AI Structured Summary
Not yet generated for this judgment
Judgment
Indira Banerjee, J.—This application has been filed u/s 11 of the Arbitration and Conciliation Act,1996(hereinafter referred to as the "1996 Act") requesting that the Chief Justice might be pleased to appoint a fit and proper person as Arbitrator to adjudicate the disputes and differences that had arisen between the parties in connection with an agreement dated 6th May, 1994.
The aforesaid agreement dated 6th May,1994 contains an arbitration clause which is set out hereinbelow for convenience :
(i) All disputes or differences of any kind whatsoever between the Licensor and Licensee arising out of or in connection with these presents shall be referred to the settled by the Chairman-cum-Managing Director of C.T.W.T.C. Limited (Licensor) or any competent officer duly authorised by him as sole arbitrator and his decision shall be final, conclusive and binding on the parties to such dispute as an award within the meaning of the Arbitration Act,1940 (Act X of 1940) and shall be held in the Town of Calcutta.
In terms of the arbitration clause all disputes and differences are to be referred to the Chairman-cum-Managing Director of the respondent or alternatively to any competent officer authorised by him as sole Arbitrator.
It is alleged that the respondent failed in its primary obligation to make over 94,400 sq. ft. godown to the petitioner, but handed over only 76,400 sq.ft. The respondent, it is alleged, has been raising bills for the entire 94,400 sq. ft. agreed to be given to the petitioner. It is also alleged that the respondent has unilaterally enhanced the rent.
By a letter dated 17th December, 2007 the respondent demanded a sum of Rs. 13,32,71,968/- from the petitioner towards alleged outstanding dues. According to the petitioner, the alleged claim is inflated.
Disputes have apparently arisen between the parties in relation to the area under occupation of the petitioner, the rent payable by the petitioner and the entitlement, if any, of the petitioner to abatement of rent.
By a letter dated 22nd January, 2008 the respondent invoked the arbitration clause and requested the Managing Director of the respondent to refer the disputes to arbitration.
By a letter dated 24th January, 2008 the Chairman-cum-Managing Director of the respondent appointed Shri S. Dutta Gupta, Management Consultant as the sole Arbitrator and referred the disputes to him for arbitration.
On the contention that the appointment was not in accordance with the arbitration agreement, since Shri S. Dutta Gupta was not an officer of the respondent, the petitioner moved an application in this Court u/s 11 of the 1996 Act.
By an order dated 4th March, 2008, Her Ladyship the Hon''ble Justice Nadira Patherya set aside the appointment of Shri S. Dutta Gupta as sole Arbitrator and directed the parties to refer the disputes to the Chairman-cum-Managing Director of the respondent, who was given the liberty either to adjudicate the dispute himself or to appoint a competent officer of the respondent to act as sole Arbitrator as per the arbitration agreement.
By an order dated 24th June, 2004 the Chairman-cum-Managing Director of the respondent appointed Shri R.K.Ghosal, the company secretary of the respondent as Arbitrator. It is however, contended by the petitioner that no copy of the letter dated 24th June, 2004 was received by the petitioner.
Be that as it may, the Arbitrator admittedly wrote a letter dated 14th July, 2008 to the petitioner informing the petitioner of his appointment as Arbitrator. The aforesaid letter was admittedly received.
In this application, it is contended that the appointment of Shri R.K.Ghosal was also not in accordance with the arbitration agreement in as much as Shri R.K.Ghosal is not a competent officer of the respondent (emphasis supplied). It is alleged that a complaint had to be lodged by the petitioner against the respondent for alleged wrongful acts of the learned Arbitrator in connection with installation of electricity connection. The fact that a complaint might have been lodged against the learned Arbitrator may reasonably give rise to doubts with regard to his independence and/or impartiality. It is, however, difficult to accept the argument that the Arbitrator was not at all competent.
Section 12 and 13 of the 1996 Act are set out hereinbelow for convenience:
"12. Grounds for challenge. - (1) When a person is approached in connection with his possible appointment as an arbitrator, he shall disclose in writing any circumstances likely to give rise to justifiable doubts as to his independence or impartiality.
(2) An arbitrator, from the time of his appointment and throughout the arbitral proceedings, shall, without delay, disclose to the parties in writing any circumstances referred to in sub-section(1) unless they have already been informed of them by him.
(3) An arbitrator may be challenged only if -
(a) circumstances exist that give rise to justifiable doubts as to his independence or impartiality, or
(b) he does not possess the qualifications agreed to by the parties.
(4) A party may challenge an arbitrator appointed by him, or in whose appointment he has participated, only for reasons of which he becomes aware after the appointment has been made.
Challenge procedure. - (1) Subject to sub-section (4), the parties are free to agree on a procedure for challenging an arbitrator.
(2) Failing any agreement referred to in sub-section(1), a party who intends to challenge an arbitrator shall, within fifteen days after becoming aware of the constitution of the arbitral tribunal or after becoming aware of any circumstances referred to in sub-section (3) of section 12, send a written statement of the reasons for the challenge to the arbitral tribunal.
(3) Unless the arbitrator challenged under sub-section(2) withdraws from his office or the other party agrees to the challenge, the arbitral tribunal shall decide on the challenge.
(4) If a challenge under any procedure agreed upon by the parties or under the procedure under sub-section(2) is not successful, the arbitral tribunal shall continue the arbitral proceedings and make an arbitral award.
(5) Where an arbitral award is made under sub-section (4), the party challenging the arbitrator may make an application for setting aside such an arbitral award in accordance with section 34.
(6) Where an arbitral award is set aside on an application made under sub-section (5), the Court may decide as to whether the arbitrator who is challenged is entitled to any fees."
A challenge to the arbitrator/arbitral tribunal has to be made before the Arbitrator either within 15 days from the date of becoming aware of the appointment of the arbitrator/constitution of the arbitral tribunal. If the challenge fails, the arbitration proceedings might continue. However, the arbitral award might be challenged u/s 34.
In an application u/s 11 of 1996 Act, the Court is not to adjudicate the impartiality or independence of an Arbitrator appointed in accordance with the arbitration agreement pursuant to an order of Court. This application is misconceived and therefore fails. The petitioner may challenge the appointment of the arbitrator before the arbitrator. Having regard to the fact that this application had been made within 15 days from the date of receipt of notice from the learned Arbitrator, it is expected that the learned Arbitrator will waive the time stipulation of 15 days and consider the objection, if any, to his appointment in accordance with law, provided the same is raised forthwith and, in any case, within a week from the date of receipt of a copy of this order.
All parties concerned are to act on a xerox signed copy of this order on the usual undertakings.