Appeal against the setting aside of an arbitral award under Section 34 of the Arbitration Act. The High Court found the award was without jurisdiction as the appointment process violated the agreement, dismissing the appeal.
Appeal dismissed; order below maintaining the setting aside of the arbitral award upheld.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
FAO No.4638 of 2006 (O&M)
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IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
FAO No.4638 of 2006 (O&M) DATE OF DECISION: 21.01.2010
Kirpal Singh
. . . . Appellant VS.
Raj Kumar and others
. . . . Respondents
CORAM : HON’BLE MR.JUSTICE RAKESH KUMAR JAIN
Present: Mr.Paramjit Batta, Advocate for the appellant.
Mr.Tejinder Joshi, Advocate for respondents No.1 and 2.
RAKESH KUMAR JAIN J. (ORAL)
This appeal is directed against the order of the learned Additional District Judge, Chandigarh whereby, an objection filed under Section 34 of the Arbitration & Conciliation Act, 1996 (for short ‘the Act’) against the award of the Arbitrator dated 22.12.2000 was allowed primarily on the ground that as per Clause 13 of the partnership deed, Arbitrator could have been appointed only on mutual consent of the parties but no consent of the respondents has been taken. The finding recorded in this regard is as under:
“A bare perusal of sub section 2(a) (iii) would reveal the petitioners being the party to the arbitration proceedings was required to be given proper notice of the appointment of the arbitrator or of the arbitral
FAO No.4638 of 2006 (O&M)
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proceedings. In this case in hand the petitioners are not shown to have been ever served with any notice regarding the appointment of respondent No.2 as Arbitrator. As per arbitration clause No.13 of the partnership deed the arbitrator could only be appointed with mutual consent of the parties. In the case in hand the respondent No.2 an evidenced by the record and the notices alleged to have been sent to the petitioners had entered into the reference on the request of respondent No.1 Kirpal Singh alone. The respondent has been unable to satisfy the court that the appointment of respondent No.2 was ever made with the mutual consent of the parties as required under the above arbitration clause no.13. When that is so certainly the respondent No.2 was not competent to enter into the reference and adjudicate upon the dispute between the parties. When the appointment of the arbitrator in this case was not in consonance with the arbitration clause contained in the partnership deed the whole proceedings conducted by the arbitrator stood vitiated.”
In the present appeal, the ground taken by the appellant is that a notice (Annexure A-2) was given to the respondents which was not replied, thus they accepted the appointment of Arbitrator by their act and conduct.
Learned counsel for the respondents has argued that even in notice (Annexure A-2) there was no proposal of the name of the Arbitrator to be appointed, rather M/s R.Khanna & Associates, Chartered Accountants were appointed as Arbitrator and that intimation was given by the appellant to the respondents. Counsel for the respondents has further referred to the proviso of Section 11 of the Act to contend that as per Section 11(2) of the Act, the parties are
FAO No.4638 of 2006 (O&M)
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free to agree on procedure for appointing the Arbitrator or Arbitrators and in that respect, it was provided in the agreement itself that the Arbitrator shall be appointed with the mutual consent of the parties. He further refers to Section 11 (5) of the Act to contend that in case of failure on the part of the parties to agree on the name of the Arbitrator within thirty days from the receipt of a request by one party from the other party, the aggrieved party can file a petition before the Chief Justice for the purpose of appointment of the Arbitrator. He also refers to Section 11 (6) to contend that if in the appointment procedure again the party fails to act as required under that procedure then the aggrieved party can request the Chief Justice or any person or institution designated by him to take the necessary measure unless the agreement on the appointment procedure provides other means for securing the appointment.
It is submitted that no such procedure has been adopted and the letter dated 02.03.2000 (Annexure P-2) does not contain the proposal of the name of the Arbitrator rather it contains the name of the Arbitrator, already appointed, violating Clause 13 of the partnership, therefore, the award passed by the Arbitrator is totally without jurisdiction.
In view of the above, I do not find any error in the order passed by the learned Court below while allowing the objection under Section 34 of the Act. Thus the appeal is hereby dismissed.
(RAKESH KUMAR JAIN) JUDGE
January 21, 2010 Vivek
2 issues framed by the court
Whether the appellant's failure to reply to a notice bars their objection to the arbitrator's appointment despite the partnership deed requiring mutual consent.
Whether the first arbitrator had the jurisdiction to appoint a second arbitrator given the appointment procedure violated the agreement.
2 provisions across 1 enactments
Kirpal Singh
Raj Kumar and others
Rakesh Kumar Jain
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
