Case Number: Civil Appeal No(s).54 OF 2022 (Arising out of SLP(Civil) No(s). 28682 of 2019)

Judges Name: Hon’ble Judges Ajay Rastogi J, Abhay S. Oka J

Order dated: 04.01.2022

“Once an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 is filed only the High Court has jurisdiction to appoint arbitrators”

Facts of the Case:

• This is an appeal preferred by M/s. Durga Welding Works (Appellant) against Chief Engineer, Railway Electrification, Allahabad, and others (Respondents) challenging the order of the Hon’ble High Court of Orissa declining to appoint an Arbitrator in exercise of its power under Section 11(6) of the Arbitration and Conciliation Act, 1996 (“Act”).
• The Appellant’s tender was accepted vide a letter dated 30.11.2006 and a contract agreement was executed between the Appellant and the Respondents which contained an arbitration clause. Since there were claims which could not be settled, the Appellant sent a legal notice to the Respondents on 03.08.2009 seeking arbitration. The Respondent failed to appoint arbitrators, an application under Section 11(6) of the Act, was filed by Appellant. 
• Thereafter, no notice of such petition was served by the Appellant to the Respondents at any stage. Subsequently, the Respondent sent a letter dated 28.01.2010 requesting the Appellant to select two persons as arbitrators from a list of four persons. And, the Appellant also selected two persons and after filing statements of claims and defenses, the Appellant stated that the Tribunal was not constituted with the time period and did not participate further in it. 
• The Tribunal passed an ex-parte award dated 21.06.2013 rejecting the claim of the appellant and the Hon’ble High Court of Orissa issued a notice to Respondents in 2016. The Hon’ble High Court of Orissa considering the peculiar facts of the case dismissed the arbitration petition with liberty to the appellant to submit its objections under Section 34 or 37 of the Act.

Order:

The Hon’ble Supreme Court observed/held as follows:

• The Respondents were never served of any notice of the Arbitration Petition (ARBP No. 61 of 2009) filed before High Court of Orissa.
• Further apart from issuing a letter dated 27.12.2011, no steps were taken by the Appellant to pursue the arbitration application in the Hon’ble High Court of Orissa.
• In the case of Dat Datar Switchgears Ltd. vs. Tata Finance Ltd. & Anr. which was followed in Punj Lloyd Ltd. Vs. Petronet MHB Ltd., the Hon’ble Court held that once an application under Section 11(6) of the Act is filed, the Respondents forfeited their right to appoint an arbitrator.
• No error was committed by the High Court in dismissing the petition filed under Section 11(6) of the Act for appointment of an Arbitrator.

The Hon’ble Supreme Court dismissed the Appeal.