Whether Article 137 of limitation Act is applicable for appointment of arbitrator?

 It is not in dispute between the parties that Article 137 would apply to application filed under Section 11 of Act, 1996. In Major (Retd.) Inder Singh Rekhi v. Delhi Development Authority, (1998) 2 SCC 338, Supreme Court held that in application for appointment of Arbitrator Article 137 of the Limitation Act will apply.

5. Article 137 of the Limitation Act, 1963 is applicable to applications both under the Civil Procedure Code and under the Special Acts. Article 137 constitutes the residuary Article in regard to applications. The starting point of limitation under Article 137 is the date when "the right to apply arises". Article 137 being a residuary Article to be adopted to different classes of applications, the expression "the right to apply" is expression of a broad common law principle and it has to be interpreted according to the circumstances of each case. In Ramanna v. Nallaparaju, 1995 (2) SCR 936, Supreme Court has held that "the right to apply" means "the right to apply first arises".

6. Under the Arbitration and Conciliation Act, 1996, right to apply to the court having jurisdiction would arise from the date such controversy arises between the parties.

IN THE HIGH COURT OF ALLAHABAD

Arbitration Application No. 69 of 2017

Decided On: 14.09.2017

 Central Electronics Limited Vs.  Friends Cable Industries

Hon'ble Judges/Coram:

Suneet Kumar, J.

Citation: 2017 (125) ALR 588.

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Whether arbitration award can be set aside if arbitrator was not validly appointed?

Point No. 2 - Competency of the Arbitrator:-

22. To ascertain, whether the retired Judge of the High Court Shri Mutalik could have been appointed as Arbitrator under section 11 of the Act, the provision of section 11 (relevant portion) needs to be considered first. The relevant portions are section 11(1) to 11(6), 11(8) of the Act and they run as under:-

"11. APPOINTMENT OF ARBITRATORS.-(1) A person of any nationality may be an arbitrator, unless otherwise agreed by the parties.

(2) Subject to sub-section (6), the parties are free to agree on a procedure for appointing the arbitrator or arbitrators.

(3) Failing any agreement referred to in sub-section (2), in an arbitration with three arbitrators, each party shall appoint one arbitrator, and the two appointed arbitrators shall appoint the third arbitrator who shall act as the presiding arbitrator.

(4) If the appointment procedure in sub-section (3) applies and-

(a) a party fails to appoint an arbitrator within thirty days from the receipt of a request to do so from the other party; of

(b) the two appointed arbitrators fail to agree on the third arbitrator within thirty days from the date of their appointment, the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him.

(5) Failing any agreement referred to in sub-section (2), in an arbitration with a sole arbitrator, if the parties fail to agree on the arbitrator within thirty days from receipt of a request by one party from the other party to so agree the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him.

(6) Where, under an appointment procedure agreed upon by the parties,-

(a) a party fails to act as required under that procedure; or

(b) the parties, or the two appointed arbitrators, fail to reach an agreement expected of them under that procedure; or

(c) a person, including an institution, fails to perform any function entrusted to him or it under that procedure, a party may request the Chief Justice or any person or institution designated by him to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment.

(7) ........

(8) The Chief Justice or the person or institution designated by him, in appointing an arbitrator, shall have due regard to-

(a) any qualifications required of the arbitrator by the agreement of the parties; and

(b) other considerations as are likely to secure the appointment of an independent and impartial arbitrator."

