SWADESH KUMAR AGARWAL versus DINESH KUMAR AGARWAL & ORS, ETC., ETC. on 5 May 2022

[2022] 7 S.C.R. 901

SWADESH KUMAR AGARWAL

v.

DINESH KUMAR AGARWAL & ORS, ETC., ETC.

(Civil Appeal Nos. 2935-2938 of 2022)

MAY 05, 2022

[M. R. SHAH AND B. V. NAGARATHNA, JJ.]

Arbitration and Conciliation Act, 1996: ss. 11(5), 11(6), 14 –Termination of the mandate of the arbitrator – Procedure to follow– Parties-respondent no. 1 to 3 appointed a sole arbitrator by mutualconsent and later revoked the mandate of the sole arbitrator –Thereafter, the respondent no. 1 and 3 filed applications u/s. 14(1)(a)to terminate the mandate of the sole arbitrator on the ground ofdelay in concluding the arbitration proceedings – During thependency thereof, the appellant filed an application u/ord. 7 r. 11for rejection of the application u/s. 14 – Trial Court dismissed theappellant’s application – Thereagainst, the appellant filed writpetition and respondent no. 1 filed an arbitration case u/s. 11(6) toterminate the mandate of the sole arbitrator and appoint a fresharbitrator – High Court allowed the arbitration case and appointeda fresh arbitration and dismissed the writ petition – On appeal,held: An application u/s. 11(6) shall be maintainable only in a casewhere there is a contract between the parties containing thearbitration agreement and the appointment procedure is prescribedand is agreed upon in writing – s.11(5) would be attracted in a casewhere there is no procedure for appointment of an arbitrator agreedupon as per s.11(2) – On facts, the sole arbitrator was appointedby the parties themselves by mutual consent and in the absence ofany written contract containing the arbitration agreement – Thus,an application u/s.11(6) in absence of any written agreementcontaining arbitration agreement was not maintainable at all –Dispute regarding the termination of the mandate of the arbitratoru/s. 14(1)(a) can be raised before the court as defined u/s.2(e) andit cannot be decided by the High Court on an application made u/s.11(6) – Thus, the judgement and order of the High Court isunsustainable and is quashed and set aside – Further, an applicationu/Ord.7 r.11 is decided only after considering the averments and

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Aallegation in the application/plaint and not the written statement/reply to the application/defence – Trial court rightly dismissed theapplication u/Ord.7 r.11 – Civil Procedure Code, 1908 – Ord. 7 r.11.

Disposing of the appeals, the CourtB

HELD: 1.1 The sole Arbitrator was appointed by the partiesthemselves by mutual consent. There was no written agreement/contract containing the arbitration clause. [Para 6.1][911-G]

Conclusion

1.2 Sub-section (5) of section 11 of the Arbitration andConciliation Act, 1996 shall be attracted in a case where there isCno procedure for appointment of an arbitrator agreed upon asper sub-section (2) of section 11 and sub-section (6) of section 11shall be applicable in a case where there is a contract containingan arbitration agreement and the appointment procedure isagreed upon. Thus, while referring the matter for arbitration thereDneed not be any written contract containing any arbitrationagreement. But the parties may themselves decide to refer thedispute for arbitration to the sole arbitrator by mutual consent.In that case or eventuality, sub-section (6) of section 11 shall notbe attracted at all and therefore, in such a situation, the applicationunder sub-section (6) of section 11 shall not be maintainable. AnEapplication under sub-section (6) of section 11 shall bemaintainable only in a case where there is a contract between theparties containing the arbitration agreement and the appointmentprocedure is prescribed and is agreed upon in writing. In theinstant case, the sole arbitrator was appointed by the partiesFthemselves by mutual consent and in the absence of any writtencontract containing the arbitration agreement. Therefore,application under section 11(6) of the Act, 1996 in absence of anywritten agreement containing arbitration agreement was notmaintainable at all. [Paras 6.2 & 6.3][912-C-F]G1.3 Except sections 13, 14 and 15, there is no otherprovision under the Act, 1996 dealing with termination of themandate of the arbitrator and/or termination of the arbitralproceedings. Section 13 of the Act, 1996 shall be applicable onlyin a case where the arbitrator is challenged on the grounds H

mentioned in section 12 of the Act, 1996. Sections 14 and 15provide for termination of the mandate of the arbitrator. On aconjoint reading of section 13, 14 and 15 of the Act, if the challengeto the arbitrator is made on any of the grounds mentioned insection 12 of the Act, the party aggrieved has to submit anappropriate application before the Arbitral Tribunal itself.However, in case of any of the eventualities mentioned in section14(1)(a) of the Act, 1996 and the mandate of the arbitrator issought to be terminated on the ground that the sole arbitratorhas become de jure and/or de facto unable to perform his functionsor for other reasons fails to act without undue delay, the aggrievedparty has to approach the concerned “court” as defined undersection 2(e) of the Act, 1996. The concerned court has toadjudicate on whether, in fact, the sole arbitrator/arbitrators has/have become de jure and de facto unable to perform his/theirfunctions or for other reasons he fails to act without undue delay.The reason why such a dispute is to be raised before the court isthat eventualities mentioned in section 14(1)(a) can be said to bea disqualification of the sole arbitrator and therefore, such adispute/controversy will have to be adjudicated before theconcerned court as provided under section 14(2) of the Act, 1996.So far as the termination of the mandate of the arbitrator and/ortermination of the proceedings mentioned in other provisionslike in section 15(1)(a) where he withdraws from office for anyreason; or (b) by or pursuant to an agreement of the parties, thedispute need not be raised before the concerned court. [Paras6.4.1, 6.4.2, 6.5 & 6.7][919-B, F-G; 920-F-H; 921-A-C]

1.4 Once the arbitrator was appointed by mutual consentand it was alleged that the mandate of the sole arbitrator stoodterminated in view of section 14(1)(a) of the Act, 1996, theapplication under section 11(6) of the Act, 1996 to terminate themandate of the arbitrator in view of section 14(1)(a) of the Actshall not be maintainable. Once the appointment of the arbitratoris made, the dispute whether the mandate of the arbitrator hasbeen terminated on the grounds set out in section 14(1)(a) of theAct, shall not have to be decided in an application under section11(6) of the Act, 1996. Such a dispute cannot be decided on anapplication under section 11(6) of the Act and the aggrieved party AB

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Ahas to approach the concerned “court” as per sub-section (2) ofsection 14 of the Act. [Para 8][922-H; 923-A-B]

