TMI Blog2012 (7) TMI 383X X X X Extracts X X X X X X X X Extracts X X X X ..... n merely on the ground that this Court would have no power to make an appointment of an arbitrator other than the Chairman-cum-Managing Director or his designate. This Court would have the power to appoint a person other than the named arbitrator, upon examination of the relevant facts, which would tend to indicate that the named arbitrator is not likely to be impartial - the petitioner had clearly pleaded that the named arbitrator is a direct subordinate of the CMD and employee of the respondent. CMD is the controlling authority of all the employees, who have been dealing with the subject matter in the present dispute and also controlling authority of the named arbitrator. Apprehending that the CMD, who had been dealing with the entire contract would not act impartially as an arbitrator - the petitioner thus made it explained that it may not get any justice in the hands of the Managing Director, since he cannot go against the directions issued by the Ministry of Defence, Government of India and, therefore, it would be appropriate to appoint independent sole arbitrator - in favour of petitioner - ARBITRATION PETITION NO.19 OF 2011 - - - Dated:- 8-5-2012 - SURINDER SINGH NIJJAR, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner to the respondent as per the aforesaid agreement and the petitioner took immediate steps to supply the said units to the respondent. The petitioner made huge investments in that regard and procured required materials. The specifications of GYRO Units, as per the specifications, did not stipulate, expressly or impliedly, the type of damping. While the entire process was going on, the respondent issued a letter dated 5th June, 2009 to the petitioner stating that as per the respondent s directives, all pending supplies as on that date, from the petitioner were to be put on hold and directed the petitioner not to dispatch any pending items including those for which Letter of Credit had been established until further communication from the respondent. After the aforesaid communication, the respondent did not issue any communication to the petitioner for supply of the said goods till 3rd December, 2009. In response to the aforesaid communication, the petitioner sent 10 units of GYRO Stabilizers along with the Certificate which was issued by the Russian Company (manufacturer) for a lot of 24 units. It appears that the respondent, on the basis of the inspection report dated 17t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. According to the petitioner, this was contrary to the terms contained in the original purchase order. The petitioner, though not obliged as per the contract, started process of procuring GYRO with air damping but due to the short validity of the Letter of Credit, only 14 such units were supplied and the petitioner had to stop the procurement of the said unit due to the expiry of the Letter of Credit. Thereafter, the petitioner has sent a number of communications to the respondent to which there has been no response, hence, the petitioner claims that number of disputes which are mentioned in paragraph 14 (a) to (g) have arisen between the parties. 8. Vide notice dated 20th May, 2011, the petitioner requested the respondent to agree on a name of an independent and impartial sole arbitrator preferably a former Judge of this Court by mutual consent between the petitioner and the respondent. 9. The petitioner claims on the basis of the postal acknowledgement that the respondent received the aforesaid notice on or about 23rd May, 2011. The receipt of the notice has been acknowledged by the respondent by a letter dated 8th June, 2011. On 29th June, 2011, the authorised representat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... worn affidavit in Poland for filing of the petition for appointment of Arbitrator. 29.06.2011 Respondent s sent reply to the advocate at New Delhi received on 1.7.2011 stating that the correspondence is being placed before the Chairman and Managing Director. Note : Due to the new communication received, the fresh affidavit was needed and hence petition was with held to await fresh affidavit from Poland. 08.07.2011 Petitioner sent further Notice to the respondent stating that the action shall not be proper. 21.07.2011 The present petition seeking the appointment of Arbitrator was filed. 26.07.2011 Respondent sent email to the counsel of the petitioner at new attaching the letter of the counsel dated 26.7.2011 along with the letter of respondent dated 19.7.2011 stating the arbitrator had been appointed. The hard copy of the said letter was received by the counsel for the petitioner at New Delhi on 28.7.2011. 