Case Note & Summary
The applicant, Vedanta Limited, filed an application under Section 11 of the Arbitration and Conciliation Act, 1996, seeking appointment of an Arbitral Tribunal to resolve disputes arising out of an EPC Contract dated 02.06.2018 with the respondent, Prowess International Pvt. Ltd. The contract was for a De-Dusting System for Blast Furnace 2 Cast House, Ladle Dumping Chamber, Coal Handling Plant and Coke Screening Plant 1 and 2. Time was of the essence, and the respondent failed to complete the work within the stipulated schedule. Despite multiple notices and an amendment dated 09.01.2019, the respondent did not remedy the breach. The applicant terminated the contract and appointed another agency, incurring costs of around Rs. 4 crores. After failed mediation, the applicant invoked arbitration clause 16 via notice dated 11.01.2023, but the respondent did not respond. The court noted that the arbitration agreement existed and the respondent did not object to the appointment. The court appointed a sole arbitrator, Justice (Retd.) R. M. S. Khandeparkar, to adjudicate the disputes. The court directed the arbitrator to file a disclosure under Section 11(8) read with Section 12(1) of the Act within four weeks.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Section 11 of Arbitration and Conciliation Act, 1996 - Existence of Arbitration Agreement - Applicant sought appointment of Arbitral Tribunal for disputes arising out of an EPC Contract dated 02.06.2018 - Respondent failed to respond to notice invoking arbitration clause 16 - Court held that since the arbitration agreement exists and respondent did not object, the application is allowed and a sole arbitrator is appointed (Paras 1-10).
Issue of Consideration
Whether an Arbitral Tribunal should be appointed under Section 11 of the Arbitration and Conciliation Act, 1996, when the respondent failed to respond to the notice invoking arbitration and did not object to the appointment.
Final Decision
The court allowed the application and appointed Justice (Retd.) R. M. S. Khandeparkar as the sole arbitrator to adjudicate the disputes between the parties. The arbitrator is directed to file a disclosure under Section 11(8) read with Section 12(1) of the Act within four weeks.
Law Points
- Section 11 of Arbitration and Conciliation Act
- 1996
- Appointment of Arbitrator
- Existence of Arbitration Agreement
- Failure to Respond to Notice
Case Details
2023 LawText (BOM) (12) 143
Application for Appointment of Arbitrator No. 1 of 2023
Mr A. Gosavi and Ms K. Naik for applicant; Mr A. K. Shrivastava, Mr A. Sharma and Mr T. Rane for respondent
Vedanta Limited thr. Auth. Sign, Benecio Menezes
Prowess International Pvt. Ltd.
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Nature of Litigation
Application under Section 11 of Arbitration and Conciliation Act, 1996 for appointment of Arbitral Tribunal
Remedy Sought
Appointment of Arbitral Tribunal to resolve disputes arising out of EPC Contract dated 02.06.2018
Filing Reason
Respondent failed to complete work under contract, leading to termination and claim for Rs. 4 crores; respondent did not respond to notice invoking arbitration
Issues
Whether an Arbitral Tribunal should be appointed under Section 11 of the Arbitration and Conciliation Act, 1996, when the respondent failed to respond to the notice invoking arbitration and did not object to the appointment.
Submissions/Arguments
Applicant submitted that the respondent failed to perform contractual obligations despite multiple notices and assurances, leading to termination and appointment of another agency at a cost of Rs. 4 crores.
Applicant argued that the arbitration clause exists and the respondent did not respond to the notice invoking arbitration, warranting appointment of an arbitrator by the court.
Ratio Decidendi
When an arbitration agreement exists and the respondent fails to respond to the notice invoking arbitration or object to the appointment, the court may appoint an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996.
Judgment Excerpts
By this application filed under Section 11 of Arbitration and Conciliation Act, 1996 applicant seeks an appointment of Arbitral Tribunal consisting of three Arbitrators for the purpose of resolving dispute that have arisen between the parties out of Contract dated 02.06.2018.
Since there was no response from the respondent though they received such notice, applicant in terms of the conditions of the contract and the dispute resolution clause even attempted to amicably settle the dispute by way of mediation.
Since mediation between the applicant and the respondent failed on account of no response from the respondent, the applicant vide notice dated 11.1.2023 invoked arbitration clause no. 16 and requested the respondent to appoint Arbitral Tribunal.
Procedural History
Applicant filed application under Section 11 of Arbitration and Conciliation Act, 1996 on 30.11.2023; reserved on 30.11.2023; pronounced on 20.12.2023.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 11, Section 11(8), Section 12(1)