1.5 There is a difference and distinction between section11(5) and section 11(6) of the Act, 1996. In a case where there isno written agreement between the parties on the procedure forBappointing an arbitrator or arbitrators, parties are free to agreeon a procedure by mutual consent and/or agreement and thedispute can be referred to a sole arbitrator/arbitrators who canbe appointed by mutual consent and failing any agreementreferred to section 11(2), section 11(5) of the Act shall be attractedand in such a situation, the application for appointment of arbitratorCor arbitrators shall be maintainable under section 11(5) of theAct and not under section 11(6) of the Act. In a case where thereis a written agreement and/or contract containing the arbitrationagreement and the appointment or procedure is agreed upon bythe parties, an application under section 11(6) of the Act shall beDmaintainable and the High Court or its nominee can appoint anarbitrator or arbitrators in case any of the eventualities occurringunder section 11(6) (a) to (c) of the Act. Once the dispute isreferred to arbitration and the sole arbitrator is appointed by theparties by mutual consent and the arbitrator/arbitrators is/are soEappointed, the arbitration agreement cannot be invoked for thesecond time. In a case where there is a dispute/controversy onthe mandate of the arbitrator being terminated on the groundmentioned in section 14(1)(a), such a dispute has to be raisedbefore the “court”, defined under section 2(e) of the Act, 1996and such a dispute cannot be decided on an application filed underFsection 11(6) of the Act, 1996. [Para 11][924-H; 925-A-F]

1.6 It appears and it is not in dispute that the applicationunder section 14(2) of the Act was sought to be rejected on theground that there was no undue delay on the part of the arbitratorand therefore, his mandate is not required to be terminated underGsection 14(1)(a) of the Act, 1996. However, such a dispute is tobe adjudicated on merits by the concerned court before whomthe proceedings under section 14(2) of the Act were initiatedand at the most, it can be said to be the defence, which was to beadjudicated by the concerned court. As per the settled position H

SWADESH KUMAR AGARWAL v. DINESH KUMAR AGARWAL& ORS, ETC., ETC.

of law, at the stage of deciding the application under Order VIIRule 11 CPC only the averments and allegations in the application/plaint are to be considered and not the written statement and/orreply to the application and/or the defence. Therefore, as suchthe trial court rightly dismissed the application under Order VIIRule 11 of CPC. [Para 12][925-G-H; 926-A-B]

1.7 The impugned judgment and order passed by the HighCourt is unsustainable and the same is quashed and set aside.The controversy and/or the dispute, whether the mandate of thesole arbitrator under section 14(1)(a) of the Act, 1996 standsterminated or not would have to be considered by the court onan application filed under section 14(2) of the Act, 1996. Afterthe impugned order passed by the High Court, respondent Nos.1 and 3 have withdrawn their applications under section 14(2) ofthe Act, 1996. To do substantial justice between the parties andto ensure that respondent Nos. 1 and 3 are not left remediless,the application/applications submitted by respondent Nos. 1 and3 before the concerned court under section 14(2) of the Act, 1996would stand revived. Now the concerned court before whom, theapplication/applications under section 14(2) of the Act, 1996 werefiled, would consider the same in accordance with law and ontheir own merits at the earliest and preferably within the stipulatedperiod from the date of receipt of the present order. If, ultimately,it is held that the mandate of the sole arbitrator is terminated asper section 14(1)(a) of the Act, 1996 and more particularly on theground that there was undue delay on the part of the arbitrator inconcluding the arbitration proceedings, the arbitrator has to besubstituted and a fresh arbitrator has to be appointed by followingthe same procedure which was followed earlier while appointingthe present sole arbitrator. In case the parties do not agree tothe name of the sole arbitrator, the aggrieved party may approachthe appropriate court for appointment of an arbitrator undersection 11(5) of the Act. In case application(s) under section 14(2)of the Act is/are dismissed and it is held that the mandate of thesole arbitrator is not terminated and there was no undue delayon his part, in such a situation the sole arbitrator to conclude thearbitration proceedings and declare the award within a period ofnine months from the decision of the court that will be taken

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Aunder section 14(2) of the Act, 1996. The impugned judgmentand order passed by the High Court is quashed and set aside.[Para 13][926-C-H; 927-A-B]

Antrix Corporation Limited v. Devas Multimedia PrivateLtd. (2014) 11 SCC 560 : [2013] 6 SCR 453; S.P. SinglaBConstructions Private Limited v. State of HimachalPradesh and Anr. (2019) 2 SCC 488 : [2018] 14 SCR1005; ACC Limited v. Global Cements Limited (2012) 7SCC 71 : [2012] 6 SCR 215; Union of India and Ors.v. Uttar Pradesh State Bridge Corporation LimitedC(2015) 2 SCC 52 : [2014] 13 SCR 1180 – referred to.

Case Law Reference

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.2935-2938 of 2022.

EFrom the Judgment and Order dated 07.09.2017 of the High Courtof Madhya Pradesh, Principal Seat at Jabalpur, Madhya Pradesh in WPNos.11258 and 11259 of 2010 and AC No.29 of 2015 and Order dated17.11.2017 in RP No.655 of 2017.

Divyakant Lahoti, Ms. Praveena Bisht, Parikshit Ahuja, Ms.FMadhur Jhavar, Ms. Vindhya Mehra, Kartik Lahoti, Advs. for theAppellant.

Ashok Lalwani, Prashant Kumar, Rajesh Inamdar, Siddhant Singh,Aditya Bhat, Ms. Ripul Swati, Pai Amit, Sunil Singh Parihar, Ms. CharuAmbwani, Rameshwar Prasad Goyal, Advs. for the Respondents.

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The Judgment of the Court was delivered by

M. R. SHAH, J.

1. The present appeals arise out of impugned common judgmentand order dated 07.09.2017 passed by the High Court of Madhya PradeshHPrincipal Seat at Jabalpur in Arbitration Case (AC) No. 29/2015 and in

Writ Petition Nos. 11258/2010 and 11259/2010 and the order dated17.11.2017 passed in Review Petition No. 655/2017, by which, the HighCourt in exercise of powers under section 11(6) of the Arbitration andConciliation Act, 1996 (hereinafter referred to as the Act, 1996) hasterminated the mandate of sole Arbitrator appointed by the partiesthemselves and has substituted the sole Arbitrator and has appointed afresh Arbitrator on the ground that the mandate of the sole Arbitratorstood terminated in view of section 14(1)(a) of the Act, 1996. This is onthe basis that there was undue and unreasonable delay in proceedingwith the arbitration proceeding by the Sole Arbitrator. By the impugnedjudgment and order, the High Court has also confirmed the order passedby the learned Trial Court dismissing the application filed under OrderVII Rule 11 of Code of Civil Procedure (CPC) preferred by the appellantherein.

