Application Under Section 11(6) Not Maintainable For Appointment Of Arbitrator In Absence Of A Written Agreement Between Parties: Supreme Court

The Supreme Court has ruled that there is a difference between the arbitrator appointed under Section 11(5) and under Section 11(6) of the Arbitration and Conciliation Act, 1996 (A&C Act) and failing any written agreement between the parties on the procedure for appointing an arbitrator (s) under Section 11(2), application for appointment of arbitrator (s) shall be maintainable under Section 11(5) and not under Section 11(6). The Bench of Justices M. R. Shah and B.V. Nagarathna held that once the dispute is referred to arbitration and the sole arbitrator is appointed by the parties by mutual consent, the arbitration agreement cannot be invoked for the second time. A family dispute between the parties for partition of properties was referred to arbitration. Thereafter, the parties to the arbitration proceedings- respondent no. 1 and 3 revoked the mandate of the sole arbitrator vide a letter addressed to the arbitrator. Respondent no. 1 and 3 filed applications under Section 14(1)(a) of the A&C Act before the District Court for terminating the mandate of the sole arbitrator on the ground of delay in concluding the arbitration proceedings. The appellant Swadesh Kumar Agarwal filed an application under Order 7 Rule 11 of CPC for dismissal of the said application filed under Section 14 of A&C Act on the ground that there was no delay on the part of the sole arbitrator. The District Court dismissed the application filed by the appellant. Against the order of the District Court, the appellant filed a writ petition before the Madhya Pradesh High Court. During the pendency of the application under Section 14(1)(a) before the District Court for terminating the mandate of the sole arbitrator, the respondent no. 1 Dinesh Kumar Agarwal filed an arbitration case before the High Court under Section 11(6) of the A&C Act requesting the termination of the mandate of the sole arbitrator and for appointment of a fresh arbitrator. The High Court allowed the application filed by the respondent no. 1 and held that there was undue delay on the part of the sole arbitrator in concluding the arbitration proceeding, thus his mandate stood terminated. The High Court also appointed a fresh arbitrator and dismissed the writ petition filed by the appellant against the order of the District Court. The appellant filed an appeal before the Supreme Court against the order of the High Court. The appellant Swadesh Kumar Agarwal submitted before the Supreme Court that the High Court had erred in terminating the mandate of the arbitrator under Section 14(1)(a) of the A&C Act on an application filed under Section 11(6). The appellant added that where an arbitrator was already appointed by the parties, no application under Section 11(6) was maintainable to terminate the mandate of the arbitrator or to substitute an arbitrator. The appellant averred that the mandate of the arbitrator can be terminated only as per the provisions of the A&C Act. The appellant averred that in case of the eventualities as mentioned in Section 14(1)(a) to terminate the mandate of the arbitrator, the parties would have to approach the "court" as defined under Section 2(e) of the A&C Act. The appellant contended that applications under Section 14(2) to decide on the termination of the arbitrator's mandate were pending in the District Court at the time when applications under Section 11(6) for appointment of a fresh arbitrator were filed before the High Court. The appellant contended that as per the law laid down by the Supreme Court in the case of Antrix Corporation Limited versus Devas Multimedia Private Ltd (2013), once the parties have invoked arbitration proceedings and the arbitrator has been appointed, a subsequent application under Section 11(6) is not maintainable. The appellant averred that in the absence of a written contract containing an arbitration agreement between the parties, Section 11(6) of the A&C Act was not applicable and thus an application under Section 11(6) was not maintainable before the High Court. The Supreme Court observed that the sole Arbitrator was appointed by the parties themselves by mutual consent and there was no written agreement or contract containing an arbitration clause. The Court noted that in a case where there is an arbitration agreement between the parties wherein an appointment procedure is agreed upon, Section 11(6) of the A&C Act shall be attracted. Thus, in the case of occurrence of any eventuality as specified under Section 11(6), a party can approach the High Court for appointment of an arbitrator. However, the Court added, Section 11(5) shall be attracted in a case where no procedure for appointment of an arbitrator is agreed upon. Thus, the Court ruled that while referring the matter for arbitration there need not be any written contract containing an arbitration agreement and the parties may themselves decide...

Application Under Section 11(6) Not Maintainable For Appointment Of Arbitrator In Absence Of A Written Agreement Between Parties: Supreme Court

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Application Under Section 11(6) Not Maintainable For Appointment Of Arbitrator In Absence Of A Written Agreement Between Parties: Supreme Court

Parina Katyal

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INR 1099+GST

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