UNION OF INDIA Vs. R R INDUSTRIES

JUDGEMENT

(1.) Counsel for the petitioner has impugned the order passed by the designated authority under section 11(6) of the Arbitration and Conciliation Act, 1996, on the ground that although on account of notice having been received from the opposite party and time to appoint the arbitrator having expired, though the right to supply the vacancy may not be available to the petitioner, yet the arbitrator has to be appointed in terms of the arbitration clause and only a gazetted Railway officer could be appointed the arbitrator, which the designated authority has not done. The second limb of the arguments of learned counsel for the petitioner is that in a similar Writ Petition (Civil) No.13448/2004, UOI v. M/s Prestress Wire Industries, the Division Bench of this Court has issued notice of the writ petition and meanwhile has stayed the operation of the impugned order.

(2.) We have perused the impugned order passed by the designated authority. The application/notice for appointment of arbitrator was given by the respondent to the petitioner vide application dated 01.6.2004. The petition for appointment of the arbitrator by the designated authority was filed by respondent on 24.2.2005 and, admittedly, the arbitrator has been appointed by the petitioner vide letter dated 21.3.2005 i.e. after expiry of 30 days of the receipt of the notice and after filing of the petition by the respondent for appointment of the arbitrator. The arguments of learned counsel for the petitioner that in terms of the law laid down by the Supreme Court, the petitioner forfeits his right to supply the vacancy but still the appointment of the arbitrator has to be in terms of arbitration clause and only a gazetted Railway officer could be appointed the arbitrator.

(3.) Reliance was placed by the designated authority on Datar Switchgears Ltd. v. Tata Finance Ltd and Anr. [(2000) 8 SCC 151]. The relevant extract is reproduced as under: So far as cases falling under Section 11(6) are concerned " such as the one before us- no time limit has been prescribed under the Act whereas a period of 30 days has been prescribed under Section 11(4) and Section 11(5) of the Act. In our view, therefore, so far as Section 11(6) 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 party first has moved the court under Section 11, that would be sufficient. In other words in cases arising under Section 11(6) if the opposite party has not made an appointment within 30 days of demand, the right to make appointment is not forfeited but continues, but an appointment has to be made before the former files application under Section 11 seeking appointment of an arbitrator. Only then the right of the opposite party ceases...