TMI Blog2002 (1) TMI 1226X X X X Extracts X X X X X X X X Extracts X X X X ..... e amended. The other party needs to be given notice of the request only so that it may know of it and it may, if it so chooses, assist the Chief Justice or his designate in the nomination of an arbitrator. - CIVIL APPEAL NOS. 5880-5889 OF 1997, 713, 714, 715, 716, 2037-2040, 2041, 2042-2044, 4311, 4312, 4324, 4356, 7304 AND 7306-7309 OF 1999 - - - Dated:- 30-1-2002 - S.P. BHARUCHA, SYED SHAH MOHAMMED QUADRI, UMESH C. BANERJEE, S.N. VARIAVA AND SHIVARAJ V. PATIL, JJ. Soli J. Sorabjee, S. Ganesh, P.P. Malhotra, S.K. Dholakia, Dushyant Dave, Atul Y. Chitale, Sanjiv Sen, Mrs. Suchitra Atul Chitale, B.K. Satija, S. Muralidhar, V.B. Saharya, Dhruv Mehta, Prateek Jalan, Mrs. Anil Katiyar, V.K. Verma, P. Nagesh, K.V. Mohan, S. Guru Krishna Kumar, L.C. Tolat, S.R. Setija, P.S. Sudheer, K.J. John, P. Venugopal, Narendra M. Sharma, R.K. Sanghi, Rajesh Prasad Singh and Hari Shankar K. for the appearing party . JUDGMENT Bharucha, CJ. - In Ador Samia (P.) Ltd. v. Peekay Holdings Ltd. [1999] 22 SCL 80 (SC), a Bench of two learned Judges of this Court came to the conclusion that the Chief Justice or any person or institution designated by him, acting under section 11 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e makes is an administrative order. It, therefore, becomes necessary to request the Attorney General to assist the Court, Mr. Andhyarujina, who is in Court but is not appearing in the matter, has advanced some submissions before us. He shall also be entitled to do so when the matter is taken up again before a Constitution Bench. The Registry shall furnish a copy of this order and a copy of the paper books both to the Attorney General and to Mr. Andhyarujina. Adjourned accordingly." 3. To determine whether the order of the Chief Justice or his designate under section 11 is a judicial order or an administrative order, it is necessary to take note of certain provisions of the act. Section 2( e ) defines a Court thus : "( e ) Court means the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction 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 a grade inferior to such principal Civil Court, or any Court of Small Causes;" Section 5 reads thus : " Ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two appointed arbitrators, fail to reach an agreement expected of them under that procedure; or ( c )a person, including an institution, fails to perform any function entrusted to him or it under that procedure, a party may 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. (7) A decision on a matter entrusted by sub-section (4) or sub-section (5) or sub-section (6) to the Chief Justice or the person or institution designated by him is final. (8) The Chief Justice or the person or institution designated by him, in appointing an arbitrator, shall have due regard to ( a )any qualifications required of the arbitrator by the agreement of the parties; and ( b )other considerations as are likely to secure the appointment of an independent and impartial arbitrator. (9) In the case of appointment of sole or third arbitrator in an international commercial arbitration, the Chief Justice of India or the person or institution designated by him may appoint an arbitrator of a nationality other than the nationalities of the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cide upon the challenge and if the challenge is not successful it shall continue the arbitration proceedings and make an award. That award can be sought to be set aside under section 34. 5. Section 16 empowers the arbitral tribunal to rule on its own jurisdiction. Clause (1) of section 16 is relevant, and reads thus : " Competence of arbitral Tribunal to rule on its jurisdiction. (1) The arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that purpose, ( a )an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract; and ( b )a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause. 6. If a party is aggrieved by an arbitral award made after rejection of his plea of jurisdiction, he can challenge it in accordance with section 34. Section 34, so far as is relevant reads thus : " Application for setting aside arbitral award. (1) Recourse to a court against an arbitral award may be made only by an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. "The appointment of arbitrators by the Chief Justice of India scheme, 1996 No. F. 22/1/95/SCA/Genl. In exercise of the powers conferred on the Chief Justice of India under sub-section (10) of section 11 of the Arbitration and Conciliation Ordinance, 1996, I hereby make the following Scheme. 1. Short title. - This Scheme may be called the Appointment of Arbitrators by the Chief Justice of India Scheme, 1996. 2. Submission of request. - The request to the Chief Justice under sub-section (4) or sub-section (5) or sub-section (6) of section 11 shall be made in writing and shall be accompanied by ( a )the original arbitration agreement or a duly certified copy thereof; ( b )the names and addresses of the parties to the arbitration agreement; ( c )the names and addresses of the arbitrators, if any, already appointed; ( d )the name and address of the person or institution, if any, to whom or which any function has been entrusted by the parties to the arbitration agreement under the appointment procedure agreed upon by them; ( e )the qualifications required, if any, of the arbitrators by the agreement of the parties; ( f )a brief written statement describing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erson or institution and either deal with the request himself or designate another person or institution for that purpose. 9. Intimation of action taken on request. - The appointment made or measure taken by the Chief Justice or any person or institution designated by him in pursuance of the request under paragraph 1 shall be communicated in writing to ( a )the parties to the arbitration agreement; ( b )the arbitrators, if any, already appointed by the parties to the arbitration agreement; ( c )the person or the institution referred to in paragraph 2( d ); ( d )the arbitrator appointed in pursuance of the request. 10. Requests and communications to be sent to Registrar. - All requests under this Scheme and communications relating thereto which are addressed to the Chief Justice shall be presented to the Registrar of this court, who shall maintain a separate Register of such requests and communications. 11. Delivery and receipt of written communications. - The provisions of sub-sections (1) and (2) of section 3 of the Arbitration and Conciliation Ordinance, 1996 shall, so far as may be, apply to all written communications received or sent under this Scheme. 