Jharkhand High Court: While allowing the application under Section 11(6), Arbitration and Conciliation Act, 1996 (Arbitration Act) for appointment of substitute arbitrator, a single judge bench of Sujit Narayan Prasad, J. held that since first arbitrator was appointed under Section 11(6) of the Arbitration Act after the applicant had exhausted all available remedies, the remedy for the appointment of a substitute arbitrator would lie under section 11(6) of the Arbitration Act.
Background
In the case at hand, the arbitration clause in the agreement executed between the applicant and the respondent stated that any dispute arising out of or in relation to the agreement should be referred to the sole arbitration of an arbitrator mutually acceptable to the parties. The dispute arose between the parties, and request for appointment of arbitrator made by the applicant as required by arbitration clause was not acted on by the respondent.
Therefore, the applicant filed an application under Section 11(6) of the Arbitration Act for appointment of arbitrator. The Arbitrator was appointed by the High Court to resolve the dispute between the parties. The arbitration proceeding commenced and was continued but due to death of the Arbitrator, an occasion arose for appointment of a substitute Arbitrator for adjudicating the dispute between the parties.
Submission of Applicant
Counsel for the applicant submitted that since the arbitrator was appointed by High Court under Section 11(6) of the Arbitration Act and the mandate of arbitrator was terminated due to death of sole Arbitrator, there is no requirement to again follow the rules, as provided in the Arbitration Clause, rather, the application is straightaway to be filed before High Court invoking the jurisdiction conferred under Section 11(6) of the Arbitration Act.
Submission of Respondent
Counsel for the respondent submitted that as per Section 15(2) of the Arbitration Act, appointment of a substitute arbitrator shall be made according to the rules that were applicable to the appointment of arbitrator being replaced. The conditions, stipulated in the arbitration clause makes it mandatory that first a request is to be made by the applicant for appointment of arbitrator before the respondent and only in case of failure on the part of the respondent, second application under Section 11(6) of the Arbitration Act is maintainable. But the applicant has not made any request for appointment of substitute arbitrator, rather, straightaway filed instant application under Section 11(6) of the Arbitration Act, therefore, it is not maintainable.
Analysis, Law, and Decision
The Court, placed reliance on Ignatius Tony Pereira v. Pifran Sanjivan Fernandes, 2016 SCC OnLine Bom 5470 and Ramjee Power Construction Ltd. v. Damodar Valley Corporation, 2009 SCC OnLine Cal 321 and held that the rules required to be followed for appointment of arbitrator under section 15(2) of the Arbitration Act have already been followed at the initial stage, and there is no other reason to ask the party to request the respondent again under Section 21 of the Arbitration Act for appointment of an arbitrator.
Explaining the scope of Section 21 of the Arbitration Act, the Court said that mandate of Section 21 of the Arbitration Act warrants that the arbitral proceeding will said to have been commenced, if the request for appointment of arbitrator is made for resolution of the dispute. The law is well settled that once the request which has been made under Section 21 for appointment of sole arbitrator, is not being acted upon within the statutory period and the application under section 11(6) of the Arbitration Act is filed after that, the party would be seized to have exercised the jurisdiction to appoint arbitrator.
The court further noted that in the present case it is admitted fact that the applicant at the initial stage filed an application making request for appointment of arbitrator in view of the arbitration clause and provision of Section 21 of the Arbitration Act. On failure on the part of the respondent, the arbitrator was not appointed within the stipulated period, hence, an application under Section 11(6) of the Arbitration Act was filed by the applicant. After which, the arbitral proceeding terminated due to demise of learned sole arbitrator. At this stage if again, the applicant will be relegated before the respondent for making a fresh request for appointment of arbitrator, the same will not be permissible, since, the power for appointment of arbitrator has been seized the moment application under Section 11(6) was filed, and same cannot be revived
Hence, after considering all the facts and legal provisions, the High Court held that application under section 11(6) of the Arbitration Act for appointment of substitute arbitrator is maintainable. The High Court appoints former Supreme Judge, Justice Kurien as the substitute Arbitrator.
[M/s Central Coalfields Limited v. Eastern India Powertech Ltd., 2022 SCC OnLine Jhar 1533, decided on 24-11-2022]
Advocates who appeared in this case :
Counsel for Applicant:- Advocate Amit Kumar Das, Advocate Shivam Utkarsh Sahay;
Counsel for Respondent:- Advocate Rohitashya Roy, Advocate Hemant Jain, Advocate Akchansh Kishore, Advocate Divjot Singh Bhati.