HC: Section 11(6) of Arbitration Act can be invoked only once the procedure for appointment of the Presiding Arbitrator has failed

  

The Delhi High Court on 28th October, Suresh Kumar Kait held that the jurisdiction of this Court under Section 11(6) of the Arbitration and Conciliation Act 1996 can be invoked only once the procedure for appointment of the Presiding Arbitrator provided in the contract has been exhausted and has failed.

Facts of case:

Petitioners in the above captioned three petitions are companies incorporated under the provisions of Companies Act, 1956 and are subsidiary of M/s IRB Infrastructure Developers Limited. Respondent is a statutory body constituted under the National Highways Authority of India Act, 1988 (NHAI) and respondent No. 2 has been incorporated under Societies Registration Act, 1860 formed by NHAI along with NHBF for settlement of disputes through arbitration. Since similar relief has been sought in these petitions, therefore, with the consent of learned counsel for the parties, these petitions were heard together and are being disposed of by this common judgment.

Contention of the petitioner:

The following contention has been submitted by the petitioner:

Read also : HC: Party cannot be allowed to remain quiet about the acquisition of the suit property which was in her knowledge and also continues possession [Read Judgment]

1. It was submitted that that even though Article 2(h) of the Memorandum of Association of SAROD formulates selection/ appointment of panel of Arbitrators, but till date it has not been formulated by SAROD.
2. It was contended that  NHBF vide letter dated 21.07.2020 addressed to the President, Society for Affordable Redressal of Disputes-Ports (SAROD) informed its inability to fulfil the aspirations of members NHBF and stated that future disputes may have to be settled under ad hoc arbitration under the Arbitration and Conciliation Act, 1996.
3. It was also contended that the governing body of SAROD is mainly controlled by respondent No.1 and the key positions such as President, Secretary and Treasurer of SAROD are under the aegis of respondent No.1.
4. It was also argued that ex facie the institution SAROD has failed to perform its functions with fairness, reasonableness and in accordance with law.

Contention of the respondent:

The following contention has been submitted by the respondent:

1. It was submitted that these petitions under the provisions of Section 11(6) of the Act are not maintainable, as this Court can appoint Arbitrator only in the event when the party or a person including an institution fails to perform any function entrusted to it under the procedure agreed, as provided under Section 11(2) of the Act.
2. It was submitted that in fact no disputes with petitioners subsists and all disputes inter separties were settled vide Settlement Agreement dated 04.11.2020, 26.08.2020 and 04.02.2020 executed between NHAI and the petitioners respectively, wherein petitioners have agreed upon not to raise any claims under the Concession Agreements in question.
3. It was also submitted that the allegations raised against SAROD are totally baseless, as the Society has a specific "eligibility criteria" depending on the qualification and experience for empanelling the Arbitrators for redressal of the disputes and the current panel of Arbitrators of SAROD are from various fields and backgrounds.
4. It was also contended that vide judgment dated 25.08.2021, the High Court of Rajasthan had permitted the petitioners to invoke Arbitration, however, till today, petitioners have not invoked the arbitration clause.

Observation and judgement of the court:

The following observation has been made by the hon'ble court:

1. The jurisdiction of the Court under Section 11(6) of the Act can be invoked only once the procedure for appointment of the Presiding Arbitrator provided in the contract has been exhausted and has failed.
2. If the parties have entered into an agreement with open eyes, it is not open to ignore it and invoke exercise of powers in Section 11(6) of the Act.
3. The present case is distinguishable on facts that the parties have yet not nominated any of the Arbitrator, who shall further appoint the Presiding Officer to complete the arbitral tribunal.

In the light of the above, these petitions under Section 11(6) of the Act seeking appointment of sole Arbitrator were not maintainable and were dismissed while directing the parties to nominate one Arbitrator each from the panel of SAROD having 89 Arbitrators and the two so appointed shall appoint the third Arbitrator.

Read Judgment; 

 

source ;  latestlaws.com 

Social media is bold.


Social media is young.

Social media raises questions.

 Social media is not satisfied with an answer.

Social media looks at the big picture.

 Social media is interested in every detail.

social media is curious.

 Social media is free.

Social media is irreplaceable.

But never irrelevant.

Social media is you.

(With input from news agency language)

 If you like this story, share it with a friend!  


    We are a non-profit organization. Help us financially to keep our journalism free from government and corporate pressure