23. In the present matters, the application under section 11 of the Act was filed in the year 2002 and the appointment of retired Judge of this Court was made first time in the proceeding on 10.7.2003. The subsequent appointments of sole Arbitrator mentioned above were made only to replace the first sole Arbitrator appointed by this Court. This decision was taken up to Supreme Court by filing Special Leave Petition by the Employer. The Apex Court referred the case of M/s. S.B.P. & Co. Vs. M/s. Patel Engineering Ltd. and Anr. [MANU/SC/1787/2005 : AIR 2006 SUPREME COURT 450] and held that it will be open to raise the challenge to jurisdiction of Arbitrator appointed by High Court before the Arbitrator himself as provided in the Act. In the case of S.B.P. & Co. cited supra also, the Apex Court had made it clear that if the applications filed under section 11 of the Act were already decided, it is to be presumed that in those cases, the appointments were made as per the ratio of previous case of Apex Court reported as M/s. Konkan Railway Corporation Ltd. and Anr. Vs. M/s. Rani Construction P. Ltd. [MANU/SC/0053/2002 : AIR 2002 SUPREME COURT 778]. As the contrary view was taken in the case of S.B.P. & Co., cited supra, the Apex Court made it clear in the case of S.B.P. & Co. itself that in the matters in which Arbitrators were already appointed as per the case of Konkan Railway Corporation cited supra, in those cases all objections with regard to jurisdiction of the Arbitrator need to be decided under section 16 of the Act. This position of law needs to be kept in mind while applying the provisions of section 11(1) to 11(6) of the Act to the present matters. Thus, the point of competency of the Arbitrator is open in the present matter. In view of the provision of section 16(6) of the Act read with provision of section 34(2)(v) of the Act, this point could have been considered by the Arbitrator and also the District Court. In the appeal, this point can be again considered.

24. If the provisions of section 11(2) and 11(6) of the Act are read together, they show that if there is agreement over the procedure for appointment of arbitration and the procedure provides other means for securing the appointment, the power under section 11(6) of the Act cannot be used.

25. The provision of section 11(2) of the Act shows that this provision is subject to the provision of section 11(6) of the Act and so, if there is already agreement on procedure, there cannot be new agreement on procedure by the parties to appoint the Arbitrator. Similarly, if there is agreement on procedure available, the provisions of sections 11(3), 11(4), 11(5) cannot be used as those provisions are to take care of the situation where there is no agreement on the procedure to appoint Arbitrator. It needs to be kept in mind that in section 11(6) of the Act, there are two parts. The first part relates to the lacuna in the procedure agreed. Due to such lacuna, if even after following the procedure the Arbitrator cannot be appointed, then the Court can take necessary measures as mentioned in those provisions of law to see that Arbitrator is appointed. However, the second part relates to the situation where there is the procedure, and due to the failure on the part of the one or more parties or due to other situation mentioned in clauses (b) (c) of section 11(6) of the Act, the Arbitrator is not appointed, but there is the procedure to take care of such situation and by following that procedure the Arbitrator can be appointed. In the present matters, procedure mentioned in second part of section 11(6) of the Act was available.

26. Clause No. 57 of the G.C.C. between the parties reads as under:-

"57. ARBITRATION:

(1) All disputes or differences in respect of which the decision, if any, of the Engineer or Employer has not become final and binding as aforesaid, shall on the initiative of either party in dispute be referred to the adjudication of three arbitrators. One arbitrator is to be nominated by the Employer, one by the Contractor and the third by the President of the International Chamber of Commerce, in the case of foreign contractors and Chairman, Central Water Commission in the case of local contractors. If either of the parties fail to appoint its arbitrator within sixty days after receipt of notice for the appointment of an arbitrator then the President of the International Chamber of Commerce or the Chairman, Central Water Commission as the case may be, shall appoint an Arbitrator. A certified copy of the appointment made by the 'President'/'Chairman' shall be furnished to both parties.

(2) The arbitration shall be conducted in accordance with the Rules of Conciliation and Arbitration of the International Chamber of Commerce, Paris in the case of foreign contractors and provisions of Indian Arbitration Act 1940 or any statutory modifications thereof in the case of local contractors and shall be held in either case at such place and time in India as the Arbitrators may determine. The decision of the majority of the Arbitrators shall be final and binding upon the parties and the expenses of the Arbitrators shall be paid as may be determined by the Arbitrators.

(3) The said arbitrator/s shall have full power to open up, revise and review any decision, opinion, direction, certificate or valuation by the Engineer, Neither party shall be limited in the proceedings before such arbitrator/s to the evidence or arguments put before the Engineer for the purpose of obtaining his said decision. No decision given by the Engineer in accordance with the foregoing provisions shall disqualify him from being called as a witness and giving evidence before the arbitrator/s on any matter whatsoever relevant to the dispute or difference referred to the arbitrator/s as aforesaid. The reference to arbitration may proceed notwithstanding that the works shall not then be or be alleged to be complete provided always that the obligations of the Employer, the Engineer and the Contractor shall not be altered by reason of the arbitration being conducted during the progress of the works.

