MANISH GUNWANI Vs. LEHMAN BROTHER SECURITIES PVT. LTD.

JUDGEMENT

(1.) THE arbitration agreement is contained in a contract of 14 August 2007 between the applicant and the respondent. The arbitration clause reads as follows :

(2.) WHERE a procedure has been agreed upon between the parties to an arbitration agreement, recourse can be taken to the provisions of Section only where : (a) a party fails to act as required under that procedure; or (b) the parties or the two appointed arbitrators fail to reach an agreement expected of them under that procedure; or (c) a person, including an institution, fails to perform any function entrusted to him or it under that procedure. In The Iron and Steel Company Limited Vs. M/s. Tiwari Road Lines : AIR 2007 SC 2064, an application was moved under section without first taking recourse to the agreed procedure under the arbitration agreement which envisaged an arbitration under the rules of the Indian Council of Arbitration. The Supreme Court held that since the parties had agreed on a procedure for appointing an arbitrator for settling the disputes by arbitration and there was no allegation that any of the contingencies enumerated in clauses (a), (b) or (c) of sub -section 6 of Section had arisen, the arbitration application was not maintainable.

(3.) SINCE the parties have agreed to a procedure for arbitration, it is necessary that the applicant should take recourse to that procedure. It is not the case of the applicant that the ICC has failed to act or to perform any function entrusted to it under the agreed procedure. In that view of the matter, having regard to the law laid down by the Supreme Court in the judgment noted above, it would not be appropriate to entertain the arbitration application at this stage. The applicant would be at liberty to take recourse to the agreed procedure by moving the ICC with an appropriate request for arbitration in accordance with its rules. The Arbitration Application is accordingly dismissed.