2. The facts leading to the present appeals in a nutshell are asunder: - 2.1 That a dispute between the parties which as such is a familydispute for partition of the properties arose. It was referred to the soleArbitrator. The learned Arbitrator was appointed as a sole Arbitrator bythe parties themselves on 04.08.2008. The learned Arbitrator directedthe parties to appear on 14.03.2009 for deciding the pending applications.On the request of the parties, the Arbitrator adjourned the hearing on30.03.2009. No proceedings were undertaken on 30.03.2009 due to thefact that the sole Arbitrator was not available in town. Respondent No.1 and 3 herein – parties to the arbitration proceedings revoked themandate of the sole Arbitrator vide letters dated 11.07.2009. The letterswere replied to by the sole Arbitrator. Thereafter, respondent No. 1 and3 herein, parties to the arbitration proceedings filed applications undersection 14(1)(a) of the Act, 1996 before the concerned Court (DistrictCourt) to terminate the mandate of the sole Arbitrator on the ground ofdelay in concluding the arbitration proceedings. The appellant hereinfiled an application under order VII Rule 11 of CPC for dismissal of thesaid applications under section 14 of the Act, 1996, submitting that therewas no delay at all on the part of the sole Arbitrator and therefore, therewas no question of terminating the mandate of sole Arbitrator undersection 14(1)(a) of the Act, 1996. Vide order dated 15.07.2010, the learnedTrial Court dismissed the application filed under order VII Rule 11 ofCPC preferred by the appellant herein.

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A2.2 Feeling aggrieved by the order passed by the learned TrialCourt, rejecting the application under order VII Rule 11 of CPC, theappellant herein preferred present writ petition Nos. 11259/2010 and11258/2010 before the High Court and pending the applications undersection 14(1)(a) of the Act, 1996 one of the parties – Dinesh KumarAgarwal preferred an arbitration case before the High Court underBsection 11(6) of the Act, 1996 and requested to terminate the mandateof the sole Arbitrator and to appoint a fresh Arbitrator. By the impugnedjudgment and order, the High Court has allowed Arbitration Case No.29/2015 and has observed and held that there was undue and unreasonabledelay on the part of the sole Arbitrator in concluding the arbitratingCproceedings and his mandate stood terminated under section 14(1)(a) ofthe Act, 1996. Consequently, the High Court has appointed a freshArbitrator. By the impugned judgment and order, the High Court hasalso dismissed the writ petitions preferred by the appellant herein, inwhich the appellant challenged the order passed by the learned TrialCourt rejecting the application under Order VII Rule 11 of CPC.D

2.3 Feeling aggrieved and dissatisfied with the impugned commonjudgment and order passed by the High Court terminating the mandateof sole Arbitrator under section 14(1)(a) of the Act, 1996, on an applicationfiled under section 11(6) of the Act, 1996 and dismissing the writ petitionsconfirming the order passed by the learned Trial Court rejecting theEapplication under Order VII Rule 11 of CPC, the appellant has preferredthe present appeals.

3. Shri Divyakant Lahoti, learned counsel appearing on behalf ofthe appellant has strenuously submitted that in the facts and circumstancesof the case the High Court has materially erred in terminating the mandateFof the Arbitrator under section 14(1)(a) of the Act, 1996on an applicationfiled under section 11(6) of the Act, 1996.

3.1 It is further submitted that in a case, where an Arbitrator wasalready appointed by the parties themselves, subsequently, no applicationunder section 11(6) of the Act, 1996 was maintainable either to terminatethe mandate of the sole Arbitrator and/or to substitute the Arbitrator.G

3.2 It is contended by Shri Lahoti, learned counsel that the mandateof the Arbitrator can be terminated and/or may come to an end only asper the provisions of the Arbitration and Conciliation Act, 1996. Relianceis placed upon sections13, 14, 15, 25(a), 30 and 32 of the Act, 1996. It issubmitted that other than the aforesaid provisions under the Act, 1996,Hthere is no provision to terminate the mandate of the Arbitrator.

3.3 It is submitted that in case of the eventualities mentioned insection 14(1)(a) of the Act, 1996, the remedy available to the aggrievedparty would be to approach the “court” as defined under section 2(e) ofthe Act, 1996.

3.4 Shri Lahoti, learned counsel appearing on behalf of the appellantfurther submitted that in the present case as such respondent No. 1 and3 herein – parties to the arbitration proceedings, in fact, did submit theapplications under section 14(2) of the Act, 1996, which were pendingbefore the concerned court at the time when the present applicationsunder section 11(6) of the Act, 1996 was filed.

3.5 It is further urged that in fact, there is a difference and distinctionbetween section 11(5) and section 11(6) of the Act, 1996.

3.6 That in the absence of any written contract containing thearbitration agreement, section 11(6) of the Act, 1996shall not be applicableand therefore, an application under that provision shall not be maintainable.

3.7 That even otherwise, there was no undue delay in the arbitrationproceedings on the part of the sole Arbitrator which could have led totermination of his mandate that too, in exercise of powers under section11(5) and section 11(6) of the Act, 1996.

3.8 It is further submitted by Shri Lahoti, learned counsel appearingon behalf of the appellant that as there was no undue delay on the partof the sole Arbitrator therefore, section 14(1)(a) would not be attracted.Therefore, application under section 14 of the Act, 1996 was liable to bedismissed and the learned Trial Court ought to have allowed the applicationfiled by the appellant, to reject the application under section 14 of theAct, 1996 in exercise of powers under Order VII Rule 11 of CPC. It issubmitted that the High Court committed a grave error in dismissing thewrit petitions and confirming the order passed by the learned Trial Courtin dismissing the application under Order VII Rule 11 of CPC.

3.9 Shri Lahoti, learned counsel appearing on behalf of the appellantheavily relied upon the decision of this Court in the case of AntrixCorporation Limited v. Devas Multimedia Private Ltd.; (2014) 11SCC 560 (para 31 & 33) and the subsequent decision of this Court in thecase of S.P. Singla Constructions Private Limited v. State ofHimachal Pradesh and Anr.; (2019) 2 SCC 488 in support of hissubmissions that once the parties have invoked the arbitration proceedingsand the Arbitrator has been appointed, subsequent application undersection 11(6) of the Act, 1996 shall not be maintainable.

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A4. The present appeal is vehemently opposed by Shri AshokLalwani, learned counsel appearing on behalf of respondent No.1 andShri Rajesh Inamdar, learned counsel appearing on behalf of respondentNo. 2. Shri Lalwani, learned counsel appearing on behalf of respondentNo. 1 has vehemently submitted that in the facts and circumstances ofthe case, when it was found that there was an undue delay on the part ofBthe Arbitrator in concluding the arbitration proceedings, his mandate wasrightly terminated considering section 14(1)(a) of the Act, 1996.

