Allahabad High Court
M/S Garg Gas Service Thru Prop. Shri ... vs Hindustan Petroleum Corporation Ltd. ... on 24 January, 2020
Author: Jaspreet Singh
Bench: Jaspreet Singh
HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH AFR Case :- ARBITRATION APPLICATION No. - 20 of 2014 Applicant :- M/S Garg Gas Service Thru Prop. Shri Rajesh Kumar Garg Opposite Party :- Hindustan Petroleum Corporation Ltd. Thru Chief Managing/Dul Counsel for Applicant :- Amarjeet Singh Rakhra Counsel for Opposite Party :- Anand Shanker Asthana Hon'ble Jaspreet Singh,J.
An interesting question is involved in this petition under Section 11(6) of the Arbitration & Conciliation Act, 1996 shown of unecessary facts, the case setup by the petitioner is that he is the distributor for L.P.G. Gas cylinders and engaged in the aforesaid business in pursuance of the distributorship agreement with Hindustan Petroleum Corporation dated 16.05.2008. The petitioner is stated to be the distributor of L.P.G. since last 31 years and the distributorship agreement have been renewed from time to time and lastly it was renewed on 15.05.2013, a copy of which has been annexed as Annexure No. 1 with the petition. The aforesaid distribution agreement contains an arbitration clause which reads as under:-
39. Any dispute of difference of any nature whatsoever or regarding any rights, liability, act, omission, or account of any of the parties, here to arising out of or in relation to this agreement (other than those in respect of which the decision ofany person, is by the Agreement expressed to be final and binding) shall be referred to the sole Arbitration of the Chairman and Managing Director of the Corporation or of retired officer of oher PSUs or retired Senior Central Govt. Officer who may be nominated by the Chairman and Managing Director. The dealer will not be entitled to raise any objection to any such Arbitrator on the ground that the Arbitrator is or was an officer and/or share holder of the Corporation or that in the course of his duties as an officer of the Corporation he had expressed views on all or any of the matter in dispute of difference. In the event of the Arbitrator to whom the matter is originally referred vacating his office or being unable to act for any reasons the Chairman and Managing Director as aforesaid at the time of such vacation of office or inability to act, shall designate person who shall be entitled to proceed with the reference from the point at which it was left by his predecessor. It is also a term to this contract that on person other than the Chairman and Managing Director or person nominaed by such Chairman and Managing Director of the Corporation as aforesaid shall act as Arbitrator hereunder, the cost of the arbitration shall be shared equally by the parties. The award of the Arbitrator so appointed shall be final, conclusive and binding on all parties to the Agreement, subject to the provisions of the Arbitration and Conciliation Act, 1996 or any statutory modification or of re-enactment there of and the rules made thereunder and for the time being in force shall apply to the Arbitration proceeding under this Clause. The award shall be made in writing and published by the Arbitrator "within six month after entering upon the reference or within such extended time not exceeding further four months as the sole arbitrator shall by a writing under his own hands appoint.
The arbitrator shall have power to order and direct either of the parties to abide by, observe and perform all such difference i.e. dispute before him. The arbitrator shall have all summary powers and may take such evidence, oral and/or documentary as the arbitrator in his obsolute discretion thinks it and shall be entitled toercise all power under the Indian Arbitration Act, 1940 including admission of any affidavit as evidence of the matter in difference i.e. dispute before him. The arbitrator shall be at liberty to appoint, if necessary any accountant or engineering or other technical person to assist him, and to act by the opinion so taken.
The arbitrator shall have power to make one or more awards, whether interim or otherwise in respect of the dispute and difference and in particular will be entitled to make separate awards in respect of claims or cross claims of the parties.
The parties hereby agree that the courts in the city of LUCKNOW alone shall have jurisdiction to entertain any application or other proceeding in respect of any thing arising under this agreement and any award or awards made by the sole arbitrator hereunder shall be filed in the concerned courts if the city of LUCKNOW only."
It is stated by the petitioner that the respondent-Corporation had been issuing show cause notices at the drop of a hat and various inspections were conducted on the distributorship of the peitioner. Though the petitioner had replied to the show cause notices which were issued from time to time yet the attitude of the respondent was threatening and being tired of being victimized at the behest of the respondent, the petitioner is said to have invoked the arbitration clause by means of its letter dated 03.05.2014.
