Punjab-Haryana High Court
Raj Kumar And Another vs Reliance Wellness Limited on 18 September, 2009
Author: Hemant Gupta
Bench: Hemant Gupta
Arbitration Case 141 of 2008 [ 1]
IN THE HIGH COURT OF PUNJAB AND HARYANA AT
CHANDIGARH
Arbitration Case 141 of 2008
Date of Decision: 18.9.2009
Raj Kumar and another ......Petitioners
Versus
Reliance Wellness Limited .......Respondent
CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA
1. Whether Reporters of local papers may be allowed to see the
judgment?
2. To be referred to the Reporters or not?
3. Whether the judgment should be reported in the Digest?
Present: Shri Naveen Sharma, Advocate, for the petitioners.
Shri Hemant Saini, Advocate, for the respondents.
HEMANT GUPTA, J. (Oral).
The petitioners have sought appointment of an Arbitrator in respect of dispute arising between the parties out of an agreement dated 1.5.2008.
Vide the aforesaid agreement, the respondent has taken on lease upper ground floor, carpet area measuring 3081.64 square feet, out of the property No. 663, Guru Teg Bahadur Nagar, Jalandhar. The said agreement has an arbitration clause, which reads as under:-
"XIV. Arbitration It is hereby expressly agreed that if at any time there shall arise any dispute, doubt or difference Arbitration Case 141 of 2008 [ 2] or question with regard to interpretation of this agreement or in respect of the rights, duties and liabilities of the parties hereto arising out these present, then every dispute, doubt, difference or question shall be referred to arbitration as per the provision of the Arbitration & Conciliation Act, 1996 and the rules framed thereunder. Two arbitrators are to be appointed one by each of the parties and third to be appointed by the said two arbitrators. The decision of the Arbitrators shall be final and binding to the parties to this Agreement. The place of Arbitration shall be at Jalandhar. The language to be used during arbitration proceedings shall be English."
The petitioners have invoked the jurisdiction of this Court for appointment of an Arbitrator in view of the alleged unilateral termination of lease by the respondent. The petitioners have served a legal notice dated 6.8.2008 (Annexure A.5) upon the respondent. Since, the Arbitrator was not appointed as sought by the petitioners vide the aforesaid notice, the present petition for appointment of an Arbitrator has been filed.
In the short reply filed today in the Court, the respondents have denied the assertion of the petitioners, but pointed out that Mr. V.B. Handa be appointed as an Arbitrator on behalf of the respondent.
Learned counsel for the petitioners has argued that the respondent has failed to appoint an Arbitrator even after the notice was served upon the respondent. Therefore, after the filing of the present Arbitration Case 141 of 2008 [ 3] petition, the offer of the respondent nominating Shri V.B. Handa to be its Arbitrator is not fair and that this Court should appoint an independent Arbitrator rather than constituting Arbitral Tribunal in terms of the arbitration clause in the agreement between the parties. Reference is made to Datar Switchgear Ltd. v. Tata Finance Ltd., (2000) 8 SCC 151 and Punj Lloyd Ltd. v.Petronet MHB Ltd., (2006)2 SCC 638.
On the other hand, learned counsel for the respondent has argued that in terms of sub-section (8) of Section 11 of the Act, this Court can appoint an Arbitrator, but having due regard to the agreement between the parties. Therefore, the constitution of the Arbitral Tribunal in terms of the agreement requires to be adhered to.
The issue raised has been examined by the Hon'ble Supreme Court in Northern Railway Admn., Ministry of Railway v. Patel Engineering Co. Ltd., (2008) 10 SCC 240, wherein the contingencies contemplated in sub-section (6) of Section 11 of the Act, have been delineated as under:-
"...The contingencies contemplated in sub-section (6) statutorily are:-
(i)a party fails to act as required under agreed procedure; or
(ii)the parties or the two appointed arbitrators fail to reach an agreement expected of them under that procedure; or
(iii)a person including an institution fails to perform any function entrusted to him or it under the procedure. In other words, the third Arbitration Case 141 of 2008 [ 4] contingencies does not relate to the parties to the agreement or the appointed arbitrators."
Later while considering the provisions of sub-section (8) of Section 11, it was held that though the emphasis is on the terms of the agreement being adhered to and/or given effect as closely as possible, but it is not mandatory for the Chief Justice or any person or institution designated by him, to appoint the named Arbitrator or the Arbitrators. Due regard at the same time has to be given to the qualifications required by the agreement and other conditions. It was held to the following effect:-
"12. A bare reading of the scheme of Section 11 shows that the emphasis is on the terms of the agreement being adhered to and/or given effect as closely as possible. In other words, the Court may ask to do that has not been done. The Court must first ensure that the remedies provided for are exhausted. It is true as contended by Mr. Desai, that it is not mandatory for the Chief Justice or any person or institution designated by him to appoint the named arbitrator or arbitrators. But at the same time, due regard has to be given to the qualifications required by the agreement and other considerations.
14. The expression "due regard" means that proper attention to several circumstances have been focussed. The expression "necessary" as a general rule can be broadly stated to be those things which are reasonably required to be done or legally ancillary to the accomplishment of the intended act. Necessary measures can be stated to be the reasonable steps Arbitration Case 141 of 2008 [ 5] required to be taken."
The parties have fixed place of arbitration at Jalandhar. The petitioner has served a notice dated 6.8.2008, but the Arbitrator in terms of the agreement between the parties, has not been appointed. The respondent itself has not adhered to the terms of agreement, therefore, having committed default in the manner of appointment of an Arbitrator, the respondent cannot insist upon that an Arbitrator has to be appointed by each party.
Consequently, Shri A.K. Sharma, former District Judge, resident of House No. 41, Indsor Park, Near DAV Engineering College, Jalandhar, is appointed as an Arbitrator to adjudicate upon the dispute(s) between the parties. The Arbitrator shall be free to fix his fee in consultation with the parties. However, in case of any reservation of fee, liberty is given to the parties to approach this Court for settlement of fee.
Parties, through their counsel, are directed to appear before the Arbitrator on 26.10.2009, for further proceedings, in accordance with law.
The present petition stands allowed in the above terms.
[ HEMANT GUPTA ] JUDGE 18-09-2009 vimal/ds