Rajasthan High Court: In a case wherein, arbitration applications had been filed by the applicant under Sections 11, 14 and 15 of the Arbitration and Conciliation Act, 1996 (‘the Act’), Pushpendra Singh Bhati, J.*, opined that the arbitration agreement clause related to appointment of arbitrator was required to be invoked and while exercising its power under the Section 11 of the Act, the Court appointed Justice Dinesh Maheshwari as the Sole Arbitrator and Substitute Arbitrator to adjudicate the dispute between the parties.
In the present case, arbitration applications had been taken up together by the Court. Therefore, arbitration applications 14 of 2021, 15 of 2021, 19 of 2021, 20 of 2021, 21 of 2021 and 31 of 2022 filed under Section 11 of the Act are referred as the Arbitration Application 1 whereas, arbitration applications 4 of 2021 and 5 of 2021 filed under Sections 14 and 15 of the Act are referred as the Arbitration Application 2.
In Arbitration application 1, the respondent invited a tender for providing and laying of re-surfacing with MSS type “B” 2.0 cm thick consolidated with bitumen VG-30. The applicant’s bid was accepted and after the finalisation of the tender process, the work order was issued in applicant’s favour.
Subsequently, certain disputes arose between the applicant and the respondent and the applicant sent a legal notice to the respondent for the appointment of an arbitrator by mutual consent for resolving the disputes. Accordingly, the respondent informed the applicant that, as per Clause 24 of the arbitration agreement, the arbitrator was appointed. The applicant further stated with the letter that the present dispute was covered under Clause 35.2 of the arbitration agreement and not clause 24.
The applicant submitted that despite requests made by the applicant, the respondent failed to appoint an independent and impartial arbitrator, thus the present case deserved exercise of powers under Section 11 of the Act.
Further, as per the Arbitration Application 2, the respondent invited a tender for resurfacing of road, interlocking paved tile pathways, furniture and other allied items to road at certain military station. The applicant’s bid was accepted. Subsequently, the dispute arose between the parties and an arbitrator was appointed. Thereafter, the arbitration proceedings commenced and pleadings were completed on 29-11-2018. On 23-10-2020, the applicant sent a notice to the respondent for substitution of the appointed arbitrator.
The applicant submitted that the appointed arbitrator failed to take an appropriate legal action against the respondent and was de facto unable to perform his functions and thus, the mandate of the Arbitrator stood terminated under Section 14(1)(a) of the Act.
Analysis, Law, and Decision
The Court while considering the Arbitration Application 1, observed that the local jurisdiction was provided in Clause 46 of the arbitration agreement and venue of the arbitration was provided under Clause 35 and opined that upon perusal of these clauses, it was clear that the seat of arbitration was Bikaner and venue of arbitration was New Delhi.
The Court observed that the ‘contrary indica’ was clearly reflected in the present case as seat was mentioned as Bikaner, whereas venue as New Delhi. The Court further observed that once the seat was fixed then the present Court had exclusive jurisdiction to entertain the applications under Section 11 of the Act.
Further, in Arbitration Application 2, the Court observed that at the present stage, the Court had to deal with the substitution of the arbitrator with the appointment of the new independent arbitrator. Thus, the Court found that the limited issue in question fell under the ambit of Section 11 of the Act.
The Court opined that the arbitration clause related to the appointment of an arbitrator was required to be invoked and while its power under Section 11 of the Act, the Court appointed Justice Dinesh Maheshwari, Former Judge, Supreme Court as the Sole Arbitrator and the Substituted Arbitrator, to adjudicate the dispute between the parties. The Court stated that the payment of cost of the arbitration proceedings and arbitration fee should be made as per the Fourth Schedule of the Act.
The Court considering the convenience of the parties, stated that the venue to conduct the arbitral proceedings should be at New Delhi, and accordingly, allowed the instant applications.
[Aseem Watts v. Union of India, 2023 SCC OnLine Raj 1462, decided on 2-9-2023]
*Judgment authored by- Justice Pushpendra Singh Bhati
Advocates who appeared in this case :
For the Applicant: Meenal Garg and Aakash Kukkar, Advocates;
For the Respondents: Deelip Kawadia, Dinesh Bishnoi and B.L. Bishnoi, Advocates