Unless Appointment Of Arbitrator Under Arbitration Clause Is Ex-Facie Valid, Jurisdiction Of Court U/S 11(6) Cannot Be Barred: Rajasthan HC

The Rajasthan High Court bench of Justice Sudesh Bansal affirmed that unless the appointment of the arbitrator is ex facie valid and such appointment satisfies the Court exercising jurisdiction under Section 11(6) of the Arbitration Act, acceptance of such appointment as a fait accompli to debar the jurisdiction under Section 11(6) cannot be countenanced in law. Brief Facts Instant Arbitration Application has been filed under Section 11(5) and (6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "A&C Act") by the applicant for constitution of an Arbitral Tribunal to adjudicate/ resolve the dispute in respect of amendment made in the Constitution of 'Shri Maheshwari Samaj' in view of Clause 39 of the original constitution (Clause 50 of amended constitution) to settle such dispute through arbitration. 'Shri Mahehswari Samaj, Jaipur' is a registered body as society bearing Registration No. 60-1960-61 dated 02.11.1960 under the provisions of the Rajasthan Societies Act, 1958 and a written constitution is available to govern the activities and functionaries of 'Shri Mahehswari Samaj'. Applicant is one of the member of 'Shri Mahehswari Samaj'. After the General Election of 'Shri Mahehswari Samaj', held in the year 2019, Members of Executive Committee were elected for a period of three years and the then Executive Committee carried out certain amendments in the existing and original constitution of 'Shri Mahehswari Samaj' by calling an extraordinary General Body Meeting on 23.02.2020 but such amendments were made arbitrarily and as per whims of the Executive Committee, without obtaining occurrence of all the members who attended and participated in the extraordinary General Body Meeting. Dispute arose but the proceedings did not move ahead despite requesting the concerned authorities multiples times. Hence this application. Contentions The applicant/petitioner submitted that in the original constitution of 'Shri Mahehswari Samaj', Clause 39 provides a mechanism to resolve the dispute in respect of constitution of Samaj through Arbitration and a high level Committee comprising five members to be appointed by the Executive Committee of 'Shri Mahehswari Samaj' would decide the dispute, whose decision shall be final and binding upon all parties. That the appointment of a high level Committee of five members to act as Dispute Resolution Committee in the present matter to settle the dispute in question, is against the spirit of the A&C Act, since such Committee of Mediation/ Arbitrators has been appointed unilaterally by the nonapplicant, who itself is one of the interested party in the dispute and there is no involvement of applicant in appointment of Arbitrators. That in the situation, an independent, impartial and neutral Arbitration Tribunal is required to be constituted by the Court to adjudicate/ resolve the dispute related to the constitution of 'Shri Mahehswari Samaj'. Reliance has been placed upon the judgments of Hon'ble Supreme Court delivered in case Perkins Eastman Architects DPC Vs. HSCC (India) Limited [(2020) and Central Organisation for Railway Electrification Vs. M/s ECI SPIC SMO MCML (JV) A Joint Venture Company (for short "C.O.R.E."),2024. Per contra ,the respondents/non-applicants submitted that the application has already been submitted to the jurisdiction of such Arbitration Committee where the dispute is pending under consideration, therefore, the present application for appointment of a new Arbitration Tribunal is misconceived and not maintainable, hence, liable to be dismissed at threshold. That if the applicant has any grudges against the members of the Arbitration Committee, the only remedy lies under Section 14/15 of the A&C Act, seeking termination of the mandate of Arbitration Tribunal for which the jurisdiction lies before the Commercial Court, hence, the present application is ex facie illegal and cannot be maintainable before the High Court. Court's Analysis The court, at the outset, reiterated the well settled law and observed that the legal proposition is no more res integra that a party or an official or an authority having interest in the dispute would be dis-entitled to make appointment of an Arbitrator. The rationale underlying to such proposition of law is well recognized that the person, who has interest in the outcome of decision of the dispute, must not have powers to appoint the Arbitrator. The court noted that as far as considering the present nature of dispute, which itself has arisen against the Executive Committee of Shri Maheshwari Samaj, the Dispute Resolution Committee constituted by the Executive Committee of Shri Maheshwari Samaj cannot be held to be an independent and impartial Committee, though, same Committee may be held valid for resolution of other disputes of the Samaj. The court came to the conclusion that in order to...

Unless Appointment Of Arbitrator Under Arbitration Clause Is Ex-Facie Valid, Jurisdiction Of Court U/S 11(6) Cannot Be Barred: Rajasthan HC

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Unless Appointment Of Arbitrator Under Arbitration Clause Is Ex-Facie Valid, Jurisdiction Of Court U/S 11(6) Cannot Be Barred: Rajasthan HC

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