Nirmal Rani and Others vs Kirpal Singh and Others

Mukul Mudgal, C.J.—This petition has been filed by the petitioner u/s 11(8) of the Arbitration & Conciliation Act, 1996 (for short '' the Act), for appointment of a sole Arbitrator to adjudicate upon the disputes between the parties.

The agreement contains the provisions for arbitration of dispute to the following effect:

Whereas our two suits are going on in the Court of ACJ (Sr. Division), Nabha and the other two suits are pending in the Court of ACJ(Junior Division), Nabha and all these suits are between us and we are share holders and owners of the property involved in the suits. Therefore, now we want to get rid of our above suits regarding our property. Therefore, we in our complete senses and without any pressure and with our own free will appoint Shri Joginder Singh Samber lson of Shri Jagjit Singh, resident of Mohalla Rewarian, Nabha and Jaidev son of Shri Seetal Singh, resident of Sukh Dass Pura, B-Tank, Patiala, as Arbitrators and authorise them that after making partition of the property situated at Nabha, get the cases filed or get the cases decided. We undertake to withdraw our respective suits on the date fixed and we will be bound to record our statements in the presence of each other and none of the parties will raise any objection. The decision given by the above two Arbitrators will be acceptable to us and we will not raise any objection. We will be bound by all the decisions given by both the Arbitrators. We will be bound by the conditions of the agreement.

Pursuant to the aforesaid clause of the agreement, it is admitted case of the parties that the matter was referred for arbitration to the Arbitrators named in the arbitration clause but those Arbitrators did not start arbitration proceedings, with the result, the petitioners filed a petition u/s 11(8) of the Act before the Court of learned Addl. Civil Judge (Senior Division), Nabha which petition later on has been transferred to this Court in view of the decision of the Hon''ble Supreme Court in S.B.P. Limited v. Patel Engineering 2005(8) S.C.C. 618.

Upon notice, respondents No. 1 to 3 put in appearance and filed their reply.

Learned Counsel for the petitioners contended that respondent No. 3 who was a named Arbitrator has declined to act as an Arbitrator in the matter and has prayed for withdrawal of his name from the Arbitral Tribunal as is evident from the reply filed by him, therefore, this Court u/s 11(6)(b) of the Act may appoint an Arbitrator to adjudicate upon the dispute between the parties.

Learned Counsel appearing for the respondents argued that the agreement being relied upon by the petitioner is a vague document as it does not contain the details of suits going on between the parties and also the subject matters which are required to be adjudicated upon by the Arbitrators. He further contended that the provisions of Section 11 of the Act could not be utilized to substitute the Arbitrator until and unless the appointed Arbitrators resigns or an application is made as per the provisions of the Act asking them to resign by both the parties or with the consent for removal of both the Arbitrators.

I have heard learned Counsel for the parties and considered their pleas. Section 11(6)(b) of the Act provides as under:

(b) the parties, or the two appointed arbitrators, fail to reach an agreement expected of them under that procedure;

c) xx xx xx

a party may request the Chief Justice or any person or institution designated by him to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment.

After hearing the pleadings of the parties, I am of the considered view that the present petition is maintainable u/s 11(6)(b) of the Act which provides that if the parties or the two appointed Arbitrators fail to reach any agreement expected of them under that procedure, a party may apply to the Chief Justice to take the necessary measure for securing the appointment. Section 11(6) of the Act according to me contains in itself substitution of Arbitrator in the event of his failure to proceed with the matter referred to him. Since Jaidev Arbitrator has withdrawn himself from the Arbitral Tribunal, therefore, another Arbitrator in his place is required to be appointed by this Court because the parties to the agreement are not reaching at any amicable settlement for appointment of another Arbitrator in his place.

So far as the objection raised by the counsel for the respondents regarding the agreement being vague or there being no details of the properties which were subject matter of the agreement, are not tenable because he has not disputed the existence of agreement between the parties and the clause of arbitration contained therein. While exercising powers u/s 11(6) of the Act, the Chief Justice or its nominee has to take into consideration whether the agreement contains an arbitration clause and whether that clause has been invoked for referring the dispute arisen between the parties out of the said agreement to an Arbitrator. In the present case, as stated earlier, both the elements exist. Therefore, the plea raised by learned Counsel for the petitioners is not necessary to be gone into as such a plea regarding vagueness of the agreement or there being no details of the properties qua which the dispute if any has arisen could be gone into by the Arbitrator.

Now the question arises whether another Arbitrator in place of Jaidev be appointed or the dispute may be referred to sole arbitration of the Arbitrator. In this regard a reference has been made to Sub Section 1 of Section 10 of the Act which provides that the parties are free to determine the number of Arbitrators provided that such number shall not be an even number, whereas Sub- section 2 of Section 10 of the Act further provides that failing the determination referred to in Sub-section (1), the arbitral Tribunal shall consist of a sole arbitrator. Section 10 of the Act reads as under:

Number of Arbitrators:

(1) The parties are free to determine the number of arbitrators, provided that such number shall not be an even number.

(2) Failing the determination referred to in Sub-section (1), the arbitral tribunal shall consist of a sole arbitrator.

It is not in dispute that the parties to an agreement are at liberty to determine the number of Arbitrators but in view of Section 10 such number shall not be an even number and if the parties fail to provide an odd number of Arbitrators, the Arbitral Tribunal would be constituted by a sole Arbitrator. Since there were even number of arbitrators contemplated in the agreement, the Court could appoint a single Arbitrator.

Finding force from the aforesaid provisions of the Act, I appoint Shri S.S. Walia, District & Sessions Judge (Retd.) as a sole Arbitrator to adjudicate upon the disputes between the parties. In the meanwhile, the parties will exchange the statements of claims and response thereof. The statements of claims be supplied to counsel for the respondents within four weeks and response to the statements of claims shall be supplied to the counsel for the petitioners within four weeks thereafter. The parties shall appear before the Arbitrator on 23.08.2010 or on an agreed date convenient to the parties but not later than a fortnight from the date of exchange of pleadings as directed aforesaid. The Arbitrator shall dispose of the reference not later than six months from the date of first appearance of the parties. The parties shall be at liberty to raise all the pleas regarding vagueness of the agreement or non-mentioning of properties dispute qua which could be adjudicated upon before the Arbitrator under the agreement in hand. The Arbitrator shall fix his own fee.

With these directions, this petition stands disposed of.