This letter dated 03.05.2014 invoking the arbitration clause is in the eye of the storm and is of which much significance as it is only on the aforesaid notice and its service, the result of this petition balances.
The petitioner again sent a reminder for appointment of the arbitrator by means of its letter dated 13.05.2014 and after having waited for the statutory period of 30 days, the petitioner insituted the instant petitioner before the High Court on 03.06.2014.
The respondent through counsel appeared before the High Court on the first date and made a statement that it had not received the notice as stated by the petitioner dated 03.05.2014. In light of the statement so made, a coordinate Bench of this Court passed the following order dated 05.06.2014 which reads as under:-
Sri K.S. Pawar, Advocate has filed Vakalatnama on behalf of respondent. The same is taken on record.
Heard Sri A.S. Rakhra, learned counsel for the applicant and Sri K.S. Pawar for respondent.
By means of the present writ petition, the petitioner has prayed for an appointment of Arbitrator so that the present dispute may be resolved.
Learned counsel for the applicant states that the distributorship agreement dated 16.05.2008 as well as 15.05.2013 there was a categorical provision for arbitration in the matter and as per Clause-39 of the distributorship agreement dated 15.05.2013, he is entitle for referring the dispute to the arbitrator. The applicant has already moved an application before the opposite party for appointment of an arbitrator and till today nothing has happened and till today.
Aggrieved with the non action of the respondent, the present writ petition has been filed. However, learned counsel for the opposite party on the basis of instruction submits that till today, the said application has not been received in the office of opposite party and the moment, it would received, the same shall be properly replied forthwith.
Therefore, in the interest of justice, I hereby direct the opposite party to take suitable action in the matter, meanwhile.
List in the second week of July, 2014 as fresh.
The respondent by means of its letter dated 09.07.2014 appointed one Sri A.K. Reddy as the sole arbitrator. The petitioner on 20.08.2014 filed a supplementary affidavt in the instant case appraising the Court that the respondent has appointed Sri A.K. Reddy as the sole arbitrator and the appointment of the said Arbitrator is contrary to the settled legal position, inasmuch as, the same has been done after the petitioner had approached this Court for appointing the arbitrator while the respondent had forefeited its right to appoint the arbitrator. The petitioner once again filed another supplementary affidavit dated 20.03.2015 appraising the Court that the alleged arbitrator Sri A.K. Reddy is proceeding in the matter and that despite the petitioner informing him that his appointment is not valid and the matter is alreaday engaging the attention of the High Court but the sole arbitrator was adament in asking the petitioner to submit to his jurisdiction. The petitioner also filed an application for early hearing bringing on record the extract of proceedings which were transpiring before the arbitrator who was moving ahead with the arbitration while the petitioner had been contending that his appointment was illegal and he should not proceed and should wait until the petition is decided by this Court.
On the other hand, the respondent filed its counter affidavit on 12.03.2018 and raised a plea that it had not received the letter dated 03.05.2014. It was stated by the respondent that the petitioner had sent a different letter by which he had sought the report regarding some CBI inspection. Since the postal receipt annexed with the letter dated 03.05.20104 was in respect of the inquiry report and not in respect of the request seeking appointment of arbitrator, hence the petitioner was not maintainable.
It is also the case of the respondent that it had appointed the arbitrator in pursuance fo the order pased by this Court dated 05.06.2014 which has been reproduced above. The respondent thereafter filed a supplementary affidavit and it has brought on record the letters by which the petitioner had sought the report of the CBI inquiry and it has further taken a stand that it did not even receive the reminder dated 13th of May 2014. It was also stated that the petitioner had filed a statement of claim before the arbitrator and thus has submitted to the jurisdiction of the arbitrator and as such is not entitled to raise this dispute before this Court.
The petitioner filed a rejoinder affidavit denying the contentions of the respondent and reiterating its stand and additionally submitted that during the pendency of the above petition the arbitrator has passed an order dated 27.06.2017 terminating the proceedings in terms of Section 25 as the claimant failed to submit/communicate its statement of claim.
It is in this backdrop, that the controversy, to be adjudicated by this Court is two fold.
(i) Whether the appointment of the arbitrator by the respondent by means of its lette dated 09.07.2014 is valid and (ii) whether what is the effect of the proceedings which transpired before the said sole arbitrator Sri A.K. Reddy who terminated the proceedings by means of its order dated 27.06.2017.
