Case Note & Summary
The appellant, Khorshed E. Nagarwalla, filed an appeal against an order of a learned Single Judge of the Bombay High Court dismissing her application under Section 9 of the Arbitration and Conciliation Act, 1996. The dispute arose from a suit that was referred to arbitration by consent of parties, with Shri A.B. Palkar (Retired Judge, Bombay High Court) appointed as sole arbitrator. The arbitration clause was recorded in minutes of order dated 6th July 2004, which also directed status quo of the subject property. After the sole arbitrator died, the appellant moved a Section 9 application seeking interim relief. The respondent objected, contending that the death of the named arbitrator invalidated the arbitration agreement and that the respondent was not willing to continue with arbitration. The learned Single Judge held that on the death of the arbitrator and in the absence of parties agreeing to appoint another arbitrator, there would be no arbitration agreement and consequently no relief could be granted. The Single Judge granted liberty to the appellant to take steps for restoration of the suit. The appellant appealed against this order. The Division Bench framed the issue whether the death of a named sole arbitrator invalidates the arbitration clause and whether the Chief Justice or his designate under Section 11 of the Act can fill the vacancy. The court analyzed the arbitration clause and the scheme of the Act. It held that the arbitration agreement survives the death of the named arbitrator, and the court under Section 11 has the power to appoint a substitute arbitrator. The court also noted that the Section 9 application is maintainable as the arbitration agreement subsists. The appeal was allowed, the impugned order was set aside, and the matter was remanded to the learned Single Judge for fresh consideration of the Section 9 application on merits.
Headnote
A) Arbitration Law - Validity of Arbitration Agreement - Death of Named Arbitrator - Section 11, Arbitration and Conciliation Act, 1996 - The court considered whether the death of a named sole arbitrator renders the arbitration clause invalid. Held that the arbitration agreement survives the death of the named arbitrator and the court under Section 11 can appoint a substitute arbitrator. The minutes of order containing the arbitration clause constitute a valid arbitration agreement. (Paras 1-3) B) Arbitration Law - Interim Relief - Maintainability of Section 9 Application - Section 9, Arbitration and Conciliation Act, 1996 - The court examined whether a Section 9 application for interim relief can be entertained when the named arbitrator has died. Held that the Section 9 application is maintainable as the arbitration agreement subsists, and the court can grant interim relief pending appointment of a substitute arbitrator. (Para 1)
Issue of Consideration
Whether the death of a named sole arbitrator invalidates the arbitration clause and whether the Chief Justice or his designate under Section 11 of the Arbitration and Conciliation Act, 1996 can fill the vacancy occasioned by such death.
Final Decision
Appeal allowed. Impugned order dated 15th June 2010 set aside. Matter remanded to learned Single Judge for fresh consideration of the Section 9 application on merits in accordance with law.
Law Points
- Arbitration agreement survives death of named arbitrator
- Section 11 of Arbitration and Conciliation Act
- 1996 empowers court to appoint substitute arbitrator
- Section 9 application maintainable for interim relief even if arbitrator dies
- Minutes of order containing arbitration clause constitutes valid arbitration agreement
