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2023 (6) TMI 1331 - CALCUTTA HIGH COURTSeeking to appoint an arbitrator to adjudicate upon the claims made therein by the petitioner - HELD THAT:- That part of Clause 33 of the agreement between the parties providing for constitution of a Dispute Resolution Committee with a stipulation that before availing of dispute resolution, the disputed amount has to be deposited, is invalid and contrary to law for more than one reason. The first and foremost is that it fetters the right of the petitioner, a party to the arbitration agreement to avail of arbitration which is a statutory right. If the petitioner is making a claim which is then and there disputed by the respondent, why should the petitioner, being the claimant be asked to deposit the disputed amount? When the petitioner is making a claim against the respondent, it is unable, at that point of time, to know whether the whole claim or part of it would be admitted, or the whole of it denied by the latter. Hence, it is unable to gauge the disputed amount. Even if it were possible for the respondent to notify the disputed amount immediately, the clause would only be operative if the respondent was simultaneously making a counter claim more than the petitioner’s claim which was being denied by the petitioner, by seeking reference of the dispute to arbitration. If you read Section 12(5) of the said Act along with its 7th schedule, the General Manager or any other employee of the respondent past or present, is disqualified from being an arbitrator on the likelihood of bias. The arbitration clause provides for appointment of a sole arbitrator by the Chairman of the respondent. If the petitioner also had a right to nominate an arbitrator, then it could have been argued that the General Manager’s power to appoint an arbitrator of his choice was counter balanced by the petitioner’s similar right and the clause adjudged to be valid in terms of CENTRAL ORGANISATION FOR RAILWAY ELECTRIFICATION VERSUS M/S ECI-SPIC-SMO-MCML (JV) A JOINT VENTURE COMPANY [2019 (12) TMI 841 - SUPREME COURT]. Under Section 11 sub-section 6A of the said Act, the court exercising power under Section 11 of the said Act has the power to go into the question of validity of an arbitration agreement - it is held that the part of the arbitration clause providing for appointment of an arbitrator is non-est. Therefore, the arbitration clause between the parties does not contain any valid provision for appointment of an arbitrator. The court has to exercise the power. This application is disposed off by referring the disputes between the parties as raised in this Section 11 petition and the claim and counter claim that may be filed by the parties in terms thereof to be adjudicated by a learned arbitrator.
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