Date of Judgement: 21.08.2009
Judge: Rajiv Sahai Endlaw, J.
Provision of Law: Petition under S 20 r/w Section 2(6) of the Indian Arbitration and Conciliation Act, 1996
S 20 (1) The parties are free to agree on the place of arbitration.
(2) Failing any agreement referred to in sub-section (1), the place of arbitration shall be determined by the arbitral tribunal having regard to the circumstances of the case, including the convenience of the parties.
(3) Notwithstanding sub-section (1) or sub-section (2), the arbitral tribunal may, unless otherwise agreed by the parties, meet at any place it considers appropriate for consultation among its members, for hearing witnesses, experts or the parties, or for inspection of documents, goods or other property.
S 2(6) Where this Part, except section 28, leaves the parties free to determine a certain issue, that freedom shall include the right of the parties to authorize any person including an institution, to determine that issue.
- Contract between NHAI and Sheladia is for the Sheladia to provide the construction supervision services to the petitioner for development of certain portions of the Golden Quadrilateral Project.
- Failure of the parties to agree upon the arbitral tribunal would mean that the sole arbitrator or, in case of a three arbitrator tribunal, the third arbitrator would be appointed by the Secretary, Indian Council of Arbitration, New Delhi (ICA).
- Venue of arbitration was to be
- Certain disputes arose and Sheladia appointed an arbitrator but NHAI did not. Hence Sheladia approached
for the appointment of an arbitrator. The ICA appointed Mr. B.C. Tripathi, retired Chief Engineer-cum-Member (Technical) based at Bhubaneshwar on 10th September, 2008 ICA
- The arbitrator issued notice dated 18th October, 2008 for holding the first sitting at
on 4th November, 2008. In spite of the notice being given, the petitioners did not turn up for the sitting, prompting the arbitrator to adjourn the proceedings. The arbitrator in his order also stated: "till further decision, the place of arbitration will continue to remain at the Conference Hall of Radhika Tower, Bhubaneswar Tankapani Road, Bhubaneswar".
- In the next sitting NHAI brought to the notice of the arbitrator that the contracted venue of arbitration was New Delhi and the arbitrator was requested to hold the arbitration proceedings at New Delhi, which the arbitrator failed to consider
- NHAI failed to attend subsequent proceedings before the arbitrator.
- NHAI approached the Delhi High Court asking for the change of venue
“It is thus found that the Arbitral Tribunal by refusing to hold the arbitration proceedings at Delhi, in spite of attention having been invited to the agreement providing so, has become de facto unable to perform his functions and/or has failed to act without undue delay. The mandate of the arbitrator thus has to be declared to have stood terminated.”
Observations by the
Apart from deciding in favour of NHAI, the Single Judge made certain comments on the way in which arbitration is conducted in
"48. Before parting with the case, I must record that the chain of events as happened herein is what brings bad name to arbitration. In spite of the arbitrator having been appointed nearly one year ago, nothing has been achieved till date and now the mandate of the arbitrator has to be held to have terminated. I find the Indian Council of Arbitration, the arbitrator as well as the respondent to be blamed for the same. The Indian Council for Arbitration being the appointing authority, in spite of clause in the agreement for the place of arbitration to be at
49. Arbitration as a mode of settlement of disputes was evolved to lessen the load on the court and to provide for expeditious resolution of disputes. However, stand of the parties such as has emerged in these proceedings is not allowing the same to happen. Though, undoubtedly the jurisdiction of the courts is limited but wherever permissible and wherever needed to be exercised for achieving the said purposes, the courts ought not to fail from exercising their jurisdiction to serve the said objectives."
PS: The Single Judge also imposed costs to the tune of Rs 50,000 on Sheladia.