(4) Performance under the contract shall, if reasonably possible, continue during the arbitration proceedings and payments due to the Contractor by the Employer shall not be withheld, unless they are the subject matter of the arbitration proceedings.

(5) All awards shall be in writing and in case of claims equivalent to Rupees one hundred thousand or more, such awards shall state reason for the amounts awarded.

(6) Neither Party is entitled to bring a claim to arbitration if its Arbitrator has not been appointed by thirty days after the expiration of the Maintenance period.

(7) The Term 'Indian Contractor' shall include Indian firm or group of Indian firms and Joint Venture consortia eligible for price preference as domestic tenderer."

Clause No. 57(1) shows that the authority mentioned in the Clause viz. the Chairman of C.W.C. was having power to appoint the sole arbitrator if both or either party had failed to nominate the Arbitrator as provided in first part of this clause. In the first arbitral proceeding, both the sides had appointed their nominees and the third Arbitrator was appointed by Chairman of C.W.C. Thus, in the present matter also, it was possible to use this procedure. In fact reference was already made to the Chairman of C.W.C. and the matter was pending before the Chairman for consideration. It is the Contractor, who had written to the Chairman of C.W.C. to inform that he was not interested in getting the Arbitrator appointed as per this clause as he wanted to move High Court under section 11 of the Act. This fact of the present matter and the position of law already quoted are sufficient to hold that retired Justice Shri Mutalik could not have been appointed as Arbitrator under section 11 by this Court. Both the learned Arbitrator and the Court under section 34 of the Act have committed error in holding that retired Justice Shri Mutalik was appointed as per the provisions made in law. This single ground is sufficient to set aside the entire award delivered by the learned Arbitrator. So, the point No. 2 is answered accordingly.

27. On the aforesaid point, the learned counsel for Employer placed reliance on the observations made by the Supreme Court in the case reported as MANU/SC/0962/2015 : 2016 (4) Mh.L.J. 101 [Huawei Technologies Company Ltd. Vs. Sterlite Technologies Ltd.]. In this case, the Apex Court has considered the provisions of section 11 and 15(2) of the Act and has laid down that the term 'Rules' mentioned in section 15(2) relates to the provisions made in the agreement for appointment of Arbitrator. It is laid down that on every occasion including for occasion of filling vacancy of Arbitrator, the Rules in that regard need to be followed. There cannot be dispute over this proposition and this Court has quoted the relevant portion of the agreement mentioned in the procedure for appointment of Arbitrator.

28. The learned counsel for respondent/Contractor placed reliance on the observations made by the Supreme Court in Civil Appeal No. 6275/2014 [North Eastern Railway & Ors. Vs. Tripple Engineering Works] decided on 13.8.2014. In this case and also in the case reported as MANU/SC/0275/2013 : 2013 (2) Arb.L.R. 105 (SC) [M/s. Deep Trading Company Vs. M/s. Indian Oil Corporation and Ors.], the Apex Court has discussed the provision of section 11 and has laid down that when one party forfeited right to appoint his nominee for constitution of Arbitral Tribunal, it is not open to the said party to say that the Arbitrator cannot be appointed under section 11 of the Act. The facts of the two reported cases show that due to failure of one party to nominate his Arbitrator, it was not possible to constitute the Arbitral Tribunal. In view of that circumstance, the Apex Court laid down that the provision of section 11 can be used. The facts of the present matter are totally different and this Court has already observed that even after failure of one or both the parties, the Arbitrator could have been appointed by the agency mentioned in the agreement. 
IN THE HIGH COURT OF BOMBAY (AURANGABAD BENCH)

Arbitration Appeal No. 6 of 2016, Civil Application No. 8990 of 2016, 
Decided On: 17.04.2017

Executive Director, Godawari Marathawada Irrigation Development Corporation
 Vs. 
Y.R. Reddy Engineers & Builders

Hon'ble Judges/Coram:
T.V. Nalawade, J.
Citation: 2017(5) MHLJ 661

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Whether chief justice can appoint arbitrator other than whose name is mentioned in arbitration agreement?

