Case Note & Summary
The dispute arose from an agreement for kerosene and light diesel oil dealership between the appellant and the Indian Oil Corporation. Following alleged violations by the dealer, the Corporation suspended supplies, prompting the dealer to seek an injunction under Section 9 of the Arbitration and Conciliation Act, 1996. The District Judge granted a restraint order, which the Corporation challenged unsuccessfully in the Allahabad High Court. Subsequently, the dealer demanded the appointment of an arbitrator, warning that failure to do so would lead to an application under Section 11. The Corporation appointed an arbitrator after the dealer filed the application under Section 11(6). The Chief Justice of the High Court dismissed the dealer's application, stating that the Corporation had already appointed an arbitrator. The Supreme Court analyzed the legal implications of the appointment and the forfeiture of the Corporation's right to appoint an arbitrator. It concluded that the Corporation's right was forfeited as it failed to act within the stipulated time after the dealer's demand. The Court emphasized that the appointment made during the proceedings was ineffective and directed the Chief Justice to consider the dealer's application for appointing an arbitrator. The appeal was allowed, and the previous order was set aside, restoring the arbitration case for fresh consideration.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Forfeiture of Right - Arbitration and Conciliation Act, 1996, Section 11 - The Corporation forfeited its right to appoint the arbitrator as it failed to act after the dealer's demand and before the dealer's application under Section 11(6). The appointment made by the Corporation during the pendency of the proceedings was of no legal consequence. Held that the Chief Justice should have appointed an arbitrator under Section 11(6) (Paras 20-23).
Issue of Consideration
Whether the respondent forfeited its right to appoint the arbitrator and the legal consequence of the appointment made during the proceedings under Section 11(6).
Final Decision
The Supreme Court allowed the appeal, set aside the impugned order, and restored the arbitration case for fresh consideration by the Chief Justice of the Allahabad High Court.
Law Points
- Arbitration
- appointment of arbitrator
- forfeiture of right
- Section 11 Arbitration and Conciliation Act
- 1996
