Case Note & Summary
The petitioner, M/s. Khurana Constructions, entered into an agreement with the respondent, IOT Infrastructure and Energy Services Ltd., on 28 February 2005 for civil and underground piping work related to the MSQ project of the Gujarat Refinery. The agreement contained an arbitration clause (Clause 83) which provided that disputes would be referred to the sole arbitration of the Managing Director of IOT or an arbitrator appointed by the Managing Director. Disputes arose, and on 1 September 2008, the petitioner sent a notice to the respondent raising a claim of Rs.10.91 Crores. The respondent sent a preliminary reply on 1 October 2008 refuting the claims but stating that a detailed reply would follow. No further response was received. On 12 November 2008, the petitioner sent another notice stating that the 90-day negotiation period under Clause 83 would commence from that date and called upon the respondent to fix a meeting for amicable resolution. The respondent did not respond. The petitioner then filed a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking appointment of an arbitrator. The court noted that the respondent had failed to respond to the notice and had not appointed an arbitrator. The court held that the failure to respond and appoint an arbitrator amounted to a refusal to appoint, and therefore, the court was empowered to appoint an arbitrator. The court appointed a retired judge of the Bombay High Court as the sole arbitrator to adjudicate the disputes between the parties.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Section 11(6) of the Arbitration and Conciliation Act, 1996 - Failure to Appoint - Where the arbitration agreement provides for appointment of arbitrator by the Managing Director of the respondent, and the respondent fails to respond to the petitioner's notice invoking arbitration and does not appoint an arbitrator within the stipulated period, the petitioner is entitled to approach the court for appointment of an arbitrator under Section 11(6) of the Act. The court held that the failure to respond and appoint constitutes a refusal to appoint, and the court can appoint an independent arbitrator. (Paras 1-5)
Issue of Consideration
Whether the failure of the respondent to respond to the petitioner's notice invoking arbitration and to appoint an arbitrator under the arbitration agreement entitles the petitioner to seek appointment of an arbitrator by the court under Section 11(6) of the Arbitration and Conciliation Act, 1996.
Final Decision
The court allowed the petition and appointed a retired judge of the Bombay High Court as the sole arbitrator to adjudicate the disputes between the parties.
Law Points
- Arbitration agreement
- appointment of arbitrator
- failure to appoint
- deemed refusal
- Section 11(6) of Arbitration and Conciliation Act
- 1996