12. The petitioner further claims that no fax was ever sent by the respondent on 19th July, 2011, as no e-mail or postal communication was received by the petitioner in Poland in the whole month of July, 2011. It is further pointed out that neither the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. Prior to that, no communication had been received by the petitioner or his counsel either by fax or otherwise stating that the arbitrator had been appointed. He emphasised that even the aforesaid appointment letter purportedly signed on 19th July, 2011 shows that it was faxed from Bangalore Office only on 25th July, 2011 to their Solicitor who in turn further communicated to the counsel for the petitioner on 26th July, 2011. Therefore, according to Mr. Viswanathan, it is unbelievable that the communication released from Bangalore office (Head quarter where the Chairman sits) could have been conveyed to the petitioner on 19th July, 2011, though the communication states CC to the petitioner but it was never sent to the petitioner. The aforesaid communication was sent by the Solicitor of the respondent to the petitioner s counsel on e-mail on 26th July, 2011 and thereafter by way of postal communication. He, therefore, submits that even if it is assumed that the aforesaid letter was signed on 19th July, 2011, but it was certainly not communicated till after the filing of the present petition, therefore, the same would have no legal sanctity. 16. In support of the submission, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmits that the order of the Managing Director came into force from the moment it was signed on 19th July, 2011. In support of this submission, he relies on the judgment of this Court in the case of Collector of Central Excise, Madras Vs. M/s M.M. Rubber Co., Tamil Nadu[1992 Supp.(1) SCC 471]. According to the learned counsel, the aforesaid principle has been reiterated by this Court in Municipal Corporation of Delhi Vs. Qimat Rai Gupta Ors.[ (2007) 7 SCC 309] On the issue of perceived partiality of the CMD or his nominee, Mr. Bhat submits that the petitioner cannot rely on the judgment of this Court in Denel (Proprietary) Limited (supra). The facts in the aforesaid case were different from the facts in the present case inasmuch as in Denel case (supra) this Court has directed the appointment of an independent arbitrator only on the ground that there was certain directions issued by the Ministry of Defence, Government of India and as such the Managing Director of BEL may not be in a position to independently decide the dispute between the parties. He further submits that in the event this Court accepts the submission of the petitioner then Chairman and Managing Director of any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent on 7-2-2002. By that time, 30 days' period contemplated under the Act lapsed. The Managing Director of the appellant was required to communicate his decision in terms of clause 25 of the contract. 27. In reaching the aforesaid conclusion, this Court relied on earlier judgment rendered in the case of State of Punjab Vs. Amar Singh Harika (supra), wherein this Court has held as follows:- The first question which has been raised before us by Mr. Bishan Narain is that though the respondent came to know about the order of his dismissal for the first time on the 28th May 1951, the said order must be deemed to have taken effect as from the 3rd June 1949 when it was actually passed. The High Court has rejected this contention; but Mr. Bishan Narain contends that the view taken by the High Court is erroneous in law. We are not impressed by Mr. Bishan Narain s argument. It is plain that the mere passing of an order of dismissal would not be effective unless it is published and communicated to the officer concerned. If the appointing authority passed an order of dismissal, but does not communicate it to the officer concerned, theoretically it is possible that unlike in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or decision is made public or notified in some form or when it can be said to have left his hand. The date of communication of the order to the party whose rights are affected is not the relevant date for purposes of determining whether the power has been exercised within the prescribed time. 30. In my opinion, the aforesaid observations do not deviate from the observations made by this Court in Bachhittar Singh s case (supra) and reiterated consistently thereafter by this Court. The observations herein were made with regard to the exercise of power by the competent authority with regard to determination of the date from which the period of limitation was to be calculated to make an appeal. In that case, an order in favour of the respondent was passed by the Collector of Central Excise, as an adjudicating authority on 28th November, 1984. Its copy was supplied to the respondent on 21st December, 1984. The Central Board of Excise and Customs, however, in exercise of its powers under Section 35-e(1) directed the Collector on 11th December, 1985 to make an appeal to the Customs, Excise Board (Control) Appellate Tribunal against this order. The point at issue was whether limitation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the limitation. The ratio of this distinction may also be founded on the principle that the government is bound by the proceedings of its officers but persons affected are not concluded by the decision. 