GARG ASSOCIATES Vs. DELHI DEVELOPMENT AUTHORITY

JUDGEMENT

(1.) Originally the petition was filed under Section 20 of the Arbitration & Conciliation Act, 1940 for directing the respondent to file the agreement and refer the disputes/claims of the petitioner to arbitration. However, pursuant to the objection raised by the respondents as to the maintainability of the petition, in view of the provisions of the Arbitration clause and the common judgment of the Supreme Court in Thyssen Stahlunion GMBH vs. Steel Authority of India Limited and Rani Constructions (P) Ltd. vs. Steel Authority of India Limited reported in 1999 (9) SCC 333, the petition was amended as to having been filed under Section 11 of the Arbitration and Conciliation Act, 1996. Facts in brief are that pursuant to invocation of arbitration by the petitioner on 18th of April, 1994, the Arbitrator was appointed after three years and only part of the claims were referred to him. The Arbitrator resigned on 8th of December 1997 by taking the plea that the work under the contract was partly carried out under his supervision. After his resignation no other Arbitrator was appointed. Vide notice dated 6th of March 2000 the petitioner called upon the respondent to appoint a new arbitrator and refer all his 17 claims for arbitration. Since the respondent failed to appoint the Arbitrator within 30 days of the notice instant petition was filed on 4th of August, 2000. However, Shri Ravinder, S.E. (Civil) Circle - 13 was appointed Sole Arbitrator on 7th of November 2000 and he entered upon the reference on 13th of November 2000. He has also resigned vide letter dated 5th of March 2001 on account of having been promoted as Chief Engineer.

(2.) Question whether the right to appoint the Arbitrator under Section 11 (6) of the 1996 Act continues even after 30 days of the service of notice by the aggrieved party was answered by the Supreme Court in 2000 (3) Arb.LR 447 (SC), Data Switchgears Limited vs. Tata Finance Limited & Anr., wherein the respondent made the appointment before the appellant filed the application under Section 11 but beyond 30 days. It was held that so far as Section 11 (6) of 1996 Act is concerned, if one party demands the opposite party to appoint an arbitrator and the opposite party does not make an appointment within 30 days of the demand, the right to appointment does not get automatically forfeited after expiry of 30 days. If the opposite party makes an appointment even after 30 days of the demand but before the first party has moved the Court under Section 11 that would be sufficient. Thus in cases arising under Section 11 (6), if the opposite party has not made any appointment within 30 days of the demand, the right to make appointment is not forfeited but continues and an appointment has to be made before the former files an application under Section 11 (6) seeking appointment of an arbitrator. Only then the right of the opposite party ceases.

(3.) The main objection of the respondents is that since the original petition under Section 20 of the 1940 Act was not maintainable and petition under Section 11 (6) was filed only after appointment of the Arbitrator on 7th of November 2000, the right of the Engineer Member to appoint the Arbitrator had not ceased on 7th of November 2000 as till that date no petition under Section 11 (6) was moved by the petitioner and further that it was only on the objection raised by the respondents on the basis of the judgment of the Supreme Court in Thyssen Stablunion GMBH vs. Steel Authority of India Limited and Rani Constructions (P) Ltd. vs. Steel Authority of India Limited reported in 1999 (9) SCC 333 that the original petition was amended to the petition one filed under Section 11 (6) of the 1940 Act.