Case Note & Summary
The Petitioner, PSP Projects Limited, a construction company, was awarded a contract by the Respondent, Bhiwandi Nizampur City Municipal Corporation, for constructing dwelling units under the Pradhan Mantri Awas Yojana. Disputes arose regarding delays in the project, and the Petitioner invoked the arbitration clause in the agreement. The arbitration clause provided for appointment of an arbitrator by the Commissioner of the Respondent Corporation. The Petitioner issued a notice invoking arbitration on a certain date, but the Respondent failed to appoint an arbitrator within 30 days. The Petitioner then filed a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking appointment of an arbitrator by the Court. The Respondent opposed the petition, arguing that the arbitration clause was hit by Section 12(5) read with the Seventh Schedule because the Commissioner is an employee of the Respondent, and that the Respondent had not forfeited its right to appoint. The Court considered two issues: whether the arbitration clause was valid despite the alleged ineligibility, and whether the Respondent forfeited its right to appoint. The Court held that the ineligibility under Section 12(5) can be waived, and since the Petitioner invoked the clause without objection, the clause is not invalid. Further, the Court held that the Respondent forfeited its right to appoint by failing to appoint within the specified period and after the petition was filed. The Court allowed the petition and appointed a sole arbitrator.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Section 11(6) of Arbitration and Conciliation Act, 1996 - Forfeiture of Right - The Respondent failed to appoint an arbitrator within 30 days of the notice invoking arbitration and after the petition was filed, thereby forfeiting its right to appoint. The Court held that the right to appoint is forfeited when the party fails to act within the prescribed time. (Paras 1-32) B) Arbitration Law - Arbitrator Eligibility - Section 12(5) read with Seventh Schedule of Arbitration and Conciliation Act, 1996 - Unilateral Appointment Clause - The arbitration clause provided for appointment of an arbitrator by the Commissioner of the Respondent Corporation, which is an employee of the Respondent. However, the Court held that the ineligibility under Section 12(5) can be waived by the parties, and since the Petitioner invoked the clause without objection, the clause is not invalid. (Paras 1-32)
Issue of Consideration
Whether the Petitioner is entitled to seek appointment of Arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996, and whether the Arbitration Clause is hit by Section 12(5) read with the Seventh Schedule; and whether the Respondent forfeited its right to appoint Arbitrator by failing to appoint within the specified period.
Final Decision
The Court allowed the petition and appointed a sole arbitrator to adjudicate the disputes between the parties.
Law Points
- Section 11(6) of Arbitration and Conciliation Act
- 1996
- Section 12(5) read with Seventh Schedule
- forfeiture of right to appoint arbitrator
- unilateral appointment clause
- waiver of ineligibility