31. From the above, it becomes evident that the order dated 19th July, 2011 would be binding on the Chairman-cum- Managing Director for the purposes of working out the limitation, but so far as the petitioner is concerned, the relevant date would be the date when the order is communicated to the petitioner. The order made by a Statutory Authority or an Officer exercising the powers of that Authority comes into force so far as the Authority Officer is concerned, from the date it is made by the concerned Authority Officer. But, so far as the affected party is concerned, the order made by the Appropriate Authority would be the date on which it is communicated. In my opinion, Section 3(2) of the Arbitration and Conciliation Act, 1996, is a mere reiteration of the aforesaid general principle of law. 32. In view of the above, I am of the considered opinion that the reliance placed on the aforesaid judgment by Mr. Bhat is misplaced. In my opinion, the reliance placed by Mr. Bhat on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etition was filed. The issue needs to be decided on the basis of the evidence produced by the parties, at the appropriate time. 34. I am also not much impressed by the submission made by Mr. Bhat that this Court is bound to appoint the Chairman-cum- Managing Director or its nominee as the arbitrator in view of the arbitration clause. However, it is necessary to consider the judgments relied upon by Mr. Bhat. In the case of Union of India Anr. Vs. M.P.Gupta (supra), this Court observed that in view of the express provision contained in the arbitration clause that two Gazetted Railway Officers shall be appointed as arbitrators; a Former Judge of the Delhi High Court cannot be appointed as the Sole Arbitrator. It must be noticed here that in the aforesaid case, no facts have been pleaded in justification of the plea for the appointment of an independent arbitrator in spite of the arbitration clause. In You One Engineering Construction Co. Ltd. Anr. Vs. National Highways Authority of India (NHAI) (supra), Justice B.N. Srikrishna, sitting as a Chamber Judge in a petition under Section 11(6) has observed as follows:- 10. In my view, the contention has no merit. The arbitration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of the powers in Section 11(6). The observations made by this Court in RITE Approach Group Ltd. Vs. Rosoboronexport (2006) 1 SCC 206, were reiterated, wherein this Court has clearly held that :- In view of the specific provision contained in the `agreement specifying the jurisdiction of the court to decide the matter, this Court cannot assume the jurisdiction, and hence, whenever there is a specific clause conferring jurisdiction on a particular court to decide the matter, then it automatically ousts the jurisdiction of the other court. 38. In Northern Railway Administration, Ministry of Railway, New Delhi Vs. Patel Engineering Company Limited (supra), a three Judge bench of this Court reiterated the general principle as noticed in the judgments relied upon by Mr. Bhat. At the same time, it is emphasised that in exercise of its powers under Section 11(6) of the Act, the Court has to take into consideration the provision contained in Section 11(8) of the Act. The aforesaid provision requires that the Chief Justice or the person or an institution designated by him in appointing an arbitrator shall have due regard to any qualifications required of the arbitrator by the ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an the named arbitrator, upon examination of the relevant facts, which would tend to indicate that the named arbitrator is not likely to be impartial. In this case, the petitioner had clearly pleaded that the named arbitrator is a direct subordinate of the CMD and employee of the respondent. CMD is the controlling authority of all the employees, who have been dealing with the subject matter in the present dispute and also controlling authority of the named arbitrator. Apprehending that the CMD, who had been dealing with the entire contract would not act impartially as an arbitrator, the petitioner had issued a notice on 20th May, 2011. In this notice, it was pointed out that while the entire process of the performance of the contract was going on, the CMD had issued a letter on 5th June, 2009 to the petitioner stating that as per the company s directives, all pending supplies as on that date were put on hold . After the aforesaid communication, no communication was issued to the petitioner for supply of the goods as per the Purchase Order dated 3rd December, 2009. Even subsequently, there were difficulties when a further lot of 24 units were supplied. The detailed submissions made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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