Allowed

M/S. K . R. Traders Thr Its Anand Nath S/O. Jogindernath v. the Union of India and Another

Bombay HC11 Oct 2022ARP/140/2021

Case brief

AI extract

What is this about?

In an arbitration petition, the Bombay High Court appointed a sole arbitrator for fresh proceedings. The court held that parties can initiate fresh arbitration after an award is set aside under Section 11 and 15 of the Arbitration and Conciliation Act, provided they strictly follow the original arbitration agreement's time limits. The petitioner's conduct regarding previously received funds was de

What did the court decide?

Mr. Raghunath Prasad Tripathi appointed as sole arbitrator; parties to adhere to time limits specified in Clause 70 of the General Condition of Contract.

M/S. K . R. Traders Thr Its Anand Nath S/O. Jogindernath Vs the… — Arbitration | Bombay HC (2022)

¶1

Digitally signed by CHITRA CHITRA SANJAY SONAWANE SANJAY Date: SONAWANE 2022.10.13 14:52:49 +0530

¶2

13-ARBP-140-2021.odt

¶3

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION

¶4

ARBITRATION PETITION NO.140 OF 2021

¶5

M/s K.R.Traders
through its partner Anand Nath
Jogindernath.

¶6

....Petitioner.

¶7

Versus

¶8

Union of India & Anr.

¶9

 ...Respondents.

¶10

Mr.Sureshkumar R. Firodiya a/w Adv. Rishabh A. Gugale for petitioner.
Mr.B.B. Sharma, Advocate a/w Priyanka Chavan for respondents.

¶11

CORAM:MANISH PITALE, J

¶12

DATE :11th OCTOBER, 2022.

¶13

P. C. :

¶14

1.This is a petition filed u/s 11 r/w 15 of the Arbitration and
Conciliation Act, whereby the petitioner is seeking appointment of a fit and
proper person to adjudicate the dispute that has arisen between the
petitioner and the respondent.

¶15

2.Brief facts leading to filing of present petition are that, the petitioner
had entered into an agreement with the respondent for execution of specific
works pertaining to providing and laying down sewage lines and pumping
stations at Ahmednagar. An agreement was executed on 26/04/1993 and

¶16

Page 1 of 10

¶17

Chitra Sonawane

¶18

13-ARBP-140-2021.odt

¶19

work order was issued on 17.5.1993. During the course of execution of the
said works certain disputes arose between the parties, as a consequence of
which arbitration clause 70 of the General Condition of Contract of Central
Government was invoked. In pursuance of such invoking of arbitration
proceeding under the said clause, an interim award dated 22.9.2012, came
to be passed on the basis of specific amount admitted by respondents as
payable to the petitioner. Proceedings before the Arbitrator continued
thereafter and eventually final award was passed on 30.4.2013 with
corrigendum issued on 30.5.2013. Under the award, the petitioner was
found entitled to payment of Rs.82,12,051.63/- from the respondents. This
was much less than the claim made by the petitioner, which was to the tune
of Rs.9,41,45,618/-. It is an admitted position that respondents disbursed
the amount of Rs.82,12,051.63/- awarded by the Arbitrator.

¶20

3.Thereafter, the petitioner challenged the award by initiating
proceeding before the Court of District Judge, Pune claiming that the
mandate of arbitrator had expired at the time of publication of award, apart
from raising other grounds on merits.

¶21

4. By judgment and order dated on 9.3.2021 the Court of District Judge,

¶22

Pune, allowed the application, only on the ground that mandate of the
arbitrator had terminated and accordingly, the award was set aside.

¶23

Page 2 of 10

¶24

Chitra Sonawane

¶25

13-ARBP-140-2021.odt

¶26

5.In this situation, the petitioner sent a notice on 27.3.2021 to
respondent no.2, invoking condition no.70 i.e. arbitration clause executed
between the parties and sought arbitration afresh, suggesting two names
from amongst whom an arbitrator could be appointed.

¶27

6.On 29.6.2021 the respondents sent a counter notice to the petitioner
seeking refund of amount paid as per award of the Arbitrator, which was
later set aside alongwith interest at the rate of 10% p.a. It is an admitted
position that the petitioner has already initiated proceeding u/s 9 of the
aforesaid Act before the competent Court at Pune, in the context of the
aforesaid counter notice issued by the respondents praying for restraining
the respondents from recovering the amount from the petitioner in
pursuance of letter dated 29.6.2021, which proceeding is pending before the
competent Court.

¶28

7. Since the respondents did not respond in a positive manner to the aforesaid notice dated 27.3.2021, the petitioner approached this Court.