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not appropriate for the Chief Justice or his designate to entertain any contentious issues between the parties and decide the same. A bare reading of sections 13 and 16 made it clear that questions with regard to the qualifications, independence and impartiality of the arbitrator and in respect of the jurisdiction of the arbitrator could be raised before the arbitrator, who would decide the same. If a contingency arose where the Chief Justice or his designate refused to make an appointment, the party seeking the appointment was not without remedy. An intervention was possible by a court in the same way as an intervention was possible against an administrative order of the executive. In other words, it would be a case of non-performance of his duty by the Chief Justice or his designate and, therefore, a mandamus would lie. In such an event there would not be any inordinate delay in setting the arbitral process in motion. The nature and function performed by the Chief Justice or his designate being essentially to aid the constitution of the arbitral tribunal, it could not be held to be a judicial function, as otherwise the Legislature would have used the expression court or judi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a request to do so from the other party. If the party who was alleged to have failed to appoint an arbitrator within thirty days of the receipt of the request contested this position, it was for the Chief Justice or his designate to decide the issue. Reliance was placed upon sub-section (7) of section 11, which refers to a decision on the matter entrusted to the Chief Justice or his designate, and on sub-section (8), which requires the Chief Justice or his designate to have due regard to the qualifications required of the arbitrator by the agreement of the parties and other considerations as are likely to secure the appointment of an independent and impartial arbitrator. In the learned counsel submission, these also indicated that the Chief Justice or his designate had to perform an adjudicatory function in naming an arbitrator. The learned counsel submitted that section 16 of the Act enabled the arbitral tribunal to decide on the width of its jurisdiction but it could not decide whether or not an arbitrator had no jurisdiction because he had been appointed by the Chief Justice or his designate even though the period of thirty days of the receipt of the request to do so had not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no element of adjudication came into it. The learned Attorney General drew attention to sections 12 and 13 which provided for a challenge to an arbitrator in respect of whom there were doubts about independence or impartiality. 13. The provision of sections 12 and 13 applied even to an arbitrator who had been nominated by the Chief Justice or his designate under section 11. In the submission of the learned Attorney General, the competence of the arbitral tribunal to rule on its own jurisdiction under section 16 was not confined to the width of its jurisdiction but extended to deciding whether it had any jurisdiction at all. Section 34 gave a party adversely affected by an arbitral award the right to approach a court to set aside on the stated grounds, which included the composition of the arbitral tribunal. An order under section 34 was appealable under section 37, as was an order accepting the plea that the arbitral tribunal did not have jurisdiction. The learned Attorney General drew our attention to the judgments of this Court in Engineering Mazdoor Sabha Representing Workmen Employed under the Hind Cycles Ltd. v. The Hind Cycle Ltd. 1963 Supp. (1) SCR 625 and Jaswant S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion determination in the context in which it occurs in article 136 signifies an effective expression of opinion which ends a controversy or a dispute by some authority to whom it is submitted under a valid law for disposal. The expression order must have also a similar meaning, except that it need not operate to end the dispute. Determination or order must be judicial or quasi-judicial; purely administrative or executive direction is not contemplated to be made the subject-matter of appeal to this Court. The essence of the authority of this Court being judicial, this Court does not exercise administrative or executive powers, i.e., character of the power conferred upon this Court, original or appellate, by its constitution being judicial, the determination or order sought to be appealed from must have the character of a judicial adjudication." The Court went on to state that to make a decision or an act judicial, the following criteria must be satisfied: "( 1 )it is in substance a determination upon investigation of a question by the application of objective standards to facts found in the light of pre-existing legal rule; ( 2 )it declares rights or imposes upon par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y may not be bound by other technical rules of law, but their decisions must, nevertheless, be consistent with the general principles of law. In other words, they have to act judicially and reach their decisions in an objective manner and they cannot proceed purely administratively or base their conclusions on subjective tests or inclinations...". 19. To put it concisely, for an order properly to be the subject of a petition for special leave to appeal under article 136 it must be an adjudicatory order, an order that adjudicates upon the rival contentions of parties, and it must be passed by an authority constituted by the State by law for the purpose in discharge of the State s obligation to secure justice to its people. 20. Section 11 deals with the appointment of arbitrators. It provides that the parties are free to agree on a procedure for appointing an arbitrator or arbitrators. In the event of there being no agreement in regard to such procedure, in an arbitration by three arbitrators each party is required to appoint one arbitrator and the two arbitrators so appointed must appoint the third arbitrator. If a party fails to appoint an arbitrator within thirty days from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake into account the qualifications required of the arbitrator by the agreement between the parties (which, ordinarily, would also be annexed to the request) and other considerations likely to secure the nomination of an independent and impartial arbitrator also cannot lead to the conclusion that the Chief Justice or his designate is required to perform an adjudicatory function. That the word decision is used in the matter of the request by a party to nominate an arbitrator does not of itself mean that an adjudicatory decision is contemplated. 22. As we see it, the only function of the Chief Justice or his designate under section 11 is to fill the gap left by a party to the arbitration agreement or by the two arbitrators appointed by the parties and nominate an arbitrator. This is to enable the arbitral tribunal to be expeditiously constituted and the arbitration proceedings to commence. The function has been left to the Chief Justice or his designate advisedly, with a view to ensure that the nomination of the arbitrator is made by a person occupying high judicial office or his designate, who take would due care to see that a competent, independent and impartial arbitrator is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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