Case Note & Summary
The applicant, Kotak Mahindra Bank Ltd., a public company and banking company, filed an application under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking appointment of an arbitrator to adjudicate disputes arising out of an Agreement dated 18th April, 2018 and a Deed of Guarantee dated 18th April, 2018. The applicant invested a sum of Rs. 100 crores in respondent no. 1 company, Williamson Magor and Co. Ltd., by acquiring shares. Respondent no. 2 is the Chairman and promoter of respondent no. 1. The agreement contained an arbitration clause. Disputes arose between the parties, and the applicant invoked the arbitration clause by a notice dated 15th February, 2021, calling upon the respondents to nominate an arbitrator. The respondents failed to nominate an arbitrator within 30 days as required. The applicant then filed the present application. The court examined the arbitration clause and found that an arbitration agreement exists. The court noted that the respondents did not respond to the notice and did not appear to oppose the application. The court held that the condition for appointment under Section 11(6) is satisfied and appointed a sole arbitrator to adjudicate the disputes. The court directed the parties to appear before the arbitrator on a date to be fixed by the arbitrator.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Section 11(6) of the Arbitration and Conciliation Act, 1996 - Failure to Nominate - The applicant bank invested in respondent company and invoked arbitration clause. Respondent failed to nominate arbitrator within 30 days. Court held that the condition for appointment under Section 11(6) is satisfied and appointed a sole arbitrator to adjudicate disputes arising out of the Agreement dated 18th April, 2018 and Deed of Guarantee dated 18th April, 2018. (Paras 1-37) B) Arbitration Law - Existence of Arbitration Agreement - Section 7 of the Arbitration and Conciliation Act, 1996 - The court examined the arbitration clause in the transaction documents and found that an arbitration agreement exists between the parties. The disputes relate to the investment and guarantee, and thus are arbitrable. (Paras 2-10) C) Arbitration Law - Court's Power to Appoint Arbitrator - Section 11(6) of the Arbitration and Conciliation Act, 1996 - When a party fails to act as required under the arbitration procedure, the court may appoint an arbitrator. The court noted that the respondent did not respond to the notice invoking arbitration, and thus the court exercised its power to appoint a sole arbitrator. (Paras 11-37)
Issue of Consideration
Whether the court should appoint a sole arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996, when the respondent failed to nominate an arbitrator as per the arbitration clause in the agreement and deed of guarantee.
Final Decision
The court allowed the application and appointed a sole arbitrator to adjudicate the disputes between the parties arising out of the Agreement dated 18th April, 2018 and Deed of Guarantee dated 18th April, 2018. The parties were directed to appear before the arbitrator on a date to be fixed by the arbitrator.
Law Points
- Section 11(6) of the Arbitration and Conciliation Act
- 1996
- Appointment of arbitrator by court
- Failure to nominate arbitrator
- Existence of arbitration agreement
- Disputes arising out of transaction documents