4.1 It is submitted that as per section 14(1) of the said Act, theword used is “shall”. It is submitted that it provides that the mandate ofan arbitrator “shall” terminate and he shall be substituted by anotherCarbitrator, if he, de jure or de facto is unable to perform his functions orfor other reasons fails to act without undue delay. It is submitted thattherefore, once it is found that the arbitrator is unable to perform hisfunctions due to eventualities mentioned in section 14(1) of the Act,1996, there shall be an automatic termination of the mandate of the Darbitrator and he shall be substituted by another arbitrator. Reliance isplaced upon the decisions of this Court in the cases of ACC Limited v.Global Cements Limited; (2012) 7 SCC 71and Union of India andOrs. v. Uttar Pradesh State Bridge Corporation Limited; (2015) 2SCC 52.

4.2 Shri Lalwani, learned counsel appearing on behalf of respondentENo. 1 has further submitted that in the facts and circumstances of thecase, the learned Trial Court did not commit any error in rejecting theapplication under Order VII Rule 11 of CPC. It is urged that whether ornot there was undue delay on the part of the sole Arbitrator is a questionwhich is to be adjudicated by the Court and at the most the same can beFsaid to be a defence. That as per the settled position of law at the stageof deciding the application under Order VII Rule 11 of CPC only theaverments in the application/plaint are required to be considered and notthe defence and/or the case stated in the written statement and/or replyto any application. It is submitted that therefore, the learned Trial Court

rightly rejected the application under Order VII Rule 11 of CPC andGrightly refused to reject the application submitted under section 14 of theAct, 1996. That in any case, after passing the impugned order, the originalapplicants- respondents have already withdrawn their applications undersection 14(2) of the Act, 1996.

4.3 Making the above submissions and relying upon the aboveHdecisions, it is prayed to dismiss the present appeals.

5. We have heard learned counsel appearing on behalf of therespective parties at length.

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6. The following questions arise for our consideration: -

(i) Whether the High Court in exercise of powers under section11(6) of the Act, 1996, can terminate the mandate of theBsole arbitrator?

(ii) Whether in the absence of any written contract containingthe arbitration agreement, the application under section 11(6)of the Act, 1996 would be maintainable?

(iii) Is there any difference and distinction between sub-section(5) of section 11 and sub-section (6) of section 11 of theAct, 1996?

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(iv) Whether the application under sub-section (6) of section 11shall be maintainable in a case where the parties themselvesappointed a sole arbitrator with mutual consent?

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(v) Whether in the facts and circumstances of the case theHigh Court was justified in terminating the mandate of thesole arbitrator on the ground that there was undue delay onthe part of the sole arbitrator in concluding the arbitrationproceedings which would lead to the termination of hismandate, in an application under section 11(6) of the Act,1996?

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(vi) Whether in the facts and circumstances of the case, thelearned Trial Court was justified in dismissing the applicationsubmitted by the appellant, submitted to reject theapplication under section 14(2) of the Act, 1996 in exerciseof powers under Order VII Rule 11 of CPC?

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Question No. (i) to (v) are interconnected. Therefore, all areconsidered and decided together.

6.1 In the present case the sole Arbitrator was appointed by theparties themselves by mutual consent. There was no written agreement/contract containing the arbitration clause.

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6.2 As per sub-section (2) of section 11, subject to sub-section(6), the parties are free to agree on a procedure for appointment of thearbitrator or arbitrators. Sub-section (5) of section 11 provides that in an H

Aarbitration with a sole arbitrator, failing any agreement referred to insub-section (2), if the parties fail to agree on the arbitrator within thirtydays from receipt of a request by one party from the other party to soagree, the court may appoint an arbitrator. However, in a case wherethere is an arbitration agreement and the written contract and theappointment procedure is agreed upon by the parties, sub-section (6) ofBsection 11 of the Act, 1996 shall be attracted and on the eventualitiesoccurring in sub-section (6) of section 11, a party may approach theHigh Court and request for appointment of an arbitrator, in exercise ofpowers under sub-section (6) of section 11 of the Act, 1996. Therefore,sub-section (5) of section 11 shall be attracted in a case where there isCno procedure for appointment of an arbitrator agreed upon as per sub-section (2) of section 11 and sub-section (6) of section 11 shall beapplicable in a case where there is a contract containing an arbitrationagreement and the appointment procedure is agreed upon. Thus, whilereferring the matter for arbitration there need not be any written contract

Dcontaining any arbitration agreement. But the parties may themselvesdecide to refer the dispute for arbitration to the sole arbitrator by mutualconsent. In that case or eventuality, sub-section (6) of section 11 shallnot be attracted at all and therefore, in such a situation, the applicationunder sub-section (6) of section 11 shall not be maintainable. Anapplication under sub-section (6) of section 11 shall be maintainable onlyEin a case where there is a contract between the parties containing thearbitration agreement and the appointment procedure is prescribed andis agreed upon in writing.

6.3 In the present case, the sole arbitrator was appointed by theparties themselves by mutual consent and in the absence of any writtenFcontract containing the arbitration agreement. Therefore, application undersection 11(6) of the Act, 1996 in absence of any written agreementcontaining arbitration agreement was not maintainable at all.

6.4 Now the next question which is posed for consideration ofthis Court is, whether, in exercise of powers under sub-section (6) ofGsection 11 of the Act, 1996, the High Court can terminate the mandateof the sole arbitrator and substitute the arbitrator in view of section14(1)(a) of the Act, 1996 on the ground that he has failed to act withoutundue delay and in such a situation aggrieved party has to approach the“court” to terminate his mandate.H

6.4.1 While answering the aforesaid question/issue, the relevantprovisions of the Act, 1996 on termination of the mandate of the arbitratorand the procedure to be followed are required to be referred to: - “11. Appointment of arbitrators-(1) A person of any nationalitymay be an arbitrator, unless otherwise agreed by the parties.

(2) Subject to sub-section (6), the parties are free to agree on aprocedure for appointing the arbitrator or arbitrators.

(3) Failing any agreement referred to in sub-section (2), in anarbitration with three arbitrators, each party shall appoint onearbitrator, and the two appointed arbitrators shall appoint the thirdarbitrator who shall act as the presiding arbitrator.

(3A) The Supreme Court and the High Court shall have the powerto designate, arbitral institutions, from time to time, which havebeen graded by the Council under section 43-I, for the purposesof this Act:

Provided that in respect of those High Court jurisdictions, whereno graded arbitral institution are available, then, the Chief Justiceof the concerned High Court may maintain a panel of arbitratorsfor discharging the functions and duties of arbitral institution andany reference to the arbitrator shall be deemed to be an arbitralinstitution for the purposes of this section and the arbitratorappointed by a party shall be entitled to such fee at the rate asspecified in the Fourth Schedule: Provided further that the ChiefJustice of the concerned High Court may, from time to time, reviewthe panel of arbitrators.]

