2002 (5) TMI 801 - HC - Companies Law

Summary

Issues:
Appointment of an arbitrator under section 11 of the Arbitration and Conciliation Act, 1996; Disputes regarding delays and damages in construction work; Applicability of arbitration clause and objections raised by the respondents; Jurisdiction of the appointing authority to restrict the scope of arbitration; Maintainability of the application under section 11 when an arbitrator has already been appointed.

Analysis:

1. Appointment of Arbitrator: The applicant sought the appointment of an arbitrator under section 11 of the Arbitration and Conciliation Act, 1996, to adjudicate disputes not referred to the arbitrator nominated by the Chief Engineer. The disputes arose from delays and damages in construction work awarded under a contract agreement.

2. Disputes and Objections: The delays in work completion were attributed to site handover delays, leading to claims for damages by the applicant. Disputes arose when the respondents objected to various amounts claimed by the applicant, leading to a request for arbitration under the agreement.

3. Applicability of Arbitration Clause: The applicant invoked the arbitration clause in the agreement, requesting the Chief Engineer to appoint an arbitrator. However, disputes arose when certain claims made by the applicant were not included in the appendix referred to the nominated arbitrator.

4. Jurisdiction of Appointing Authority: The respondents contested the application, arguing that certain claims were not arbitrable as per the contract conditions. The appointing authority's decision to exclude certain claims from arbitration was challenged, citing precedents regarding the scope of arbitration under the Act.

5. Maintainability of the Application: The court considered the maintainability of the application under section 11 despite the appointment of an arbitrator. It was determined that the applicant was justified in approaching the court under section 11(6) due to the respondents' failure to follow the appointment procedure correctly.

6. Decision and Conclusion: The court held that the appointing authority exceeded its jurisdiction by excluding certain claims from arbitration. The appointed arbitrator was tasked with determining the arbitrability of disputes as per the agreement. The applicant was permitted to raise the disputed claims before the arbitrator, with the respondents retaining the right to object to the claims during arbitration proceedings.

In conclusion, the court disposed of the application, emphasizing the importance of allowing the arbitrator to decide on the arbitrability of disputes as per the agreement, while also affirming the applicant's right to raise disputed claims before the appointed arbitrator.