No embargo on the appointment of the arbitrator suggested by the Respondent-
Tata Projects Limited vs. Oil And Natural Gas Corporation
ARB. P. 302/2020
The petition was filed before the High Court of Delhi under section 11(6) of the arbitration and conciliation act 1996 for the appointment of an arbitrator. The said petition was filed by Tata Projects Limited (petitioner) against Oil And Natural Gas Corporation Limited (respondent).
Respondent awarded the tender to the petitioner in February 2017 that formed a contract that also stated the resolution of the dispute. The resolution as per contract was a settlement in 60 days from the day of notice to the defaulting party. Failing to resolve the dispute via settlement in 60 days, then after the expiry of 60 days, the aggrieved party can refer the dispute to conciliation or arbitration according to terms and conditions. Then each of the parties would appoint an arbitrator. Then these two arbitrators will appoint the third arbitrator.
As of 8th April, 2020 petitioner wrote to the respondent seeking a resolution to the dispute. Although it could not be able to resolve via settlement and after the expiration of the period of 60 days, the petitioner invoked the arbitration on 26th June 2020 by sending a letter of notice to the respondent and suggested him the name of Hon'ble Mr. Justice Dilip Ganesh Karnik (retd.). As per the agreement, the respondent was required to appoint an arbitrator in 15 days from 26th June. However, the respondent failed to do so.
The petitioner filed the petition under section 11(6) alleging that various delays and hindrances by the respondent while undertaking the contracted work caused additional financial outlay, and as per the terms of the contract respondent have failed to appoint an arbitrator for resolution of the dispute, so this petition sought appointment of arbitrator by the court on behalf of the respondent so that the parties can continue with the other arbitration process.
On 17th August 2020, the respondent appointed Hon'ble Mr. Justice G.S. Singhvi as arbitrator. However, the counsel for petitioner Ms. Nagraj submitted that the respondent had lost its right to appoint an arbitrator when the present petition was filed, while referring to Datar Switchgear Ltd. v. TATA Finance Ltd., Union of India v. Bharat Battery Manufacturing Co. (P) Ltd.
With the appointment of Mr. Justice G.S. Singhvi as arbitrator by the respondent, the court said this action of the respondent was excess of his right. However, the court also said that Mr. Justice G.S. Singhvi is an eminent retired judge, so there can be no question in his appointment by the respondent.
Ms. Nagraj, while referring to Bharat Battery Manufacturing Co. (P) Ltd., argued that the respondent appointed arbitrator when it is to be appointed by the court in the exercise of courts power under section 11(6) then the respondent has indirectly exercised the right which directly wasn’t available to him.
The court stated that it’s correct that the respondent lost the right to appoint an arbitrator of its choice when the petition has been filed under section 11(6) of the act. The only outcome of it is that the court can override the respondent's request and appoint another arbitrator. There is no provision of this in the law that the court should do this. There is no embargo explicit or implied on the appointment of arbitrator of the person that the respondent suggests. If the court is convinced that the suggested person is suitable to be appointed, then the court can appoint the person who the respondent suggests. The court considered the appointment of Mr. Justice G.S. Singhvi (retd.) was suitable as the court could not find any reasonable objection to Mr. Justice G.S. Singhvi (retd.) as his eminence and reputation.
In the last court-appointed Mr. Justice G.S. Singhvi (retd.) as the second arbitrator and directed the parties to arbitration proceedings.
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