(4) If the appointment procedure in sub-section (3) applies and—(a) a party fails to appoint an arbitrator within thirty days from thereceipt of a request to do so from the other party; or(b) the twoappointed arbitrators fail to agree on the third arbitrator withinthirty days from the date of their appointment,[the appointmentshall be made, on an application of the party, by the arbitralinstitution designated by the Supreme Court, in case of internationalcommercial arbitration, or by the High Court, in case of arbitrationsother than international commercial arbitration, as the case maybe;]

(5) Failing any agreement referred to in sub-section (2), in anarbitration with a sole arbitrator, if the parties fail to agree on the A

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SUPREME COURT REPORTS

arbitrator within thirty days from receipt of a request by one partyfrom the other party to so agree 11[the appointment shall be madeon an application of the party in accordance with the provisionscontained in sub-section (4);]

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(6) Where, under an appointment procedure agreed upon by theparties,- (a) a party fails to act as required under that procedure;or (b) the parties, or the two appointed arbitrators, fail to reach anagreement expected of them under that procedure; or (c) a person,including an institution, fails to perform any function entrusted tohim or it under that procedure, a [the appointment shall be made,on an application of the party, by the arbitral institution designatedby the Supreme Court, in case of international commercialarbitration, or by the High Court, in case of arbitrations other thaninternational commercial arbitration, as the case may be] to takethe necessary measure, unless the agreement on the appointmentprocedure provides other means for securing the appointment.

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(6B) The designation of any person or institution by the SupremeCourt or, as the case may be, the High Court, for the purposes ofthis section shall not be regarded as a delegation of judicial powerby the Supreme Court or the High Court.]

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(8) The arbitral institution referred to in sub-sections (4), (5) and(6)], before appointing an arbitrator, shall seek a disclosure inEwriting from the prospective arbitrator in terms of sub-section (1)of section 12, and have due regard to— (a) any qualificationsrequired for the arbitrator by the agreement of the parties; and(b) the contents of the disclosure and other considerations as arelikely to secure the appointment of an independent and impartialFarbitrator.

(9) In the case of appointment of sole or third arbitrator in aninternational commercial arbitration, 16[the arbitral institutiondesignated by the Supreme Court] may appoint an arbitrator of anationality other than the nationalities of the parties where theGparties belong to different nationalities.

(11) Where more than one request has been made under sub-section (4) or sub-section (5) or sub-section (6) to different arbitralinstitutions, the arbitral institution to which the request has beenfirst made under the relevant sub-section shall be competent toappoint.

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(12) Where the matter referred to in sub-sections (4), (5), (6) and(8) arise in an international commercial arbitration or any otherarbitration, the reference to the arbitral institution in thosesubsections shall be construed as a reference to the arbitralinstitution designated under sub-section (3A).

(13) An application made under this section for appointment of anarbitrator or arbitrators shall be disposed of by the arbitral institutionwithin a period of thirty days from the date of service of notice onthe opposite party.

(14) The arbitral institution shall determine the fees of the arbitraltribunal and the manner of its payment to the arbitral tribunal subjectto the rates specified in the Fourth Schedule.

Explanation.— For the removal of doubts, it is hereby clarifiedthat this sub-section shall not apply to international commercialarbitration and in arbitrations (other than international commercialarbitration) where parties have agreed for determination of feesas per the rules of an arbitral institution.]

12. Grounds for challenge- (1) When a person is approachedin connection with his possible appointment as an arbitrator, heshall disclose in writing any circumstances,— (a) such as theexistence either direct or indirect, of any past or present relationshipwith or interest in any of the parties or in relation to the subject-matter in dispute, whether financial, business, professional or otherkind, which is likely to give rise to justifiable doubts as to hisindependence or impartiality; and (b) which are likely to affect hisability to devote sufficient time to the arbitration and in particularhis ability to complete the entire arbitration within a period of twelvemonths. Explanation 1.— The grounds stated in the Fifth Scheduleshall guide in determining whether circumstances exist which giverise to justifiable doubts as to the independence or impartiality ofan arbitrator. Explanation 2.— The disclosure shall be made bysuch person in the form specified in the Sixth Schedule.]

(2) An arbitrator, from the time of his appointment and throughoutthe arbitral proceedings, shall, without delay, disclose to the partiesin writing any circumstances referred to in sub-section (1) unlessthey have already been informed of them by him.

(3) An arbitrator may be challenged only if- (a) circumstancesexist that give rise to justifiable doubts as to his independence or

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Aimpartiality, or (b) he does not possess the qualifications agreed toby the parties.

(4) A party may challenge an arbitrator appointed by him, or inwhose appointment he has participated, only for reasons of whichhe becomes aware after the appointment has been made.

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[(5) Notwithstanding any prior agreement to the contrary, anyperson whose relationship, with the parties or counsel or thesubject-matter of the dispute, falls under any of the categoriesspecified in the Seventh Schedule shall be ineligible to be appointedas an arbitrator: Provided that parties may, subsequent to disputesChaving arisen between them, waive the applicability of this sub-section by an express agreement in writing.]

13. Challenge procedure.— (1) Subject to sub-section (4), theparties are free to agree on a procedure for challenging anarbitrator.

D(2) Failing any agreement referred to in sub-section (1), a partywho intends to challenge an arbitrator shall, within fifteen daysafter becoming aware of the constitution of the arbitral tribunal orafter becoming aware of any circumstances referred to in sub-section (3) of section 12, send a written statement of the reasonsfor the challenge to the arbitral tribunal.E(3) Unless the arbitrator challenged under sub-section (2)withdraws from his office or the other party agrees to the challenge,the arbitral tribunal shall decide on the challenge.

(4) If a challenge under any procedure agreed upon by the partiesFor under the procedure under sub-section (2) is not successful,the arbitral tribunal shall continue the arbitral proceedings andmake an arbitral award.

(5) Where an arbitral award is made under sub-section (4), theparty challenging the arbitrator may make an application for settingGaside such an arbitral award in accordance with section 34.

(6) Where an arbitral award is set aside on an application madeunder sub-section (5), the Court may decide as to whether thearbitrator who is challenged is entitled to any fees.

14. Failure or impossibility to act.—(1) 3 [The mandate of anHarbitrator shall terminate and he shall be substituted by another

arbitrator, if]— (a) he becomes de jure or de facto unable toperform his functions or for other reasons fails to act withoutundue delay; and (b) he withdraws from his office or the partiesagree to the termination of his mandate.

(2) If a controversy remains concerning any of the grounds referredto in clause (a) of sub-section (1), a party may, unless otherwiseagreed by the parties, apply to the Court to decide on the terminationof the mandate.

(3) If, under this section or sub-section (3) of section 13, an arbitratorwithdraws from his office or a party agrees to the termination ofthe mandate of an arbitrator, it shall not imply acceptance of thevalidity of any ground referred to in this section or sub-section (3)of section 12.

