VINOD BAID Vs. CHADALAVADA KRISHNAMURTHY AND ANOTHER

JUDGEMENT

(1.) This application is filed, under Section 11(6) of the Arbitration and Conciliation Act, 1996 (for short 'the 1996 Act'), seeking appointment of a Sole Arbitrator, to decide the inter se disputes between the applicant and the respondents, on the ground that the mandate of the earlier Arbitrator stood terminated under Section 14(1)(a) of the 1996 Act.

(2.) Facts, to the limited extent necessary, are that, pursuant to a Memorandum of Understanding entered into on 9.12008, the applicant continued as the Chairman and Whole-Time Director of the Company whereas the 1st respondent was designated as the Managing Director of the Company. Certain disputes arose between the parties, resulting in a fresh Memorandum of Understanding being entered into on 14.9.2011. The applicant invoked the jurisdiction of this Court, under Section 11 of the 1996 Act, seeking appointment of a Sole Arbitrator and, by order in AA No.86 of 2013 dated 4.10.2013, a retired Judge of this Court was appointed as the Sole Arbitrator to adjudicate the disputes among the parties. The learned Arbitrator was requested to make an award within five months from the date on which he entered reference. Several extensions appear to have been granted thereafter, and on the ground that no award was passed even by December, 2017, the application in AAMP No. 1158 of 2017 was filed to substitute the Sole Arbitrator, by appointing any other competent Sole Arbitrator, or a panel of Arbitrators, to continue the proceedings.

(3.) Both Sri Milind G. Gokhale, learned Counsel for the applicant and Sri T. Surya Satish, learned Counsel for the 2nd respondent, would submit that the Sole Arbitrator did not pass an award within the time granted by this Court initially, or within the period as extended from time to time; there was undue delay on his part in passing an award; consequently his mandate stood terminated under Section 14( 1 )(a) of the 1996 Act; as a consequence of the Arbitrator being terminated, by operation of law under Section 14(1)(a), the applicant is entitled to invoke the jurisdiction of this Court seeking appointment of a substitute Arbitrator under Section 11 (6) read with Section 15(2) of the 1996 Act; since the Arbitrator was appointed by the High Court, under Section 11(4) and (5) of the 1996 Act, the power to terminate his mandate, and appoint a substitute Arbitrator in his place, lies only with the High Court on its jurisdiction being invoked under Section 11(6) read with Section 15(2) of the 1996 Act; in view of Section 29 of the 1996 Act, failure on the part of the Arbitrator, to pass an award within twelve months, results in automatic termination of his mandate; and as a matter of abundant caution, an Original Petition has been filed before the City Civil Court, Hyderabad under Section 14(2) of the 1996 Act. Both the learned Counsel would rely on a Division Bench judgment of this Court in Deepak Galvanising and Engineering Industries Private Limited v. Government of India, 1997 (5) ALD 765, the Allahabad High Court in Rungta Projects Ltd. v. Government of Uttar Pradesh, 2012 (6) ADJJ 214 and the Supreme Court in NBCC Limited v. J.G. Engineering Private Limited, (2010) 2 SCC 385, in this regard.