The Court has heard Sri A.K. Rakhra, learned counsel for the appellant and Sri A.S. Asthana for the respondent-Corporation.
As far as the facts are concerned, the same are not disputed between the parties, inasmuch as, both the parties agree that there is a distributionship agreement which contains an arbritation clause and both are bound by it. The contention of learned counsel for the petitioner is that once it had invoked the arbitration clause by means of the letter dated 03.05.2014 and the respondent did not cooperate in appointment of an arbitrator. In the meantime, the petitioner had approached this Court by means of the instant petition in the month of June, 2014, thereafter, the respondent forefeited its right to appoint an arbitrator, consequently, the alleged appointment of Sri A.K. Reddy by the respondent on 09.07.2014 is illegal and all subsequen actions and proceedings underaken by the said arbitrator are also void and it is now for this Court to appoint an arbitrator in exercise of the powers conferred under Section 11 (6) of the Arbitration and Conciliation Act, 1996.
Per contra, Sri Asthana has submitted that the alleged letter dated 03.05.2014 which is the source of invocation of the arbitration clause was not recieved by the respondent-Corporation. It is also submitted that once they did not receive the intial notice dated 03.05.2014 then even assuming the petitioner had sent another reminder on 13.05.2014 that will be of no consequence since a reminder cannot be treated to be the notice invoking arbitration. Moreover, if the reminder is taken as the notice invoking the arbitration then the instant petition filed before the High Court on 05.06.2014 would be premature, inasmuch as, 30 days would not have lapsed since sending of the said reminder notice.
It has been submitted that for the said reason, the petition is bad and has also additionally argued that the arbitrator was appointed by the respondent in pursuance of the order passed by this Court 05.06.2014. Once the petitioner participated and the order dated 27.06.2017 terminating the proceedings under Section 25 was passed, the same partkakes the nature of an award for which the petitioner ought to have taken recourse under Section 34 of the Arbitration and Conciliation Act, 1996 and the same is not open to be assailed in proceedings under Section 4 (6).
In order to decide the controversy its it is important to ascertain whether the notice dated 03.05.2014 was served on the respondent and what would be its outcome in case if despite service the respondent did not appoint an arbitrator and as borne out from the record and admitted to the parties, the arbitrator was appointed only on 09.07.2014 after the petitioner had already knocked the door of this Court by filing the instant petition on 05.06.2014.
Before proceeding further, it will be worthwhile to examine the relevant law on the aforesaid subject. This issue was considered by the Apex Court for the first time in the case of Datar Switchgears Vs. Tata Finance Ltd. and Another reported 2000 (8) SCC 151. Thereafter there has been a consistent view taken by the Apex Court which has been followed even as late as in the year 2017 wherein a large Bench of the Apex Court in the case of TRF Ltd. Vs. Energo Enginerring Projects Ltd. reported in 2017 (8) SCC 377. The relevant portion reads as under:-
24. In Deep Trading Co. v. Indian Oil Corpn. [Deep Trading Co. v. Indian Oil Corpn., (2013) 4 SCC 35 : (2013) 2 SCC (Civ) 449] , the three-Judge Bench referred to Clause 29 of the agreement, analysed sub-sections (1), (2), (6) and (8) of Section 11 of the Act, referred to the authorities in Datar Switchgears [Datar Switchgears Ltd. v. Tata Finance Ltd., (2000) 8 SCC 151] and Punj Lloyd Ltd. v. Petronet MHB Ltd. [Punj Lloyd Ltd. v. Petronet MHB Ltd., (2006) 2 SCC 638] and came to hold that: (Deep Trading case [Deep Trading Co. v. Indian Oil Corpn., (2013) 4 SCC 35 : (2013) 2 SCC (Civ) 449] , SCC p. 42, paras 19-20) "19. If we apply the legal position exposited by this Court in Datar Switchgears [Datar Switchgears Ltd. v. Tata Finance Ltd., (2000) 8 SCC 151] to the admitted facts, it will be seen that the Corporation has forfeited its right to appoint the arbitrator. It is so for the reason that on 9-8-2004, the dealer called upon the Corporation to appoint the arbitrator in accordance with the terms of Clause 29 of the agreement but that was not done till the dealer had made application under Section 11(6) to the Chief Justice of the Allahabad High Court for appointment of the arbitrator. The appointment was made by the Corporation only during the pendency of the proceedings under Section 11(6). Such appointment by the Corporation after forfeiture of its right is of no consequence and has not disentitled the dealer to seek appointment of the arbitrator by the Chief Justice under Section 11(6). We answer the above questions accordingly.