15. Termination of mandate and substitution of arbitrator.—(1) In addition to the circumstances referred to in section 13 orsection 14, the mandate of an arbitrator shall terminate— (a) wherehe withdraws from office for any reason; or (b) by or pursuant toagreement of the parties.

(2) Where the mandate of an arbitrator terminates, a substitutearbitrator shall be appointed according to the rules that wereapplicable to the appointment of the arbitrator being replaced.

(3) Unless otherwise agreed by the parties, where an arbitrator isreplaced under sub-section (2), any hearings previously held maybe repeated at the discretion of the arbitral tribunal.

(4) Unless otherwise agreed by the parties, an order or ruling ofthe arbitral tribunal made prior to the replacement of an arbitratorunder this section shall not be invalid solely because there hasbeen a change in the composition of the arbitral tribunal.

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25. Default of a party.—Unless otherwise agreed by the parties,where, without showing sufficient cause,—

(a) the claimant fails to communicate his statement of claim inaccordance with sub-section (1) of section 23, the arbitraltribunal shall terminate the proceedings; (b)the respondent fails to communicate his statement ofdefence in accordance with sub-section (1) of section 23,the arbitral tribunal shall continue the proceedings without

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Atreating that failure in itself as an admission of the allegationsby the claimant 3 [and shall have the discretion to treat theright of the respondent to file such statement of defence ashaving been forfeited].

(c) a party fails to appear at an oral hearing or to producedocumentary evidence, the arbitral tribunal may continuethe proceedings and make the arbitral award on the evidencebefore it.

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30. Settlement.—(1) It is not incompatible with an arbitrationCagreement for an arbitral tribunal to encourage settlement of thedispute and, with the agreement of the parties, the arbitral tribunalmay use mediation, conciliation or other procedures at any timeduring the arbitral proceedings to encourage settlement.

(2) If, during arbitral proceedings, the parties settle the dispute,Dthe arbitral tribunal shall terminate the proceedings and, if requestedby the parties and not objected to by the arbitral tribunal, recordthe settlement in the form of an arbitral award on agreed terms.

(3) An arbitral award on agreed terms shall be made in accordancewith section 31 and shall state that it is an arbitral award.

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(4) An arbitral award on agreed terms shall have the same statusand effect as any other arbitral award on the substance of thedispute.

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32. Termination of proceedings.—(1) The arbitral proceedingsFshall be terminated by the final arbitral award or by an order ofthe arbitral tribunal under sub-section (2).

(2) The arbitral tribunal shall issue an order for the termination ofthe arbitral proceedings where—

(a) the claimant withdraws his claim, unless therespondent objects to the order and the arbitral tribunalrecognises a legitimate interest on his part in obtaininga final settlement of the dispute, G

(b) the parties agree on the termination of theproceedings, or H

(c) the arbitral tribunal finds that the continuation of theproceedings has for any other reason becomeunnecessary or impossible.

(3) Subject to section 33 and sub-section (4) of section 34, themandate of the arbitral tribunal shall terminate with the terminationof the arbitral proceedings.”

Except the aforesaid provisions, there is no other provision underthe Act, 1996 dealing with termination of the mandate of the arbitratorand/or termination of the arbitral proceedings.

6.4.2 Section 13 provides that subject to sub-section (4), the partiesare free to agree on a procedure for challenging an arbitrator and failingany agreement on a procedure for challenging an arbitrator, a party whointends to challenge an arbitration shall, within fifteen days after becomingaware of the constitution of the arbitral tribunal or after becoming awareof any circumstances referred to in sub-section (3) of section 12, send awritten statement of the reasons for the challenge to the arbitral tribunal.As per sub-section (3) of section 13, unless the arbitrator challengedunder sub-section (2) withdraws from his office or the other party agreesto the challenge, it is for the arbitral tribunal to decide on the challenge.If a challenge to the arbitrator is not successful in that case, the arbitraltribunal shall continue the arbitral proceedings and make an arbitral awardand when an arbitral award is made under sub-section (4), the partychallenging the arbitrator may make an application for setting aside suchan arbitral award in accordance with section 34 of the Act, 1996.Therefore, as per section 13 of the Act, the challenge to the arbitratorshall be made before the arbitral tribunal itself.

However, section 13 of the Act, 1996 shall be applicable only in acase where the arbitrator is challenged on the grounds mentioned insection 12 of the Act, 1996.

6.5 Sections14 and 15 provide for termination of the mandate ofthe arbitrator. Section 14 of the Act, 1996 provides that the mandate ofthe arbitrator shall terminate and he shall be substituted by anotherarbitrator in case of any eventuality mentioned in section 14(1)(a). Asper sub-section (2) of section 14, if a controversy remains concerningany of the grounds referred to in clause (a) of sub-section (1), a partymay, apply to the “court” to decide on the termination of the mandate.The expression “court” is defined under section 2(e) of the Act, 1996,which reads as under:-

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A“(e) “Court” means—

(i) in the case of an arbitration other than internationalcommercial arbitration, the principal Civil Court of originaljurisdiction in a district, and includes the High Court inexercise of its ordinary original civil jurisdiction, havingBjurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not include any Civil Court of agrade inferior to such principal Civil Court, or any Court ofSmall Causes;

C(ii)in the case of international commercial arbitration, the HighCourt in exercise of its ordinary original civil jurisdiction,having jurisdiction to decide the questions forming thesubject-matter of the arbitration if the same had been thesubject-matter of a suit, and in other cases, a High Courthaving jurisdiction to hear appeals from decrees of courtsDsubordinate to that High Court;]”

6.6 Section 15 provides other grounds for termination of themandate of the arbitrator. It provides that in addition to the circumstancesreferred to in section 13 or section 14, the mandate of an arbitrator shallterminate (a) where he withdraws from office for any reason; or (b) byEor pursuant to an agreement of the parties.

Where the mandate of an arbitrator is terminated on the aforesaidgrounds mentioned in section 15(1)(a) and (b) in such a situation asubstitute arbitrator shall have to be appointed and that too, according tothe rules that were applicable to the appointment of the arbitrator beingFreplaced.

6.7 Therefore, on a conjoint reading of section 13, 14 and 15 ofthe Act, if the challenge to the arbitrator is made on any of the groundsmentioned in section 12 of the Act, the party aggrieved has to submit anappropriate application before the Arbitral Tribunal itself. However, inGcase of any of the eventualities mentioned in section 14(1)(a) of the Act,1996 and the mandate of the arbitrator is sought to be terminated on theground that the sole arbitrator has become de jure and/or de facto unableto perform his functions or for other reasons fails to act without unduedelay, the aggrieved party has to approach the concerned “court” asdefined under section 2(e) of the Act, 1996. The concerned court has toH

adjudicate on whether, in fact, the sole arbitrator/arbitrators has/havebecome de jure and de facto unable to perform his/their functions orfor other reasons he fails to act without undue delay. The reason whysuch a dispute is to be raised before the court is that eventualitiesmentioned in section 14(1)(a) can be said to be a disqualification of thesole arbitrator and therefore, such a dispute/controversy will have to beadjudicated before the concerned court as provided under section 14(2)of the Act, 1996.