¶29

8.Mr. Firodiya, the learned Counsel for the petitioner referred to Clause
70 of the General Condition of Contract i.e. the arbitration clause and
submitted that when earlier award was set aside, fresh arbitration
proceedings could certainly be initiated as per the mandate of clause 70 of

¶30

Page 3 of 10

¶31

Chitra Sonawane

¶32

13-ARBP-140-2021.odt

¶33

the General Condition of Contract. Learned Counsel specifically referred to
Section 15(2) of the aforesaid Act to contend that when the mandate of the
arbitrator had terminated, a substitute arbitrator could certainly be
appointed in accordance with Clause 70 of the Arbitration Clause. Learned
Counsel relied upon judgments of the Supreme Court in the cases of i)
McDermott International Inc. Vs. Burn Standard Co. Ltd. (2006) 11 SCC 181
ii)Dakshin Haryana Buli Vitran Nigam Limited Vs. Navigant Technologies
Private Ltd. (2021) 7 SCC 657 iii) National Highways Authority of India Vs.
M. Hakeem & Anr (2021)9 SCC 1, to contend that there was no prohibition
in law for a fresh round of arbitration between the parties when the
arbitration award was set aside on any ground. The law laid down by the
Supreme Court, in the said judgments really indicated that the Court u/s 34
of the Act can either reject objections raised against the arbitration award or
upon accepting the same, set aside the award, leaving the parties for fresh
round of arbitration, if so advised.

¶34

9.On the basis of said position of law, learned Counsel for the petitioner
submitted that in the present case, since the respondents had refused to
respond in a positive manner to the notice dated 27.3.2021, issued on
behalf of the petitioner invoking clause 70 of the General Condition of
Contract for fresh round of arbitration, there was no alternative left for the
petitioner but to approach this Court.

¶35

Page 4 of 10

¶36

Chitra Sonawane

¶37

13-ARBP-140-2021.odt

¶38

10.On the other hand, Mr.Sharma, learned counsel for the respondents
submitted that the Court ought to take into account the conduct of the
petitioner. It is submitted that the petitioner was enjoying the fruits of
award which the petitioner itself proceeded to challenge on the ground that
mandate of arbitrator had terminated. If, at all, the petitioner desired to
initiate a fresh round of arbitration, he ought to refund the amount already
disbursed to him in pursuance of the award passed by the Arbitrator, which
was eventually set aside on the challenge raised by the petitioner itself.

¶39

11.By placing reliance on the judgment of this Court, in the case of
Teltech Instrumentation Private Limited, Mumbai, Vs. Bharat Petroleum
Corporation Limited, 2012(4) Mh.L.J.355, learned counsel for the
respondents submitted that there since there was a specific time limit
prescribed in clause 70 for completion of arbitration proceedings, any
substitute arbitrator appointed, would have to complete the arbitration
proceeding within the said time line. In such a situation, there was no
question of appointment of an arbitrator because the time limit provided in
Clause 70 was already over.

¶40

12.Heard learned Counsel for the plaintiff and learned Counsel for the
defendant.

¶41

Page 5 of 10

¶42

Chitra Sonawane

¶43

13-ARBP-140-2021.odt

¶44

13.Before adverting to the rival contentions, it would be proper to
refer to the position of law for deciding the present petition. Sections 11
and 15 of the said Act are relevant. Section 11 of the said Act pertains to
appointment of arbitrators, particularly, in the backdrop when the parties to
the arbitration agreement fail to agree upon appointment of an arbitrator. In
the present situation, there is no dispute about the fact that while the
petitioner sent notice dated 27.3.2021 to the respondent proposing names
of arbitrators to be appointed, in terms of arbitration clause, the respondent
did not agree with such proposal, leading to the present petition being filed
on behalf of the petitioner.

¶45

14.Section 15 of the said Act, pertains to termination of mandate and

¶46

substitution of arbitrator. The said section reads thus;

¶47

15. Termination of mandate and substitution of arbitrator-

¶48

(1) In addition to the circumstances referred to in section
13 or section 14, the mandate of an arbitrator shall
terminate-

¶49

(a) where he withdraws from office for any reason; or

¶50

(b) by or pursuant to agreement of the parties.

¶51

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

¶52

(3) Unless otherwise agreed by the parties, where an
arbitrator is replaced under sub-section (2), any hearings

¶53

Page 6 of 10

¶54

Chitra Sonawane

¶55

13-ARBP-140-2021.odt

¶56

previously held may be repeated at the discretion of the
arbitral tribunal.

