Libra Automotives Private Limited vs Bmw India Private Limited & Anr. on 9 July, 2019
22. The Court while exercising its power under Section 11 of the Act, cannot
recast the terms of the Contract and direct the parties to go for a composite
arbitration contrary to the procedure prescribed under the arbitration clause
provided in distinct arbitration agreements. The overlapping of the issues
does not mean that the arbitration proceedings under the two respective
contracts cannot commence and continue independently. Fundamental
feature of an arbitration agreement is that there is an understanding between
the parties to adopt alternate mechanism for the adjudication of the future
disputes that arise between them. The law does not prescribe any standard
form of arbitration agreement and the parties are free to agree upon a
procedure and designate the private forum where the parties would like to go
in case the disputes and differences arise between them. Thus, there is to be
consensus ad-idem between the parties regarding the choice of the forum.
The Supreme Court in certain judgments, has held that in certain exceptional
circumstances the Court has a power to make an appointment of the
Arbitrator, notwithstanding the choice of the specified forum agreed
between the parties. However, at the first instance, the effort of the Court
would be to ensure that the parties adhere to the choice of the Arbitrator or
to the mechanism for constituting the Arbitral Tribunal as envisaged by the
Arbitration Agreement. It is also noteworthy that, the Supreme Court
in Indian Oil Corporation Ltd. v. Raja Transport Pvt. Ltd., (2009) 8 SCC
520, Union of India v. Singh Builders Syndicate, (2009) 4 SCC 523,
Northern Eastern Railway v. Triple Engineering, (2014) 9 SCC
288 and Union of India v. BESCO, AIR 2017 SC 1628, has expressed the
ARB.P. 163/2019 Page 16 of 17
opinion that where an application under Section 11(6) of the Act is filed, the
procedure for appointment of an arbitrator prescribed in the agreement, be
given effect to and the Court ought not to appoint an independent arbitrator
without resorting to the inbuilt mechanism as agreed between the parties.
Parties were conscious of the terms of the agreement and they willingly and
consciously agreed for the arbitral procedure envisaged under the agreement
without any reservation. Petitioner is now suggesting that the agreed choice
of forum should be ignored and that part of the Agreements should be
severed and further Respondent should tow it‟s line and agree to the Arbitral
Tribunal contrary to what has been provided in the Contracts. This cannot be
permitted and thus the relief claimed in the present petition for appointment
of a common arbitrator cannot be granted. There is no merit in the present
petition and the same is dismissed. No order as to costs.