Delhi High Court: The petitioner filed a petition under Section 11 of the Arbitration and Conciliation Act, 1996 (‘Act’) seeking appointment of an arbitrator/arbitral tribunal for adjudication of disputes, which had originated between the petitioner and the respondent in a lease agreement. Rekha Palli, J.*, allowed the petition and held that the petitioner’s prayer for appointing an independent impartial tribunal to adjudicate the disputes between the parties was accepted.
Background
The petitioner stated that in terms of the arbitration clause contained in the lease agreement, the disputes were required to be adjudicated by a three-member tribunal, with one member of the tribunal being the petitioner’s nominee and the other being the respondent’s nominee, with a further stipulation that the vice chairman of the respondent will appoint the presiding arbitrator, i.e., the third nominee. The petitioner submitted that upon invoking arbitration clause and suggesting the name of its nominee arbitrator, the respondent refused to accept it and offered five other names who were on the panel of the respondent and directed the petitioner to select one of those persons as its nominee arbitrator. The petitioner submitted that the respondent’s offer was not acceptable as the panel offered to the petitioner was not broad-based. Thus, the petitioner prayed that either the petitioner should be granted liberty to appoint its own nominee and the respondent be granted the same liberty to appoint its nominee arbitrator or both the nominee arbitrators be appointed by this Court.
Analysis, Law, and Decision
The Court noted that the lease agreement while entitling the petitioner to select one of the arbitrators from the panel of five offered by the respondent also empowered the respondent to nominate the other two arbitrators. Further the Court stated that the respondent’s plea that the petitioner should be compelled to select its nominee arbitrator from the five-member panel provided by the respondent could not be accepted.
The Court relied on Margo Networks (P) Ltd. v. Railtel Corporation of India Ltd., 2023 SCC OnLine Del 3096, wherein a Coordinate Bench of this Court after examining decisions of Voestalpine Schienen Gmbh v. Delhi Metro Rail Corpn. Ltd., (2017) 4 SCC 665 (‘Voestalpine Schienen Gmbh Case’) and Central Organisation for Railway Electrification v. ECI-SPIC-SMO-MCML(JV), (2020) 14 SCC 712 (‘Central Organisation for Railway Electrification Case’), concluded that the panel of arbitrators being offered by the respondent therein, which was also a multiple member panel, was clearly restrictive and, therefore, proceeded to appoint the nominee arbitrators for both the petitioner and the respondent.
The Court opined that it failed to appreciate as to how this position wherein not only did the respondent had the power to unilaterally appoint two out of the three arbitrators and compelled the petitioner to choose one of the panels of five arbitrators could be said to be meeting the test of “counter balancing” as laid down in Voestalpine Schienen Gmbh Case (supra) and Perkins Eastman Architects DPC v. HSCC (India) Ltd., (2020) 20 SCC 760. It was further opined that the fact that the petitioner was given an option to choose from a list of five persons showed that the panel being offered by the respondent was not even sufficiently broad-based. The Court also noted that the question as to whether “counter balancing” could be achieved in a situation where one of the contracting parties had a right to appoint 2/3rd of the members of the arbitral tribunal was not specifically considered in Central Organisation for Railway Electrification Case (supra) and therefore, the said decision would not be applicable to the facts of the present case.
The Court allowed the petition and held that the petitioner’s prayer for appointing an independent impartial tribunal to adjudicate the disputes between the parties was accepted. The Court observed that the lease agreement between the parties contemplates a three-member Arbitral Tribunal, accordingly, Justice G.P. Mittal, former Judge of the Delhi High Court was appointed as a nominee arbitrator of the petitioner and Justice Vinod Goel, former Judge of the Delhi High Court, was appointed as the nominee arbitrator for the respondent for adjudication of disputes between the parties. Further, the two arbitrators would appoint the presiding arbitrator.
[Taleda Square (P) Ltd. v. Rail Land Development Authority, 2023 SCC OnLine Del 6321, Judgement dated 10-10-2023]
*Judgement authored by — Justice Rekha Palli
Advocates who appeared in this case :
For the Petitioner: Ms. Nina R Nariman, Ms. Geetika Kapur, Advocates
For the Respondent: Mr. R.V. Sinha, Mr. A.S. Singh, Mr. Amit Sinha, Mr. Rajeev Sharma, Advocates
Buy Arbitration and Conciliation Act, 1996 HERE
