Magma Leasing Ltd. Vs. Tonganagaon Tea Co. Pvt. Ltd. and ors. - Court Judgment

Excerpt:
- ordersubhro kamal mukherjee, j.1. this is an application for appointment of an arbitrator instead and place of mr. p.k. banerjee, retired chief justice of rajasthan high court.2. admittedly, there has been an arbitration clause in the agreement of financing between the parties. in the arbitration clause it has been provided that all disputes, differences, claims and questions whatsoever arising between the parties should be referred to mr. p.l. agarwal of m/s. khaitan and company, solicitors.3. the named arbitrator, however, expressed his inability to enter upon the reference.4. consequently, the petitioner filed an application under section 11 of the arbitration and conciliation act, 1996 ('the said act' in short) with a prayer for appointment of a person in place of the said mr. p.l......

Judgment:
ORDER

Subhro Kamal Mukherjee, J.

1. This is an application for appointment of an Arbitrator instead and place of Mr. P.K. Banerjee, retired Chief Justice of Rajasthan High Court.

2. Admittedly, there has been an Arbitration clause in the agreement of financing between the parties. In the Arbitration clause it has been provided that all disputes, differences, claims and questions whatsoever arising between the parties should be referred to Mr. P.L. Agarwal of M/s. Khaitan and Company, Solicitors.

3. The named Arbitrator, however, expressed his inability to enter upon the reference.

4. Consequently, the petitioner filed an application under Section 11 of the Arbitration and Conciliation Act, 1996 ('the said Act' in short) with a prayer for appointment of a person in place of the said Mr. P.L. Agarwal, who refused to act as an Arbitrator in the dispute between the parties. The said application was registered as A.P. No. 169 of 2001 in this Court.

5. Ganguly, J. by order dated August 1, 2001 referred the matter to the Hon'ble Chief Justice for appointment of an Arbitrator in view of the provisions of Section 11 of the said Act. The Hon'ble Chief Justice appointed Mr. P.K. Banerjee, retired Chief Justice of Rajasthan High Court as the learned Arbitrator.

6. The learned Arbitrator entered upon the reference and held about twenty-five sittings. However, on November 18, 2002 the learned Arbitrator closed the Arbitration proceedings accepting the plea of the respondents that the said Arbitration proceedings could not be proceeded with, as the petitioner has given no notice for thirty days. The respondents raised such objection as to the jurisdiction of the Arbitral Tribunal and the claimant, also, conceded to such objection.

7. The minutes of the meeting dated November 18, 2002 is set out herein below :

'At the very outset it must be stated that though Mr. Pandey for respondent and Mr. Sen, Mr. Banerjee, Mrs. Ganguly and Mr. S.K. Singhania, for the claimant are present here, it is conceded that in view of the facts that no notice for 30 days, as envisaged in the Arbitration and Conciliation Act, 1996 has been given by Magma Leasing Limited, the claimant herein, this Arbitration proceeding cannot proceed and therefore, on the failure on their part, to give notice, this Arbitration proceeding can not continue.

I, therefore, without prejudice to the rights and contention of the parties in the proceedings, close this Arbitration proceeding and the Arbitration proceeding is dismissed. I make it clear that I have not gone into the merits of the case of both the parties in this Arbitration proceeding, as I have no jurisdiction and it is conceded by Mr. Sen and agreed to by Mr. Pandey.'

8. The claimant, through its learned advocate, issued a notice to the respondents on November 21, 2002 indicating that the claimant appointed Mr. Chittotosh Mookerjee, retired Chief Justice of Bombay High Court as the sole Arbitrator with a request to enter upon the reference and to complete the Arbitration proceeding and requested the respondents to signify their consent. However, on January 3, 2003 the learned advocate for the respondents, in reply to the said letter dated November 21, 2002 of the learned advocate for the claimant, stated that the appointment of Mr. P.K. Banerjee, retired Chief Justice of Rajasthan High Court has not terminated and he continued to be the learned Arbitrator. It was, further, stated that the claimant had no right or authority to appoint any Arbitrator/particularly, keeping in mind the order of this Court and expressed their inability to signify their consent.

9. In the aforesaid premises, the claimant has come with the present application for appointment of the Arbitrator instead and in place of the outgoing learned Arbitrator.

10. The respondents contend that the present application is not maintainable inasmuch as the learned Arbitrator not only closed the Arbitration proceedings, but, also dismissed the Arbitration proceedings. It is, therefore, submitted that the learned Arbitrator has passed his Award dismissing the claim.

11. As I have noted hereinabove that the Hon'ble Chief Justice appointed the learned outgoing Arbitrator on an application filed under Section 11 of the said Act by the claimant. The respondents challenged the jurisdiction of the Arbitrator and called upon the learned Arbitrator to rule on his jurisdiction. The respondents submitted before the learned Arbitrator that as the claimant has given no notice for thirty days, the Arbitration proceedings could not be proceeded with and could not be continued. The claimant, also, conceded to the prayer of the respondents.

12. My reading of the minutes of the Arbitral proceedings dated November 18, 2002 is that the respondents challenged the jurisdiction of the learned Arbitrator and requested the learned Arbitrator to rule on his jurisdiction. The claimant conceded to such prayer of the respondents. The learned Arbitrator ruled on his jurisdiction and held that the Arbitral Tribunal was not properly constituted. My reading of the order of the learned Arbitrator is that the parties agreed to termination of the mandate of the learned Arbitrator, the learned Arbitrator, therefore, closed the Arbitration proceedings. The learned Arbitrator has not passed any Award rejecting the claim of the claimant inasmuch as the learned Arbitrator in the said minutes recorded expressly that the learned Arbitrator did not go into the merits of the case of both the parties.

13. Under Sub-section (2) of Section 15 of the said Act where the mandate of the Arbitrator is terminated, a substituted Arbitrator should be appointed according to the rules that were applicable to the appointment of the Arbitrator being re-placed. The named Arbitrator refused to act and on an application under Section 11 of the said Act, the Hon'ble Chief Justice appointed Mr. P.K. Banerjee, retired Chief Justice of the Rajasthan High Court as the learned Arbitrator. When the mandate of the said learned Arbitrator has been terminated, in my view, the petitioner has rightly approached this Court for appointment of the Arbitrator by the Chief Justice instead and place of the outgoing learned Arbitrator.

14. I, therefore, admit this application and direct the Registrar, Original Side of this Court to place this application before the Hon'ble Chief Justice for naming the Arbitrator instead and in place of the outgoing Arbitrator.

15. All parties and the Registrar, Original Side, of this Court are to act on xerox signed copy of this dictated order on usual undertaking.