MALANPUR STEEL LIMITED Vs. DODSAL LIMITED

JUDGEMENT

(1.) . Petitioner is challenging order dated 5.4.2002 passed by the designated authority in AA No.141/2001 appointing third Arbitrator in the matter.

(2.) Petitioner and R-2 entered into an agreement/ contract containing the Arbitration clause on 25,5.1989. Disputes arose between them which were referred to two Arbitrators under the old Arbitration Act, 1940. The Arbitrators failed to come out with an award and later appointed Justice R.N.Sahai (Rtd.) as umpire subject to his consent. Meanwhile, one of the Arbitrators, Dr. Gupta, nominated by R-2 resigned and was replaced by Justice G.C.Jain who on his death was succeeded by Justice P.N.Bhagwati (Retd.). The two arbitrators met on 15.2.1999 and appointed Justice R.N.Mishra (Retd.) as the umpire. While this remained in limbo, parties grappled on the issue of applicability of the old and new Arbitration Acts. Petitioner offered to go by the New Act by his communication dated 23.1.2000 to which R-2 failed to convey his response by the agreed time frame (8.3.2000) but which he ultimately did on 12.9.2000. Petitioner says he backed out of his offer on this. He, however, addressed communication on 17.4.2001 to the two Arbitrations informing that they could not decide the matter/issue in the absence of third arbitrator. The two arbitrators then explored the appointment of a third Arbitrator on 15.5.2001 and expressed their inability to do so and required parties to seek his appointment by filing an application under Section 11 (4) of the New Act. Pursuant thereto R-2 filed requisite application culminating in appointment of Justice Dr.A.S.Anand (Retd.) as third Arbitrator.

(3.) Petitioner is assailing this appointment primarily on two grounds (1) that new appointment had terminated the mandate of Justice Mishra replacing him in the process which could not be done under Old Act or New Act and (2) the designated authority had proceeded on the wrong premise that Justice Mishra's appointment as umpire had not taken effect in the absence of his consent. L/C for petitioner, Mr.Sharma submitted that impugned order was not sustainable on both counts because no consent of umpire/third arbitrator was required to validate his appointment under either Act and that the order passed by the designated authority was contrary to the law laid down by Supreme Court in K.D.Kaparia Vs. M/s. Indian Engineering Co. (AIR 1972 SC 1538). He also urged that the authority was incompetent to replace the already appointed umpire by the new Arbitrator in exercise of arbitration powers under Section 11 (4) of the New Act.