20. Section 11(8) does not help the Corporation at all in the fact situation. Firstly, there is no qualification for the arbitrator prescribed in the agreement. Secondly, to secure the appointment of an independent and impartial arbitrator, it is rather necessary that someone other than an officer of the Corporation is appointed as arbitrator once the Corporation has forfeited its right to appoint the arbitrator under Clause 29 of the agreement."
25. The Court accepted the legal position laid down in Newton Engg. [Newton Engg. and Chemicals Ltd. v. Indian Oil Corpn. Ltd., (2013) 4 SCC 44 : (2013) 2 SCC (Civ) 457] and referred to Deep Trading Co. [Deep Trading Co. v. Indian Oil Corpn., (2013) 4 SCC 35 : (2013) 2 SCC (Civ) 449] and opined that as the Corporation had failed to act as required under the procedure agreed upon and did not make the appointment until the application was made under Section 11(6) of the Act, it had forfeited its right of appointment of an arbitrator. In such a circumstance, the Chief Justice or his designate ought to have exercised his jurisdiction to appoint an arbitrator under Section 11(6) of the Act. Be it noted, the three-Judge Bench also expressly stated its full agreement with the legal position that has been laid down in Datar Switchgears Ltd. [Datar Switchgears Ltd. v. Tata Finance Ltd., (2000) 8 SCC 151] From the above extraction of the principle and the consistent view taken by the Apex Court, it is no more res-integra that the right of the respondent to appoint an arbitrator commences from the time a request is made by the petitioner and within 30 days of the receiving of such request and in any case not beyond the date when the petitioner approached this Court by filing the instant petition.
Thus, the cut-off date for the respondent to appoint an arbitrator was 05.06.2014. Having said that, the question still arises as to whether the respondent received the letter invoking the arbitration clause dated 03.05.2014. In case if the answer to the aforesaid issue is "No" then the petitioner cannot press, that the respondent lost the right to appoint the arbitrator upon filing of the petition before this Court, however, in case if it is found that the letter dated 03.05.2014 was served then the submission of the petitioner holds good.
The learned counsel for the respondents has urged vehemently and has taken the Court through the record to indicate that the postal receipt which has been annexed by the petitioner with the letter dated 03.05.2014 actually relates to the other letter by which the petitioner had sought the inquiry report from the respondents. Thus, the submission is that the petitioner while sending the letter for seeking inquiry repor is using the said postal receipt to state that it was the lette dated 03.05.2014 which was sent under the said registered cover.
Though, initially the respondent had taken a stand that it did not receive the letter dated 03.05.2014 and thus even assuming that the notice dated 13.05.2014 (reminder) was served it would be of no consequence.
However, subsequently, it even denied the receiving of the reminder dated 13.05.2014 and in respect thereto it again took the stand that by the postal receipt dated 13.05.2014, the petitioner had sought the inquiry report and it did not relate to the reminder letter as alleged.
The learned counsel for the petitioner has streneously urged that the respondents have been playing a mischief, inasmuch as, they have been shifting their stand from time to time. However, the learned counsel for the petitioner has drawn the attention of the Court to the letter dated 09.07.2014 by which the respondent had appointed the arbitrator.
Upon the perusal of the said letter dated 09.07.2014 it would be interesting to note that the said letter is written by the Chairman and the Managing Director informing the petitioner that Sri A.K. Reddy has been appointed as the sole arbitrator. What is more interesting is that while referring to the documents, its specifically refers to the letter dated 03.05.2014 & 13.05.2014 and it is quoted hereinbelow as under:-
"Dear Sirs, I refer to (i) Copy of H.P. Gas (Liquefied Petroleum Gas) Dealership (Domestic & Commercial) Agreement dated 15.05.2013 entered into by and between M/s Hindustan Petroleum Corporation Limited (Respondent) and Shri Rajesh Kumar Garg, who is carrying on business in the firm name/style of M/s. Garg Gas Service, Fazalganj, Kanpur (Claimant) (ii) Copy of Show Cause Notice dated 14.11.2013 issued by the Respondent to the Claimant (iii) Copy of reply dated 16.12.2013 of the Claimant to the Show Cause Notice dated 14.11.2013 (iv) Copies of letters dated 03.05.2014 and 13.05.2014 of the Claimant requesting for appointment of an arbitrator as per Clause No. 39 of the Dealership Agreement (v) copy of order dated 05.06.2014 passed by the Hon'ble Lucknow Bench of Allahabad High Court in Arbitration Application No. 20 of 2014 (vi) and all other related correspondence/documents.
