral tribunal made prior to the replacement of an arbitrator under this section shall not be invalid solely because there has been a change in the composition of the arbitral tribunal."

8. The learned counsel for the respondent would submit that even for

substituting a new Arbitrator, the petitioner will have to file an application

under Section 11 of the Act.

9. The judgments relied upon by the learned counsel for the

respondent referred to supra, are on different set of facts. Further, they

were all dealing with applications under Section 11 of the Act, seeking for

appointment of an Arbitrator. But, in the instant case, the relief sought for

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ARB.O.P.(Com.Div) No.21 of 2023

by the petitioner is for substituting the existing Arbitrator who has

withdrawn himself from arbitration. In all the decisions referred to supra,

those were cases where "either there was no consensus for appointment of

an Arbitrator" or "there was no consensus between the Arbitrators for

appointment of a third Arbitrator". In the instant case, it is not so as the

petitioner only seeks for substitution of an Arbitrator who has withdrawn

himself from arbitration as per the provisions of Section 15 of the Act.

Having participated in the arbitration, the respondent cannot now contend

that an Arbitrator cannot be substituted on account of the fact that the

existing Arbitrator has withdrawn himself from arbitration.

10. The Arbitration and Conciliation Act is a self-contained Code.

As seen from the documents, the respondent has also challenged the

jurisdiction of the existing Arbitrator by filing an application under Section

16 of the Act, which has been dismissed by the Sole Arbitrator.

Challenging the same, he filed C.R.P.No.897 of 2021 before this Court. A

learned Single Judge of this Court has disposed of the said Civil Revision

Petition, by directing the Arbitrator to frame the issue of limitation as a

preliminary issue and give a finding thereon.

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11. While that be so, without waiting for the outcome of the

arbitration with regard to the preliminary issue, the question of opposing

this petition seeking for substitution of an Arbitrator, will not arise.

12. The interest of the respondent has been adequately protected by

the order of the learned Single Judge of this Court. The only provision of

law available for substitution of a new Arbitrator in place of the existing

Arbitrator who has withdrawn from arbitration, is under Sections 14 and

15 of the Act. Section 11 of the Act deals with a fresh appointment of an

Arbitrator and does not deal with a case of substitution. The present case

falls under Sections 14(b) and 15(a) of the Act.

13. There must be finality to any arbitration. The respondent having

participated in the arbitration cannot oppose this petition by raising the

very same ground which was raised earlier before this Court both in the

Section 11 application as well as in the Civil Revision Petition. However,

the substituted Arbitrator will have to consider the objection raised by the

respondent, including the issue of limitation while passing the final

Arbitral Award with regard to the subject matter of the dispute.

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14. For the foregoing reasons, this Court will have to necessarily

allow this petition filed under Sections 14, 15 & 29A of the Arbitration

and Conciliation Act. Accordingly, this Court appoints Hon'ble

Tmt.Justice Chitra Venkataraman (Retd.), Former Judge of this Court as a

Sole Arbitrator in place of the existing Arbitrator namely Hon'ble

Mr.Justice K.N. Basha, a retired Judge of this Court, to adjudicate the

dispute between the parties arising out of the Development Agreement

dated 03.04.2005. Accordingly, this Arbitration Original Petition is

allowed as prayed for, by issuing the following directions:-

(a) Hon'ble Tmt.Justice Chitra Venkataraman,

Retired Judge of this Court, having residence at Old

No.17-B, New No.31, IV Main Road, Raja

Annamalaipuram, Chennai – 600028, Mobile

No.:9840990000, is appointed as a substitute Arbitrator

in place of the earlier Arbitrator namely Hon'ble

Mr.Justice K.N. Basha, to adjudicate the dispute between

the petitioner and the respondent arising out of the

Development Agreement dated 03.04.2005.

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(b) The substituted Arbitrator shall either continue

with the arbitration at the stage it was left by the existing

Arbitrator or shall commence the arbitration afresh at her

discretion.

remuneration/fees as per the schedule agreed upon by the

parties to the dispute.

(d) Both the parties shall equally share the

Arbitrator's fees.

(e) Either of the parties shall make a request to the

erstwhile Arbitrator namely Hon'ble Mr.Justice K.N.