Case Note & Summary
The dispute arose between a contractor and the Ahmedabad Municipal Corporation regarding unpaid dues for work performed under a contract for paving and footpath construction. The contractor, after completing the work, claimed outstanding payments totaling Rs. 77,08,632/- but received no response from the Corporation despite serving notices. The contractor invoked the arbitration clause in the contract due to the lack of payment and the Corporation's failure to appoint an Arbitrator. The Gujarat High Court rejected the contractor's petition for the appointment of an Arbitrator, citing that the Ahmedabad Municipal Corporation was not a 'Public Undertaking' as defined under the Gujarat Tribunal Act, 1992, and that the Arbitration Agreement lacked a specified procedure for appointing an Arbitrator. The contractor appealed to the Supreme Court, which considered whether the absence of a Notification regarding the Corporation's status as a Public Undertaking affected the jurisdiction of the Arbitration Tribunal and whether the lack of a procedure in the Arbitration Agreement barred the appointment of an Arbitrator under the Arbitration and Conciliation Act, 1996. The Supreme Court found that the absence of a Notification did not preclude the Corporation from being treated as a local authority and that the lack of a specified procedure did not prevent the Chief Justice from appointing an Arbitrator. The Court ultimately allowed the appeal, appointed a former Supreme Court judge as the Arbitrator, and set aside the High Court's order, directing the Arbitrator to resolve the disputes expeditiously.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Jurisdiction of Chief Justice - Arbitration and Conciliation Act, 1996, Section 11 - In absence of a procedure for appointing an Arbitrator in the Arbitration Agreement, the Chief Justice or Designated Court can still appoint an Arbitrator under Section 11(6) of the Act. The court recognized the right of the appellant to seek appointment of an Arbitrator despite the absence of a Notification declaring the Municipal Corporation as a Public Undertaking, allowing the appeal and appointing an Arbitrator directly (Paras 14-17).
Issue of Consideration
Whether the absence of a procedure in the Arbitration clause for the appointment of an Arbitrator bars the Chief Justice or the Designated Court from appointing an Arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996.
Final Decision
The Supreme Court allowed the appeal, appointed Hon’ble Mr. Justice C.K. Thakker as the Arbitrator, and set aside the High Court's order. The Arbitrator was directed to fix his own fees and publish his Award within six months.
Law Points
- Arbitration Agreement
- Appointment of Arbitrator
- Jurisdiction of Courts
- Public Undertaking
- Works Contract
