Tag Archives: Appointment of Arbitrator

Arbitrator – Appointed by Government Department/Company

In Union of India v. U.P. State Bridge Corporation Ltd., (2015) 2 SCC 52, it was held as under:

        “In the case of contracts between Government Corporations/State owned companies with private parties/contractors, the terms of the agreement are usually drawn by the Government Company or public sector undertakings. Government contracts have broadly two kinds of arbitration clauses, first where a named officer is to act as sole arbitrator; and second, where a senior officer like a Managing Director, nominates a designated officer to act as the sole arbitrator. No doubt, such clauses give the Government a dominant position to constitute the Arbitral Tribunal are held to be valid. At the same time, it also casts an onerous and responsible duty upon the persona designata to appoint such persons/officers as the arbitrators who are not only able to function independently and impartially, but are in a position to devote adequate time in conducting the arbitration. If the Government has nominated those officers as arbitrators who are not able to devote time to the arbitration proceedings or become incapable of acting as arbitrators because of frequent transfers, etc., then the principle of “default procedure” at least in the cases where the Government has assumed the role of appointment of arbitrators to itself, has to be applied in the case of substitute arbitrators as well and the court will step in to appoint the arbitrator by keeping aside the procedure which is agreed to between the parties. However, it will depend upon the facts of a particular case as to whether such a course of action should be taken or not. S.P. Singla Constructions (P) Ltd. v. State of H.P., (2019) 2 SCC 488.

Leave a comment

Filed under Arbitration, Arbitrator Appointed by Government Department

Appointment of Arbitrator – No Claim Certificate Obtained by Fraud, Coercion, Duress or Undue Influence

In Union of India v. Master Construction Company, (2011) 12 SCC 349, it was held as under:

            “In our opinion, there is no rule of the absolute kind. In a case where the claimant contends that a discharge voucher or no claim certificate has been obtained by fraud, coercion, duress or undue influence and the other side contests the correctness thereof, the Chief Justice/his designate must look into this aspect to find out at least, prima facie, whether or not the dispute is bona fide and genuine. Where the dispute raised by the claimant with regard to validity of the discharge voucher or no – claim certificate or settlement agreement, prima facie, appears to be lacking in credibility, there may not be a necessity to refer the dispute for arbitration at all.”

            From the proposition which has been laid down by the Hon’ble Apex Court, what reveals is that a mere plea of fraud, coercion or undue influence in itself is not enough and the party who alleged is under obligation to prima facie establish the same by placing satisfactory material on record before the Chief Justice or his Designate to exercise power under Section 11(6) of the Arbitration and Conciliation Act, 1996 which has been considered by the Hon’ble Supre Court in New India Assurance Co. Ltd. v. Genus Power Infrastructure Ltd., (2015) 2 SCC 424 as below:

            “It is therefore clear that a bald plea of fraud, coercion, duress or undue influence is not enough and the party who sets up a plea, must prima facie establish the same by placing material before the Chief Justice/ his Designate.”

            It is true that there cannot be a rule of its kind that mere allegation of discharge voucher or no claim certificate being obtained by fraud/coercion/undue influence practiced by other party in itself is sufficient for appointment of the arbitrator unless the claimant who alleges that execution of the discharge agreement or no claim certificate was obtained on account of fraud/coercion/undue influence practiced by the other party is able to substantiate the same, the correctness thereof may be open for the Chief Justice/his Designate to look into this aspect to find out at least prima facie whether the dispute is bona fide and genuine in taking a decision to invoke Section 11(6) of the Arbitration and Conciliation Act, 1996. United India Assurance Co. Ltd. v. Antique Art Exports Pvt. Ltd., (2019) 5 SCC 362.

Leave a comment

Filed under Appointment of Arbitrator, Arbitration

Arbitration – Notice Under Section 21 of the Act is Mandatory

Considering that the running theme of the Arbitration and Conciliation Act is the consent or agreement between the parties at every stage, Section 21 performs an important function of forging such consensus on several aspects viz., the scope of the disputes, the determination of which disputes remain unresolved; of which disputes are time-barred; of identification of the claims and counter claims and most importantly, on the choice of arbitrator. Thus, the inescapable conclusion on a proper interpretation of Section 21 of the Act is that in the absence of an agreement to the contrary, the notice under Section 21 of the Act by the claimant invoking the arbitration clause, preceding the reference of disputes to arbitration, is mandatory. In other words, without such notice, the arbitration proceedings that are commenced would be unsustainable in law. Alupro Building Systems Pvt. Ltd. v. Ozone Overseas Pvt. Ltd., 2017 SCC Online Del 7228.   

Leave a comment

Filed under Notice Under Section 21, Uncategorized

Appointment of Arbitrator – Applicability of Article 137 of Limitation Act

It is not in dispute that Article 137 of the Limitation Act would apply to applications filed under Section 11 of the Arbitration and Conciliation Act, 1996. In Major (Retd.) Inder Singh Rekhi v. DDA, (1998) 2 SCC 338, the Hon’ble Apex Court held that in application for appointment of arbitrator Article 137 of the Limitation Act will apply.

       Article 137 of the Limitation Act, 1963 is applicable to applications both under Civil Procedure Code and under the Special Acts. Article 137 constitutes the residuary Article in regard to applications. The starting point of limitation under Article 137 is the date when “the right to apply arises”. Article 137 being a residuary Article to be adopted to different classes of applications, the expression “the right to apply” is expression of a broad common law principle and it has to be interpreted according to the circumstances of each case. In Ramanna v. Nallaparaju, 1995 (2) SCR 936, the Hon’ble Apex Court has held that “the right to apply” means “the right to apply first arises”.

       Under the Arbitration and Conciliation Act, 1996, right to apply to the Court having jurisdiction would arise from the date such controversy arises between the parties. Central Electronics Limited v. Friends Cable Industries, Noida, 2017 (125) ALR 588.

Leave a comment

Filed under Applicability of Limitation Act, Arbitration

Appointment of Arbitrator – Limitation

The time limit for filing a petition for appointment of an Arbitrator under Section 11 of the Act has not been provided either under the Act or under the Limitation Act specifically. The request to the Chief Justice or his designate by way of application would fall within the definition of “application” contained in Section 2(b) of the Limitation Act, 1963. Therefore, the Article 137 of the Limitation Act comes into play and the limitation for seeking appointment of an Arbitrator under Section 11 would be three years from the date when the right to apply accrues.
The observations of the Hon’ble Apex Court in S.B.P. and Company v. Patel Engineering Limited, (2005) 8 SCC 618, as explained and clarified in Indian Oil Corporation Ltd. V. S.P.S. Engineering Limited, (2011) 3 SCC 507, makes it clear that the Chief Justice or his designate is competent to decide if the claim sought to be resolved by arbitration is stale or dead or is long time barred though it is not imperative upon him to enter into the said exercise. It can be left to be decided by the Arbitral Tribunal if it appears to be slightly overtime. However, where the claim is evidently and patently dead or long time barred and does not involve entry into disputed questions of fact or evidence, the court may refuse it to refer to arbitration. Thus, it is only in case where there is a genuine dispute regarding limitation and the claim is slightly beyond time that the matter should be left to be adjudicated by the Arbitral Tribunal but not where the claim is apparently barred by limitation. Sureka International v. Union of India, 2014 (5) AWC 5106.

Leave a comment

Filed under Appointment of Arbitrator, Arbitration