So far as the termination of the mandate of the arbitrator and/ortermination of the proceedings mentioned in other provisions like in section15(1)(a) where he withdraws from office for any reason; or (b) by orpursuant to an agreement of the parties, the dispute need not be raisedbefore the concerned court. For example, where the sole arbitratorhimself withdraws from office for any reason or when both the partiesagree to terminate the mandate of the arbitrator and for substitution ofthe arbitrator, thereafter, there is no further controversy as either thesole arbitrator himself has withdrawn from office and/or the partiesthemselves have agreed to terminate the mandate of the arbitrator andto substitute the arbitrator. Thus, there is no question of raising such adispute before the court. Therefore, the legislation has deliberatelyprovided that the dispute with respect to the termination of the mandateof the arbitrator under section 14(1)(a) alone will have to be raised beforethe “court”. Hence, whenever there is a dispute and/or controversy thatthe mandate of the arbitrator is to be terminated on the grounds mentionedin section 14(1)(a), such a controversy/dispute has to be raised beforethe concerned “court” only and after the decision by the concerned“court” as defined under section 2(e) of the Act, 1996 and ultimately it isheld that the mandate of the arbitrator is terminated, thereafter, thearbitrator is to be substituted accordingly, that too, according to the rulesthat were applicable to the initial appointment of the arbitrator. Therefore,normally and generally, the same procedure is required to be followedwhich was followed at the time of appointment of the sole arbitratorwhose mandate is terminated and/or who is replaced.

7. Now the next question which is posed for consideration of thisCourt is, whether, in a case where the parties themselves have referredthe dispute for arbitration and appointed and/or nominated the solearbitrator by mutual consent and in the absence of any arbitrationagreement and contract containing an arbitration agreement once the AB

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Aarbitrator is appointed, an application under section 11(6) of the Act,1996 to terminate the mandate of the arbitrator and to substitute thearbitrator would be maintainable.

7.1 It is to be noted that in the present case as such the applicationunder section 14(2) of the Act, 1996 to terminate the mandate of theBarbitrator was already pending before the concerned court on the groundthat his mandate stood terminated in view of section 14(1)(a) of the Act,1996.

7.2 As observed hereinabove, there is a difference and distinctionbetween the arbitrator to be appointed under section 11(5) and underCsection 11(6) of the Act, 1996. As observed above, even in the absenceof any arbitration agreement in writing between the parties, with consentthe parties may refer the dispute for arbitration and appoint a solearbitrator/arbitrators by mutual consent and parties may agree mutuallyon a procedure for appointing an arbitrator or arbitrators even in theabsence of any written agreement. In such a situation and failing anDagreement referred to sub-section (2), the aggrieved party may approachthe High Court for appointment of an arbitrator under sub-section (5) ofsection 11 and in such a situation sub-section (5) of section 11 shall beattracted. However, where there is a written agreement on theappointment procedure agreed upon by the parties and there is a failureEto appoint an arbitrator or arbitrators, in that case, sub-section (6) ofsection 11 shall be attracted and an aggrieved party may approach theHigh Court for appointment of an arbitrator under sub-section (6) ofsection 11 of the Act, 1996. Therefore, an application under section 11(6)of the Act, 1996 shall be maintainable only in a case where there is awritten agreement and/or the contract containing the arbitrationFagreement and the appointment procedure agreed upon by the parties,application under section 11(6) of the Act, 1996 shall be maintainable.Otherwise, the application under section 11(6) of the Act, 1996 shall notbe maintainable.

7.3 In the present case, the parties themselves agreed on aGprocedure for appointment of the arbitrator and appointed and nominatedan arbitrator by mutual consent. Therefore, the application under section11(6) of the Act, 1996 was not maintainable at all.

8. Even otherwise, once the arbitrator was appointed by mutualconsent and it was alleged that the mandate of the sole arbitrator stoodHterminated in view of section 14(1)(a) of the Act, 1996, the application under section 11(6) of the Act, 1996 to terminate the mandate of thearbitrator in view of section 14(1)(a) of the Act shall not be maintainable.Once the appointment of the arbitrator is made, the dispute whether themandate of the arbitrator has been terminated on the grounds set out insection 14(1)(a) of the Act, shall not have to be decided in an applicationunder section 11(6) of the Act, 1996. Such a dispute cannot be decidedon an application under section 11(6) of the Act and the aggrieved partyhas to approach the concerned “court” as per sub-section (2) of section14 of the Act. In the case of Antrix Corporation Limited (supra) inpara 31 and 33, it is observed and held as under: -

“31. The matter is not as complex as it seems and in our view,once the arbitration agreement had been invoked by Devas and anominee arbitrator had also been appointed by it, the arbitrationagreement could not have been invoked for a second time by thepetitioner, which was fully aware of the appointment made by therespondent. It would lead to an anomalous state of affairs if theappointment of an arbitrator once made, could be questioned in asubsequent proceeding initiated by the other party also for theappointment of an arbitrator. In our view, while the petitioner wascertainly entitled to challenge the appointment of the arbitrator atthe instance of Devas, it could not do so by way of an independentproceeding under Section 11(6) of the 1996 Act. While power hasbeen vested in the Chief Justice to appoint an arbitrator underSection 11(6) of the 1996 Act, such appointment can be questionedunder Section 13 thereof. In a proceeding under Section 11 of the1996 Act, the Chief Justice cannot replace one arbitrator alreadyappointed in exercise of the arbitration agreement.

33. Sub-section (6) of Section 11 of the 1996 Act, quitecategorically provides that where the parties fail to act in terms ofa procedure agreed upon by them, the provisions of sub-section(6) may be invoked by any of the parties. Where in terms of theagreement, the arbitration clause has already been invoked byone of the parties thereto under the ICC Rules, the provisions ofsub-section (6) cannot be invoked again, and, in case the otherparty is dissatisfied or aggrieved by the appointment of an arbitratorin terms of the agreement, his/its remedy would be by way of apetition under Section 13, and, thereafter, under Section 34 of the1996 Act.”

