Full Judgment
Therefore, Section 15 of the Arbitration and Conciliation Act came into play when a substitute Arbitrator was to be appointed under Section 15(2). This application for appointment of an Arbitrator by the Court was filed on 2nd August, 2010. The respondents made the appointment on 4th August, 2010. Section 15(2) enacts as follows:-
Where the mandate of an arbitrator terminates, a substitute arbitrator shall be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced.
Sub-section (1) says that the mandate of an Arbitrator shall terminate if the arbitrator withdraws from office for any reason. I have been referred to the case of Nucon India (P) Ltd. v. Delhi Vidyut Board (DESU) reported in AIR 2001 Delhi 227 by Mr. Dhruba Ghosh learned Counsel for the petitioner.
He submits borrowing the principles of Section 11 and the discussion in that judgement, that once an application for appointment of the Arbitrator has been filed, the appointing authority loses the right to appoint an Arbitrator. Such is to happen even in the case of appointment of a substitute Arbitrator. Section 15 was not under consideration in that case.
The section only says that the appointment has to be made according to the applicable rules. In my opinion, the applicable rules would be the agreement, and the Arbitration and Conciliation Act, 1996. Now the point is that there is a delay of slightly over one month in appointing the Arbitrator. Here the appointment procedure under Section 11 (6) applies. There is no strict stipulation in Section 11(6) that after 30 days the right to appoint would be lost.
Under the above Section in some cases 30 days have been taken as the reasonable period to appoint, borrowing the principle, from the stipulation of 30 days in Sub-sections (4) and (5) of Section 11. In my opinion under the appointment procedure in Section 11(6) the Arbitrator has to be appointed within a reasonable period but the time limit of 30 days is not to be taken as an inflexible rule. But however if an Arbitrator is appointed after filing of a Section 11 application it is then an affront to the Court. Such action is to frustrate the proposed order, it is presumed. Therefore, that is not appreciated. In this case, the appointment has been made after filing of the application. That is not correct. Hence I set aside the appointment of Arbitrator being communicated by a letter dated 4th August, 2010 of the Chief Engineer (IBBZ).
However, some respect has to be shown to the appointment machinery in the above Act. The facts and circumstances demand that an opportunity should be given to the respondents to make appointment according to the Arbitration Clause, upon resignation of the previous Arbitrator. Therefore, I dispose of this application by directing the Chief Engineer (IBBZ) CPWD, Government of India to appoint an Arbitrator within a period of two weeks from the date of communication of this order. The Arbitrator already appointed cannot be appointed. In default, the application will be referred to the Honble designate of the Honble the Chief Justice for naming of an Arbitrator. The above direction to appoint an Arbitrator is peremptory. Liberty to mention.
All parties concerned are to act on a signed photocopy of this order on the usual undertakings.