Thus, the issue is no more res integra. Though an
arbitrator is specified in the agreement for arbitration, if
circumstances so warrant, the Chief Justice or the designated
Judge is free to appoint an independent arbitrator, having due
regard to the qualification, if any, and other aspects as required
under Section 11(8) of the Act.
Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 4483 OF 2017

UNION OF INDIA 
V
BESCO LTD.
Dated:MARCH 27, 2017.
Citation: AIR 2017 SC 1628

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Whether misdescription of party will affect application for appointment of arbitrator as per S 11 of arbitration Act?

Such attention, however, has to be focused on the principal objection of the respondent. The same is to the effect that the two of the sub-agreements were between Taiyo Membrane Corporation and the respondent Company whereas one sub-agreement was between Taiyo Membrane Corporation (India) and the respondent. The applicant is Taiyo Membrane Corporation Pty. Ltd. which is not a party to any of the said sub-agreements. Besides, it is contended that invocation of the arbitration clause was by the applicant who is not a party to the agreements. On the said basis, it is urged that there is no valid invocation of the arbitration clause and consequently there is no failure on the part of the respondent to appoint the arbitrator so as to warrant an order from the Court under Section 11(6) of the Act. It is also urged that one of the sub-agreements being between two Indian entities i.e. Taiyo Membrane Corporation (India) and the respondent Company any appointment of an arbitrator would fall outside the jurisdiction of this Court under Section 11(6) of the Act.

4. The above objections of the respondent have been sought to be met by the petitioner by filing a rejoinder affidavit to point out that the Letters of Intent with regard to the works allotted under the sub- agreements were issued in favour of Taiyo Membrane Corporation Pty. Ltd. That apart, several correspondences exchanged between the respondent Company and the Taiyo Membrane Corporation Pty. Ltd. with regard to the works covered by the sub-contracts have also been referred to and relied upon to contend that there is no doubt and ambiguity with regard to the fact that the Taiyo Membrane Corporation Pty. Ltd. and Taiyo Membrane Corporation are one and the same entity. Insofar as the agreements executed by Taiyo Membrane Corporation (India) is concerned, it is urged that the above position has also been clarified by subsequent communications exchanged between the respondent Company and Taiyo Membrane Corporation Pty. Ltd. with respect to the work covered by the agreement in which one of the parties is Taiyo Membrane Corporation (India).

5. While it is correct that there is some confusion with regard to the description of the parties in the sub-agreements; the legal notice(s); and the letter(s) of invocation; the L.O.Is. issued in respect of the works and the correspondences exchanged by and between the parties make it clear that the applicant Taiyo Membrane Corporation Pty. Ltd. and Taiyo Membrane Corporation are one and the same entity and the works under the sub- agreements had been allotted by the respondent to the said entity. In this regard it may also be relevant to note that under the Australian Corporation Act, 2001 (Section 57A) a Corporation includes a Company and a proprietary Company Limited by shares is incorporated as Pty. Ltd.

6. In the above circumstances the alleged mis-description will not affect the maintainability of the present application. As already observed, the Court does not find any ambiguity or inconsistency in the description of parties so as to non-suit the applicant-petitioner by dismissing its application on the above basis. The ambiguity, if any, in the description of the parties having been explained and the respondent Company itself having issued L.O.Is. and having exchanged subsequent correspondences with the applicant with regard to the works under the sub- contracts, though executed in the name of the Taiyo Membrane Corporation and Taiyo Membrane Corporation (India), the applicant's petition cannot be held to be not maintainable as urged on behalf of the respondent.

Non Reportable

Supreme Court of India

Taiyo Membrance Corp.P.Ltd vs Shapoorji Pallonji & Co.Ltd on 9 September, 2015

Bench: Ranjan Gogoi

Citation:(2016)1 SCC 736  

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When application for appointment of arbitrator before chief justice is not tenable?

Once a judicial authority takes a decision under Section 8(1) of The Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the Act") declining to refer the dispute pending before it to arbitration and the said decision having become final, whether either party to the proceedings can thereafter invoke the jurisdiction of the Chief Justice under Section 11(6) of the Act, is the question arising for consideration in this case. The scope of Section 8(3) of the Act is also an ancillary issue.