By virtue of the order dated 05.06.2014 passed by the Hon'ble Lucknow Bench of Allahabad High Court in Arbitration Application No. 20 of 2014, as per request made by the Claimant vide his letters dated 03.05.2014 and in terms of Clause 39 of the Dealership Agreement, I hereby appoint Shri K.A. Reddy, an officer of the Corporation, as Sole Arbitrator ot adjudicate the disputes and differences between the parties.
From the perusal of the aforesaid quoted paragraphs it would indicate that it refers to the copies of the letter dated 03.05.2014 and 13.05.2014 as sent by the claimant requesting appointment of an arbitrator and it further provides that as per the request made by the claimant vide his letters dated 03.05.2014 and 13.05.2014 in terms of Clause 39 of the Dealership Agreement.
In light of the aforesaid lettter the stand taken by the respondent that it did not receive the aforesaid letter dated 03.05.2014 and 13.05.2014 is diluted. In furtherance of the letter dated 09.07.2014, the arbitrator also sent a notice dated 04.08.2014 addressed to the parties informing them of his appointment as the sole arbitrator and he also refers to the letter for the Chairman and Managing Direcotr of the respondent-Corporation dated 09.07.2014 which also makes a mention of the letters dated 03.05.2014 and 13.05.2014 sent by the claimant.
Once a senior and resposible Authority of the respondent-Corporation writes a letter appointing an arbitrator wherein there is a clear reference to the letters dated 03.05.2014 and 13.05.2014, this Court is of the view that the stand taken by the respondent stating that it did not receive the letter pales into insignificance. Admission of a party is the best piece of evidence.
Sri Asthana, learned counsel appearing for the respondent-Corporation could not give any plausible explanation as to why the reference of the letters were given in the appointment order of Sri A.K. Reddy when the respondent-Corporation did not receive the aforesaid letters. Moreover, from the perusal of the language written in the letter dated 09.07.2014 it is clear that while appointing the sole arbitrator, the aforementioned documents/letters were present since the CMD specifically refers to the said documents while taking its decision.
In light of the aforesaid, this Court is clearly of the view that the stand taken by the respondent that it did not receive the aforesaid letters cannot be countenanced.
Once it is so held, now it is to be examined that whether despite the fact, the petitioner had approached this Court on 05.06.2014 could the respondent appoint the arbitrator on the 09.07.2014 and whether this Court by means of the order dated 05.06.2014 directed the respondent to appoint an arbitrator. The order dated 05.06.2014 has already been reproduced hereinabove.
From the perusal of the order dated 05.06.2014 passed by this Court, it transpires that the Court had recorded the submissions of the learned counsel for the parties and thereafter its stated as under:-
" Therefore, in the interest of justice, I hereby direct the opposite party to take suitable action in the matter, meanwhile."
This above quoted extract from the order dated 05.06.2014 is to be read in context with the submission of the parties which is mentioned in the paragraph preceding the said order dated 05.06.201. The Court had noted the submission of the learned counsel for the responent that till date i.e. 05.06.2014 it did not receive the request for appointment of an arbitrator and the moment it would receive, it shall be properly reply forthwith. Thus, at best, what can be culled out is that the respondent by then had not received the letter requesting for an appointment of an arbitrator and the learned counsel for the respondents submitted that the moment they did receive they would reply to it forthwith and this is what the Court held directing the opposite party to take suitable action in the matter. As far as the legal position as extracted hereinabove is concerned, it is clear that the moment upon making a request and after a lapse of 30 days, the party approaches the Court under Section 11 then the right of the other party to appoint an arbitrator ceases.
