The Calcutta High Court disposed of a writ petition seeking the appointment of arbitral tribunals under sections 14 and 15 of The Arbitration and Conciliation Act, 1996. The Court observed that once the Court intervenes in the matter of appointment and the arbitration is set in motion, the parties must revert to the Court in all subsequent interruptions in that process.
Brief Facts:
The petitioner had appointed a sole arbitrator. The respondent made a written request to the appointed arbitrator to withdraw on the ground of unilateral appointment but was denied the same which led to the respondent filing an application under section 14 of the Act for termination of the arbitrator’s mandate. The Co-ordinate Bench passed an order on 22.2.2022 noting that disputes and differences had arisen between the parties and appointed the arbitrator on consent. The arbitrators thereafter communicated their inability to perform the functions on the ground of elevation to the Bench and relocation outside India. The question which falls for adjudication is the governing provisions of the 1996 Act with regard to the appointment of the Tribunal. In other words, whether the procedure for appointment of a new arbitral tribunal should revert to i) section 14 of the Act which contemplates an arbitrator’s failure or impossibility to act or ii) to section 11 where the Court intervenes in the matter of appointment of arbitrators subject to circumstances existing under the situations envisaged in section 11 of the Act.
Contentions of the Petitioner:
The Learned Counsel for the Petitioner submitted that the arbitrator was de facto unable to perform her functions under section 14(i)(a) by reason of the elevation and relocation. He relied on section 15(2) which provides for the appointment of a substitute arbitrator when the mandate of an arbitrator terminates under section 14 or by reason of the additional circumstances referred to in section 15(1). He argued that the procedure for substitution of an arbitrator under section 15 must be the same as the initial appointment of the arbitrator whose mandate came to an end by reason of the inability.
Contentions of the Respondent:
The Learned Counsel for the Respondent submitted that the Court can only appoint an arbitrator under sections 11(5) and (6) of the Act and that sections 14 and 15 do not confer any power on the Court to make such an appointment. It was submitted that the petitioner had unilaterally appointed a sole arbitrator which prompted the respondent to make a written request to the unilaterally-appointed sole arbitrator to withdraw as he was ineligible to act as an arbitrator.
Observations of the Court:
The Court noted that on a plain reading of Section 15(2), the term “rules” would mean the rules of the agreement between the parties with regard to the appointment of the arbitrator or the procedure of appointment by the Court of the erstwhile arbitrator. The Court would simply rewind the clock to the date and time when the arbitrator (whose mandate is terminated) was appointed and not to a stage before the replacement.
The Court observed that the respondent cannot say that the appointments which are now proposed to be made of the substitute arbitrators must be consigned to the drill of section 11(5) where the parties have to agree on the appointment within 30 days and thereafter approach the Court if they are unable to do so. Further, the Court said that the right to choose an arbitrator in accordance with an agreed procedure for appointment however stops at the doorway of 11(6) when the parties surrender that right to the High Court or the Supreme Court. Once the Court intervenes in the matter of appointment and the arbitration is set in motion, the parties must revert to the Court in all subsequent interruptions in that process.
The decision of the Court:
The Calcutta High Court, disposing of the petition, held that Mr. Shounak Mukhopadhyay and Mr. Jayanta Sengupta would be the arbitrators in accordance with the statutory mandate of section 15 of the Act.
Case Title: Srei Equipment Finance Limited vs Seirra Infraventure Private Limited
Coram: Hon’ble Justice Moushumi Bhattacharya
Case no.: AP 281 of 2023
Advocate for the Petitioner: Mr. Swatarup Banerjee
Advocate for the Respondent: Mr. Rohit Das
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