Case Note & Summary
The dispute arose from a contract between the petitioner and the first respondent for the supply of 16,000 metric tonnes of Blackstrap Cane Molasses. The petitioner claimed to have fulfilled its obligations but alleged that the respondents colluded to deceive it into parting with the molasses, which was subsequently sold to a third party. An application under Section 9 of the Arbitration and Conciliation Act, 1996 was filed, leading to a consent order from the District Court. However, disputes regarding compliance with the consent order prompted the petitioner to seek arbitration. The respondents failed to appoint their arbitrator as required by the arbitration agreement, leading the petitioner to file an application under Section 11 of the Act for the appointment of an arbitrator. The court analyzed the arbitration agreement and the respondents' failure to comply with its terms. It emphasized that the jurisdiction under Section 11 is limited to ensuring adherence to the agreed arbitration procedure and cannot modify the terms of the agreement. The court appointed a former judge as an arbitrator on behalf of the respondents and directed the arbitrators to expedite the proceedings. The respondents were ordered to bear the costs of the application.
Headnote
A) Arbitration Law - Appointment of Arbitrators - Jurisdiction under Section 11 - Court's Role in Appointing Arbitrators - Arbitration and Conciliation Act, 1996, Section 11 - The court held that it cannot alter the terms of the arbitration agreement or appoint a single arbitrator when the agreement specifies a committee of three arbitrators. The respondents' failure to appoint an arbitrator does not negate the arbitration clause's validity, and the court's jurisdiction is limited to ensuring compliance with the agreed procedure (Paras 4-5).
Issue of Consideration
Whether the court could appoint an arbitrator when the respondents failed to do so under the arbitration agreement.
Final Decision
The Supreme Court appointed Justice R.C. Chopra as an arbitrator on behalf of the respondents and directed the arbitrators to expedite the proceedings. The respondents were ordered to bear the costs of the application, quantified at Rs.10,000.
Law Points
- Arbitration agreement enforcement
- appointment of arbitrators
- jurisdiction under Section 11
- International Commercial Arbitration
- party autonomy