The defendants/appellants had filed an application under Section 9A of the Code of Civil Procedure, 1908[1] (hereinafter referred to as "the CPC"), as applicable to the State of Maharashtra, to dismiss the suit for want of jurisdiction since the partnership deed contained a provision for arbitration and hence the disputes were liable to be resolved in terms of the Act. In other words, application filed by defendants, in essence, was to be treated as an application under Section 8(1) of the Act. The same was opposed by the plaintiff. The trial court upheld the objection and held that it was within the jurisdiction of the court to try the dispute and, therefore, it was not required under law to refer the same to arbitration. The suit proceeded. The parties have examined all their witnesses. While so, the respondents herein approached the Chief Justice of the High Court of Judicature at Bombay in Arbitration Application No. 12/2013 under Section 11(6) of the Act seeking appointment of an arbitrator as per the terms of the partnership deed.

Under Section 8(1) of the Act, either party is free to apply to the judicial authority within the prescribed time to refer the parties to arbitration, in case the matter pending before it is the subject matter of an arbitration agreement. Section 8(3) of the Act however makes it clear that notwithstanding the application under Section 8(1) of the Act and the issue pending before the judicial authority, arbitration may be commenced or continued and an arbitral award can also be made. In other words, despite the pendency of an application under Section 8(1) of the Act before the judicial authority, Section 8(3) of the Act permits the parties to commence and continue the arbitration and the arbitral tribunal is free to pass an award. That alone is what is contemplated under Section 8(3) of the Act.

In the suit instituted by the firm and some of the respondents, the order passed by the civil court that it was well within its jurisdiction to try the suit, despite the objection regarding the existence of a clause for arbitration, has become final. Thereafter, Section 11(6) jurisdiction of the Chief Justice cannot be invoked by either party. The principle of res judicata will also be attracted in such a case.

Reportable

Supreme Court of India

Anil Jagannath Rana & Ors vs Rajendra Radhakishan Rana & ... on 18 December, 2014

Bench: Anil R. Dave, Kurian Joseph

CIVIL APPEAL NO. 11604 /2014

[Arising out of S.L.P. (Civil) No. 15314 of 2014]

Citation:AIR 2015 SC(SUPP)501

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Whether appointment of arbitrator by SIAC can be challenged U/S 11 of Arbitration Act 1996?

 From the relevant facts of the case, it is also clear that the respondents at one time had suggested the name of a retired judge of the Supreme Court of India as the sole Arbitrator, which was not agreed to by the petitioner, who in turn, was inclined to nominate another learned judge. Be that as it may, in such a situation, the respondents by invoking Arbitration clause 30.2 had approached SIAC for appointment of an Arbitrator. This was on 5th September, 2014 i.e. before the present proceeding was instituted by the petitioner. Though the notice of the said request was served on the petitioner on 11th September, 2014, no steps were taken by the petitioner to pre- empt the appointment of a sole Arbitrator by SIAC. Mr. Steven Y.H. Lim came to be appointed as the sole Arbitrator by the SIAC on 29th September, 2014. The petitioner has submitted to the jurisdiction of Mr. Steven Y.H. Lim. Even if it is held that such participation, being under protest, would not operate as an estoppel, what must be acknowledged is that the appointment of the sole Arbitrator made by SIAC and the partial award on the issue of jurisdiction cannot be questioned and examined in a proceeding under Section 11(6) of the Act which empowers the Chief Justice or his nominee only to appoint an Arbitrator in case the parties fail to do so in accordance with the terms agreed upon by them. To exercise the said power, in the facts and events that has taken place, would really amount to sitting in appeal over the decision of SIAC in appointing Mr. Lim as well as the partial award dated 27th November, 2014 passed by him acting as the sole Arbitrator. Such an exercise would be wholly inappropriate in the context of the jurisdiction under Section 11(6) of the Act, a view already expressed by this Court in a recent decision in Antrix Corp. Ltd. vs. Devas Multimedia P. Ltd. [Arbitration Petition NO.20 of 2011 decided on May 10, 2013, reported in (2013) 6 SCR 453].

Supreme Court of India

Pricol Limited vs Johnson Controls Enterprise Ltd & ... on 16 December, 2014

Bench: Ranjan Gogoi

NON-REPORTABLE

     IN THE SUPREME COURT OF INDIA
     CIVIL ORIGINAL JURISDICTION
    ARBITRATION CASE (CIVIL) NO.30 OF 2014

Citation:AIR 2015 SC(supp)471

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