Delhi High Court - Orders
Srl Limited vs Dr Rajan Jaiswal on 7 December, 2022
Author: Navin Chawla
Bench: Navin Chawla
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ARB.P. 1211/2022
SRL LIMITED ..... Petitioner
Through: Mr.Ajay Uppal, Adv.
versus
DR RAJAN JAISWAL ..... Respondent
Through: Mr.Shubham Verma, Adv.
CORAM:
HON'BLE MR. JUSTICE NAVIN CHAWLA
ORDER
% 07.12.2022
1. This petition has been filed under Section 11 of the Arbitration and Conciliation Act, 1996 (in short, the 'Act') seeking appointment of an Arbitrator for adjudicating the disputes that have arisen between the parties in relation to the 'Direct Client/Pathology Service Understanding' dated 15.06.2020 executed between the parties. The Arbitration Agreement is contained in Clause 'C(5)' "C. Miscellaneous Terms:
xxxxxx
5. Dispute Resolution: Any dispute between the Parties shall be referred to and settled by a sole arbitrator appointed by SRL in accordance with the provisions of the Arbitration and Conciliation Act, 1996. The venue of Arbitration shall be New Delhi.
Subject to above the court of New Delhi shall have exclusive jurisdiction on any matter/dispute arising out of this Understanding."
2. Disputes having arisen between the parties, the petitioner invoked the Arbitration Agreement vide notice dated 17.09.2022. In the said notice, the petitioner fairly stated that as the Arbitration Agreement Signature Not Verified Digitally Signed By:RENUKA NEGI Signing Date:09.12.2022 17:50:28 authorized the petitioner to appoint the Sole Arbitrator, which is no longer permissible, the appointment shall be sought from the Court.
3. Having failed to receive a response from the respondent, the present petition was filed by the petitioner.
4. Notice of this petition was issued to the respondent and accepted by the learned counsel for the respondent on 31.10.2022.
5. Though the respondent claims to have filed his reply to the petition, the same is not on record. The learned counsel for the respondent has, however, been heard in opposition to the present petition.
6. He submits that the above referred Arbitration Agreement between the parties, having vested the power of appointment of a Sole Arbitrator with the petitioner, would be illegal and, therefore, void.
7. Placing reliance on the judgment dated 08.03.2021 of the Supreme Court in Civil Appeal No.825/2021 @ Special Leave Petition (Civil) No. 8718/2020 titled Pravin Electricals Pvt. Ltd. v. Galaxy Infra and Engineering Pvt. Ltd., he submits that while exercising powers under Section 11 of the Act, the Court would consider whether the Arbitration Agreement is prima facie valid.
8. I have considered the submissions made. While there can be no doubt that the Court shall refuse to refer the parties to an arbitration where it is shown that the arbitration agreement is not valid, in the present case, I cannot agree with the submission of the learned counsel for the respondent that the Arbitration Agreement contained in Clause C(5) of the Agreement reproduced hereinabove is in any manner illegal.
9. Section 12 of the Act gives the grounds for determining the circumstances which can raise a justifiable doubt as to the Signature Not Verified Digitally Signed By:RENUKA NEGI Signing Date:09.12.2022 17:50:28 independence or impartially of an Arbitrator. The Supreme Court in Perkins Eastman Architects DPC v. HSCC (India) Limited, (2020) 20 SCC 760, has held that a party to the agreement cannot have the power to appoint a Sole Arbitrator. The same, however, does not make the Arbitration Agreement containing such a power to be illegal. The Arbitration Agreement between the parties is clearly severable from the procedure of appointment of an Arbitrator. Section 12 of the Act makes an arbitrator appointed by the party to the agreement to be ineligible, however, it does not denude this Court of its power to appoint an independent arbitrator. The same course was followed even in Perkins (supra).
10. Reference should also be made to Section 12(5) of the Act, which reads as under:
"12. Grounds for challenge.
xxxxx (5) Notwithstanding any prior agreement to the contrary, any person whose relationship with the parties or counsel or the subject-matter of the dispute falls under any of the categories specified in the Seventh Schedule, shall be ineligible to be appointed as an arbitrator:
PROVIDED that parties may, subsequent to disputes having arisen between them, waive the applicability of this sub-section by an express agreement in writing."
11. Proviso to Section 12(5) of the Act also provides that the parties may, subsequent to disputes having arisen between them, waive the applicability of Section 12(5) of the Act (which makes any person, whose relationship with the parties or counsel or the subject-matter of the disputes, falls under any of the categories specified in the VIIth Signature Not Verified Digitally Signed By:RENUKA NEGI Signing Date:09.12.2022 17:50:28 Schedule, to be ineligible to be appointed as an Arbitrator) by an express agreement in writing. Therefore, the prohibition on a party to an agreement appointing a Sole Arbitrator, is derogable in nature and does not make the Arbitration Agreement itself illegal.
12. In view of the above, I find no merit in the submission made by the learned counsel for the respondent.
13. Accordingly, the parties are referred to the Delhi International Arbitration Centre (in short 'DIAC') for the appointment of an Arbitrator. The parties shall appear before the DIAC on 20th December, 2022 at 2.00 p.m.
14. The arbitration proceedings shall be governed by the DIAC Rules, including the fee structure thereof.
NAVIN CHAWLA, J DECEMBER 7, 2022 RN Signature Not Verified Digitally Signed By:RENUKA NEGI Signing Date:09.12.2022 17:50:28