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A9. Following the aforesaid decision in the subsequent decision ofthis Court in the case of S.P. Singla Constructions Private Limited(supra), it is observed and held by this Court that once the arbitrator hadbeen appointed as per clause 65of the agreement (in that case) and asper provisions of the law, the arbitration agreement could not have beeninvoked for second time.B

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9.1 Now so far as reliance being placed upon the decisions of thisCourt by learned counsel appearing on behalf of respondent No. 1 in thecases of ACC Limited (supra) and Uttar Pradesh State BridgeCorporation Limited (supra) are concerned as such there cannot beany dispute with respect to the position of law laid down by this Court inCthe aforesaid decisions to the effect that in case of any of the eventualitiesoccurring as mentioned in section 14 and 15 of the Act, 1996, the mandateof the arbitrator shall stand terminated. However, the question is in acase where there is a dispute/controversy on the mandate of the arbitrationbeing terminated on the ground set out in section 14(1)(a) of the Act,Dwhether such a dispute shall have to be raised before the concerned“court” defined under section 2(e) of the Act or such a dispute can beconsidered on an application under section 11(6) of the Act? Before thisCourt in the aforesaid decisions such a controversy was not raised.Therefore, the aforesaid decisions shall not be of any assistance torespondents and/or the same shall not be applicable to the facts of theEcase on hand, while deciding the issue, whether termination of themandate of the arbitrator on the ground mentioned under section 14(1)(a)of the Act,1996 can be decided under section 14(2) or under section11(6) of the Act, 1996.

10. It is to be noted that as such in the present case the proceedingsFbefore the concerned court under section 14(2) of the Act, 1996 at theinstance of respondent No. 1 and 3 herein to terminate the mandate ofthe sole respondent under section 14(1)(a) of the Act were already pendingbefore the concerned court when respondent No. 1 moved an applicationunder section 11(6) of the Act and such a dispute was at large beforeGthe court in a proceeding under section 14(2) of the Act.

11. In view of the aforesaid discussion and for the reasons statedabove, it is observed and held as under: -

(i) That there is a difference and distinction between section11(5) and section 11(6) of the Act, 1996;H

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(ii) In a case where there is no written agreement between theAparties on the procedure for appointing an arbitrator orarbitrators, parties are free to agree on a procedure bymutual consent and/or agreement and the dispute can bereferred to a sole arbitrator/arbitrators who can be appointedby mutual consent and failing any agreement referred toBsection 11(2), section 11(5) of the Act shall be attractedand in such a situation, the application for appointment ofarbitrator or arbitrators shall be maintainable under section11(5) of the Act and not under section 11(6) of the Act;

(iii) In a case where there is a written agreement and/or contractcontaining the arbitration agreement and the appointmentor procedure is agreed upon by the parties, an applicationunder section 11(6) of the Act shall be maintainable and theHigh Court or its nominee can appoint an arbitrator orarbitrators in case any of the eventualities occurring undersection 11(6) (a) to (c) of the Act; C

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(iv) Once the dispute is referred to arbitration and the solearbitrator is appointed by the parties by mutual consent andthe arbitrator/arbitrators is/are so appointed, the arbitrationagreement cannot be invoked for the second time; E

(v) In a case where there is a dispute/controversy on themandate of the arbitrator being terminated on the groundmentioned in section 14(1)(a), such a dispute has to beraised before the “court”, defined under section 2(e) ofthe Act, 1996 and such a dispute cannot be decided on anapplication filed under section 11(6) of the Act, 1996.

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12. Now the next question which is posed for consideration ofthis Court is whether the learned Trial Court was justified in rejectingthe application submitted by the appellant, which was filed to reject theapplications under section 14 of the Act, in exercise of powers underOrder VII Rule 11 of CPC is concerned, having gone through theaverments in the application under Order VII Rule 11 of CPC, it appearsand it is not in dispute that the application under section 14(2) of the Actwas sought to be rejected on the ground that there was no undue delayon the part of the arbitrator and therefore, his mandate is not required tobe terminated under section 14(1)(a) of the Act, 1996. However, such a G

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Adispute is to be adjudicated on merits by the concerned court beforewhom the proceedings under section 14(2) of the Act were initiated andat the most, it can be said to be the defence, which was to be adjudicatedby the concerned court. As per the settled position of law, at the stage ofdeciding the application under Order VII Rule 11 of CPC only theaverments and allegations in the application/plaint are to be consideredBand not the written statement and/or reply to the application and/or thedefence. Therefore, as such the learned Trial Court rightly dismissedthe application under Order VII Rule 11 of CPC.

13. In view of the aforesaid discussion and for the reasons statedabove, the impugned judgment and order passed by the High Court isCunsustainable and the same deserves to be quashed and set aside and isaccordingly quashed and set aside. The controversy and/or the dispute,whether the mandate of the sole arbitrator under section 14(1)(a) of theAct, 1996 stands terminated or not shall have to be considered by thecourt on an application filed under section 14(2) of the Act, 1996. It isDreported that after the impugned order passed by the High Court,respondent Nos. 1 and 3 have withdrawn their applications under section14(2) of the Act, 1996. To do substantial justice between the parties andto ensure that respondent Nos. 1 and 3 are not left remediless, we directthat the application/applications submitted by respondent Nos. 1 and 3before the concerned court under section 14(2) of the Act, 1996 shallEstand revived. Now the concerned court before whom, the application/applications under section 14(2) of the Act, 1996 were filed, shall considerthe same in accordance with law and on their own merits at the earliestand preferably within a period of four months from the date of receipt ofthe present order. It goes without saying, that if, ultimately, it is held thatFthe mandate of the sole arbitrator is terminated as per section 14(1)(a)of the Act, 1996 and more particularly on the ground that there wasundue delay on the part of the arbitrator in concluding the arbitrationproceedings, the arbitrator has to be substituted and a fresh arbitratorhas to be appointed by following the same procedure which was followed earlier while appointing the present sole arbitrator. In case the parties doGnot agree to the name of the sole arbitrator, the aggrieved party mayapproach the appropriate court for appointment of an arbitrator undersection 11(5) of the Act. In case application(s) under section 14(2) ofthe Act is/are dismissed and it is held that the mandate of the sole arbitratoris not terminated and there was no undue delay on his part, in such aHsituation the sole arbitrator to conclude the arbitration proceedings and declare the award within a period of nine months from the decision ofthe court that will be taken under section 14(2) of the Act, 1996. Theimpugned judgment(s) and order(s) passed by the High Court in ACNo.29/2015 and in Review Petition No. 655/2017 are hereby quashedand set aside. The appeals arising out of the aforesaid orders are herebyaccordingly Allowed. However, the appeals challenging the impugnedjudgment and order passed in W.P. No. 11258/2010 and W.P. No. 11259/2010, confirming the order/orders passed by the learned Trial Courtrejecting the application under Order VII Rule 11 of CPC are herebydismissed. In the facts of the case, there shall be no order as to costs.

Nidhi Jain

Appeals disposed of.

(Assisted by : Shashwat Jain, LCRA)

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