¶57

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

¶58

15.A perusal of Section 15(2) of the Act quoted above shows that when a
mandate of arbitrator terminates, a substitute arbitrator is to be appointed
only in accordance with the rules that were applicable to the appointment of
arbitrator. It is this provision, which is the bone of contention between the
parties, because the respondents appear to interpret the same to mean that
once the time line as specified in the arbitration clause i.e. clause 70,
referred to hereinabove, is not adhered to, no arbitration proceeding can
ever be initiated. This Court is not in agreement that the said interpretation
sought to be put on clause 70 r/w 15(2) of the aforesaid Act.

¶59

16.The petitioner is justified in relying upon abovementioned judgments
of the Supreme Court cited supra wherein, it has been categorically laid
down that even when arbitration award is set aside by the Court, the only
course of action available to the parties for resolving the existing dispute is
to initiate arbitration proceeding afresh. The only condition that can be

¶60

Page 7 of 10

¶61

Chitra Sonawane

¶62

13-ARBP-140-2021.odt

¶63

read under such a situation is that such arbitration proceeding would
necessarily proceed strictly in terms of the arbitration agreement between
the parties. If that be so, the petitioner was clearly entitled to issue notice
dated 27.3.2021 to the respondents invoking clause 70 of the General
Condition of Contract for a fresh round of arbitration. This Court is
convinced that there is indeed a dispute between the parties and in the face
of aforesaid arbitration agreement, it can not be said that the petitioner was
not entitled to issue notice dated 27.3.2021 or that it could not have filed
the present petition for appointment of arbitrator.

¶64

17.The respondents, in their counter notice dated 29.6.2021, have
proceeded on the basis that there can not be a fresh round of arbitration and
on the other hand, they have insisted upon liability of petitioner to refund
the amount already disbursed by the respondents. In fact, even before this
Court, much emphasis was placed by the respondents on the conduct of the
petitioner about the money taken from respondents and then turning
around to insist upon a fresh round of arbitration.

¶65

18.This Court is of the opinion that in the present petition, the only
concern is the question of appointment of arbitrator. Conduct of the
petitioner sought to be highlighted by the respondents is not relevant. The
same can be agitated in the pending petition filed by the petitioner u/s 9 of

¶66

Page 8 of 10

¶67

Chitra Sonawane

¶68

13-ARBP-140-2021.odt

¶69

the said Act before the competent Court at Pune. The respondents can also
make a grievance regarding the same before the arbitrator once fresh
arbitration proceedings commence.

¶70

19.At this stage, the learned counsel for the respondents handed over a
list of proposed arbitrators to this Court and also to the learned Counsel
appearing for the petitioner. From amongst the list of proposed arbitrators,
the learned Counsel for the petitioner, upon instructions of one of the
partners of the petitioner firm, agreed to the name of Mr Raghunath Prasad
Tripathi, Retired ADG, MES as Arbitrator.

¶71

20.In view of the above, present petition is allowed.

¶72

21.Mr.Raghunath Prasad Tripathi, upon agreement between the parties
before this Court, is appointed as the sole arbitrator for adjudicating upon
the dispute between the parties.

¶73

22.The learned Arbitrator shall communicate his consent and disclosure
statement under Section 11(8) and 12(1) of the Act to the Registrar
(Judicial) of this Court within 2 weeks from today.

¶74

23. The parties are at liberty to place this order before the learned

¶75

Page 9 of 10

¶76

Chitra Sonawane

¶77

13-ARBP-140-2021.odt

¶78

Arbitrator at the earliest.

¶79

24.The parties shall appear before learned Arbitrator on 14/11/2022.
Statement of claim shall be filed within 2 weeks of appearance before the
learned Arbitrator.

¶80

25. The learned arbitrator shall stick to the time limits specified in clause 70 i.e. the arbitration agreement between the parties.

¶81

26. The petition is disposed of accordingly.

¶82

(MANISH PITALE, J.)

¶83

Page 10 of 10

¶84

Chitra Sonawane

M/S. K . R. Traders Thr Its Anand Nath S/O. Jogindernath v. the Union of India and Another

Case brief

What is this about?

What did the court decide?

M/S. K . R. Traders Thr Its Anand Nath S/O. Jogindernath v. the Union of India and Another

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Sun Pharma Laboratories Limited Vs Suraksha Pharma Pvt. Ltd. and Anr.

Sun Pharma Laboratories Limited, Vs Vatave Health Care and Anr.

Gammon India Ltd. Vs Shivhare Road Lines

Jothy Lakshmi Namasivayam Vs Hdb Financial Services and 2 Ors.

M/S. Mastan Tin Works through Its Proprietor Shahnawas Shahbazkar Vs the Bombay Mercantile Co-Operative Bank Limited and (2) Ors.

M/S. Miraj Engineering Services Private Limited Thr. Its Managing Dir. Mr. Rajesh P. Solanki Vs M/S. Furnace Fabrica India Limited