ION EXCHANGE INDIA LIMITED Vs. PARAMOUNT LIMITED

JUDGEMENT

(1.) HEARD forthwith. Petitioners have invoked provisions of section 11 of Arbitration and Conciliation Act, 1996 and have sought reliefs that a third arbitrator be appointed considering provisions of the Arbitration Act and the agreement between the parties and pending hearing final disposal of the application to direct respondent No. 1 not to proceed further by granting injunction to that effect. A few facts may be noted which will be relevant for the purpose of resolving the controversy in issue. The arbitral Clause in the agreement between the parties reads as under:

(2.) IN view of the respondent No. 2 proceeding to act as a sole arbitrator, present petition was filed invoking provisions of section 11. It is contended on behalf of the petitioners that arbitral Clause did not contain a time limit for appointing arbitrator. It is further pointed out that considering section 11 of the Arbitration and Conciliation Act, 1996, on failure by one of the parties to the agreement to appoint an arbitrator in terms of the arbitration Clause, other party had to move under section 11 for Constitution of the Arbitral Tribunal. The sole arbitrator considering provisions of the Act, 1996 could not have proceeded to assume jurisdiction and proceed with the arbitral proceedings. It is further contended that section 11 does not exclude jurisdiction of the authority under section 11 to constitute the Tribunal, even if the arbitrator appointed by the respondents assumes jurisdiction and acts as the sole arbitrator. It is contended that if such situation is allowed, it will apart from multiplicity of proceedings defeat the object of the Arbitration Act. On the other hand, on behalf of the respondents, it is contended that arbitral Clause itself contains a provision for appointment of the sole arbitrator in the absence of the other side appointing arbitrator within a reasonable time. It is contended that reasonable time would be 30 days and consequently in terms of the Arbitral Clause, arbitrator appointed by the respondent could have acted as the sole arbitrator. Reliance has been placed on the judgment of the Apex Court in the case of (Datar Switchgears Ltd. v. Tata Finance Ltd. and another) 2001 (1) Bom. C. R. (S. C.)778 : 2000 (8) Supreme Court Cases 151 and (Konkan Railway Corporation Ltd. v. Rani Construction Pvt. Ltd.) 2002 (6) Bom. C. R. (S. C.) 313 : 2002 (2) S. C. C. 388.

(3.) THE short issue that would arise in this proceeding is whether it is possible to intervene or pass any order under section 11 after the Arbitral Tribunal has assumed jurisdiction. The Apex court in Konkan Railway Corporation Ltd. v. Rani Construction Pvt. Ltd. , 2002 (2) S. C. C. 388, after considering its earlier judgments and section 11 has taken a view that the power under section 11 is purely administrative in character. The Arbitral Tribunal on the other hand would be exercising quasi judicial functions. In that circumstances, considering section 16 of the Arbitration and Conciliation Act, 1996 whether it will be possible for the authority under section 11 to issue any directions for further constitution of the Tribunal in terms of the arbitral Clause and or grant injunction. It is doubtful whether the administrative authority can grant any injunction. This is power conferred on courts and Tribunals. Apart from that considering the judgment of the Apex Court, the issue as to whether the Arbitral Tribunal appointed is Tribunal properly constituted and can decide the disputes between the parties within the jurisdiction of the Arbitral Tribunal and can be decided by the Arbitral Tribunal on the objection raised under section 16 of the Arbitration and Conciliation Act, 1996. The Apex Court noted that the language of section 16 is not limited to the width of its jurisdiction but goes to the very root of its jurisdiction and as such there would be no impediment to contest before the Arbitral Tribunal that it had been wrongly constituted. Considering that remedy is available under the Act itself to the party and considering the power conferred on the authority under section 11, to my mind, it will not be possible to pass any other order but leave it open to the petitioners to raise all objections as to jurisdiction of respondent No. 2 before respondent No. 2 who has proceeded to act as sole arbitrator. With above observations, application disposed of. P. A. to issue authenticated copy of this order. Order accordingly.