This legal position which is settled cannot be ignored and thus, upon the perusal of the material on record, this Court finds that this Court had not directed or granted jurisdiction to the respondent to appoint an arbitrator. Thus, what can be deduced out is that the petitioner had made the request for appointment of an arbitrator by means of the letter dated 03.05.2014, the same was not responded by the opposite party, thereafter, the petitioner approached this Court by filing a petition after 30 days from invoking the arbitration clause. The arbitrator Sri A.K. Reddy was appointed on 09.07.2014 which in light of the decision as referred to hereinabove TRF (Supra) is not justified nor valid, accordingly, it is so held and the first question framed by the Cour is answered accordingly.
Once it is found that the respondent did not possess the jurisdiction or the authority to appoint the arbitrator, and the petitioner had invoked the jurisdiction of this Court by filing the instant petition, however, in the meantime, many subsequent developments occurred including the insistence of the said arbitrator, requiring the petitioner to participate, the reluctance of the petitioner to submit to his jurisdiction and ultimately termination of the proceedings by the said arbitrator by means of its order dated 27.06.2017.
Considering the fact that the appointment of Sri A.K. Reddy in the first place was in excess of jurisdiction and contrary to the settled legal provisions and principles, this Court is of the view that no jurisdiction could be conferred on the said arbitrator and any proceedings undertaken by him cannot be legitimatized. Once his appointment is found to be bad in the eyes of law, all his actions would be rendered null and void including the sittings held by him and passing of the order dated 27.06.2017 terminating the proceedings.
This Court is fortified in its view and draw strength from the decision of the Apex Court in the case of Perkins Eastman Achitects DPC and Others Vs. HSCC (India) Ltd. reported in AIR 2020 SC 59 wherein the question before the Apex Court, was what is the power that can be exercised by a court under Section 11 (6) when the appointment of the arbitrator is made by the respondent and whether a party is to be left to raise the challenge at an appropriate stage in terms of the remedies available in law. The Apex Court relying upon another decision in the case of Walter Bau AG reported in 2015 (3) SCC 100 framed the question and thereafter noticing the legal position has held as under. The relevant portion is being reproduced hereinafter:-
21. The further question that arises is whether the power can be exercised by this Court under Section 11 of the Act when the appointment of an arbitrator has already been made by the respondent and whether the appellant should be left to raise challenge at an appropriate stage in terms of remedies available in law. Similar controversy was gone into by a Designated Judge of this Court in Walter Bau AG MANU SC/0053/2015 : (2015) 3 SCC 800 and the discussion on the point was as under:-
"9. While it is correct that in Antrix MANU/SC/0514/2013 : (2014) 11 SCC 560 and Pricol Ltd. MANU/SC/1165/2014 : (2015) 4 SCC 177, it was opined by this Court that after appointment of an arbitrator is made, the remedy of the aggrieved party is not under Section 11 (6) but such remedy lies elsewhere and under different provisions of the Arbitration Act (Sections 12 and 13), the context in which the aforesaid view was expressed cannot be lost sight of. In Antrix MANU/SC/0514/2013 : (2014) 11 SCC 560, appointment of the arbitrator, as per the ICC Rules, was as per the alternative procedure agreed upon, whereas in Pricol Ltd. MANU/SC/1165/2014 : (2015) 4 SCC 177, 17., the party which had filed the application under Section 11 (6) of the Arbitration Act had already submitted to the jurisdiction of the arbitrator. In the present case, the situation is otherwise.
10. Unless the appointment of the arbitrator is ex facie valid and such appointment satisfies the Court exercising jurisdiction under Section 11 (6) of the Arbitration Act, acceptance of such appointment as a fait accompli to debar the jurisdiction under Section 11 (6) cannot be countenanced in law. In the present case, the agreed upon procedure between the parties contemplated the appointment of the arbitrator by the second party within 30 days of receipt of a notice from the first party. While the decision in Datar Switchgears Ltd. MANU/SC/0651/200 : (2000) 8 SCC 151 may have introduced some flexibility in the time frame agreed upon by the parties by extending it till a point of time anterior to the filing of the application under Section 11 (6) of the Arbitration Act, it cannot be lost sight of that in the present case the appointment of Shri Justice A.D. Mane is clearly contrary to the provisions of the Rules governing the appointment of arbitrators by ICADR, which the parties had agreed to abide by in the matter of such appointment. The option given to the respondent Corporation to go beyond the panel submitted by ICADR and to appoint any person of its choice was clearly not in the contemplation of the parties. If that be so, obviously, the appointment of Shri Justice A.D. Mane is non est in law. Such an appointment, therefore, will not inhibit the exercise of jurisdiction by this Court under Section 11 (6) of the Arbitration Act. It cannot, therefore, be held that the present proceeding is not maintainable in law. The appointment of Shri Justice A.D. Mane made beyond 30 days of the receipt of notice by the petitioner, though may appear to be in conformity with the law laid down in Datar Switchgears Ltd. MANU/SC/0651/2000 : (2000) 8 SCC 151, is clearly contrary to the agreed procedure which required the appointment made by the respondent Corporation to be from the panel submitted by ICADR. The said appointment, therefore, is clearly invalid in law."
22. It may be noted here that the aforesaid view of the Designated Judge in Walter Bau AG MANU/ SC/0053/2015 : (2015) 3 SCC 800 was pressed into service on behalf of the appellant in TRF Limited MANU/SC/0755/2017 : (2017) 8 SCC 377 and the opinion expressed by the Designated Judge was found to be in consonance with the binding authorities of this Court. It was observed:-
"32. Mr Sundaram, learned Senior Counsel for the appellant has also drawn inspiration from the judgment passed by the Designated Judge of this Court in Walter Bau AG MANU/SC/0053/2015 : (2015) 3 SCC 800, where the learned Judge, after referring to Antrix Corpn. Ltd. MANU/SC/0514/2013 : (2014) 11 SCC 560, distinguished the same and also distinguished the authority in Pricol Ltd. V. Johnson Controls Enterprise Ltd. MANU/SC/1165/2014 ; (2015) 4 SCC 177 and came to hold that: (Walter Bau AG case MANU/SC/0053/2015 : (2015) 3 SCC 800 SCC p. 806, para 10) "10. Unless the appointment of the arbitrator is ex facie valid and such appointment satisfies the Court exercising jurisdiction under Section 11 (6) of the Arbitration Act, acceptance of such appointment as a fait accompli to debar the jurisdiction under Section 11 (6) cannot be countenanced in law. ..."
33. We may immediately state that the opinion expressed in the aforesaid case is in consonance with the binding authorities we have referred to hereinbefore."
25. In the aforesaid circumstances, in our view a case is made out to entertain the instant application preferred by the Applicants. We, therefore, accept the application, annul the effect of the letter dated 30.07.2019 issued by the respondent and of the appointment of the arbitrator. In exercise of the power conferred by section 11 (6) of the Act, we appoint Dr. Justice A.K. Sikri, former Judge of this Court as the sole arbitrator to decide all the disputes arising out of the Agreement dated 22.05.2017, between the parties, subject to the mandatory declaration made under the amended Section 12 of the Act with respect to independence and impartiality and the ability to devote sufficient time to complete the arbitration within the period as per Section 29A of the Act. A copy of the Order be dispatched to Dr. Justice A. K. Sikri at 144, Sundar Nagar, New Delhi - 110003 (Tel. No.:- 011 - 41802321). The arbitrator shall be entitled to charge fees in terms of the Fourth Schedule to the Act. The fees and other expenses shall be shared by the parties equally.
Thus, in light of what has been held above, this Court finds that the appointment of Sri A.K. Reddy was against the provision of law and thus it conferred no jurisdiction on him and all proceedings held by him were rendered null and void. Thus in light of the above discussions the objections of the respondent are rejected. Since there is no dispute in between the parties regarding the arbitration clause and that there are live disputes between the parties, accordingly, this Court in exercise of the powers conferred under Section 11 (6) of the Arbitration and Conciliation Act, 1996 proposes the name of Hon'ble Justice Anirudh Singh (Rtd. Judge) of this Court who is residing at 1108 I Block, Ganga Apartment, Sector 4, Gomti Nagar Vistar, Lucknow, Pin Code No. 226010, Mob. 9454412315 to appoint as a sole arbitrator.
The learned counsel for the petitioner shall provide a complete set of paper book with the office to be forwarded to the proposed arbitrator for seeking his consent in terms of Section 12 (3) of the Act of 1996.
Accordingly, list this matter on 19.02.2020.
Order Date: 24.01.2020 Asheesh