Case Note & Summary
The applicant filed an arbitration petition under section 11 of the Arbitration and Conciliation Act, 1996, seeking appointment of an arbitrator. By order dated 14.10.2005, Justice D.R. Dhanuka (Retd.) was appointed, but he resigned due to the respondent's inability to pay fees. Subsequently, by order dated 17.3.2006, Justice B.C. Gadgil (Retd.) was appointed as sole arbitrator. The respondent's special leave petition against this order was dismissed on 16.3.2007, making the order final. The arbitration proceeded, but the arbitrator withdrew by letter dated 4.2.2009. The applicant then filed the present civil application for appointment of a substitute arbitrator. The respondent opposed, arguing that the arbitration agreement was forged and the application was barred by limitation. The court held that once a section 11 order for initial appointment attains finality, objections regarding the validity of the arbitration agreement and limitation cannot be raised in a subsequent application for substitute arbitrator. The court allowed the application and appointed a substitute arbitrator.
Headnote
A) Arbitration Law - Substitution of Arbitrator - Finality of Section 11 Order - Once an order under section 11 of the Arbitration and Conciliation Act, 1996 appointing an arbitrator attains finality, the existence and validity of the arbitration agreement cannot be re-agitated in a subsequent application for appointment of a substitute arbitrator under section 15(2) of the Act. The earlier order is binding on the parties at all stages. (Paras 1-7)
B) Arbitration Law - Limitation - Bar of Raising Limitation Objection - A respondent cannot raise the plea of limitation in an application for substitute arbitrator if such plea was available but not taken in the original section 11 application which has become final. The finality of the section 11 order precludes re-examination of such issues. (Paras 6-7)
Issue of Consideration
Whether in an application for appointment of a substitute arbitrator on termination of mandate of an arbitrator appointed under section 11, the respondent can raise contentions regarding validity of arbitration agreement and limitation which were available in the original section 11 application.
Final Decision
The court allowed the civil application and appointed a substitute arbitrator in place of the earlier arbitrator who withdrew.
Law Points
- Finality of section 11 order
- substitution of arbitrator
- res judicata
- scope of section 15(2) of Arbitration and Conciliation Act
- 1996
Case Details
2010 LawText (BOM) (08) 62
Civil Application No.8 of 2010 in Arbitration Petition No.5 of 2005
Mr. M.M. Sathaye for Applicant/Original Petitioner; Mr. Y.V. Divekar with Dr. Pallavi Divekar i/b Mr. Y.D. Patil for Respondent
Kum. Bharati V. Paithankar & Anr.
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Nature of Litigation
Civil application for appointment of substitute arbitrator after withdrawal of earlier arbitrator.
Remedy Sought
Applicant sought appointment of an arbitrator in place of the earlier arbitrator who withdrew.
Filing Reason
The earlier arbitrator appointed under section 11 withdrew from the arbitration.
Previous Decisions
By order dated 14.10.2005, Justice D.R. Dhanuka (Retd.) was appointed as arbitrator; by order dated 13.1.2006, it was clarified that the appointment was not with consent; by order dated 17.3.2006, Justice B.C. Gadgil (Retd.) was appointed as sole arbitrator; SLP against that order was dismissed on 16.3.2007.
Issues
Whether in an application for appointment of a substitute arbitrator, the respondent can raise objections regarding validity of arbitration agreement and limitation which were available in the original section 11 application.
Submissions/Arguments
Respondent argued that the arbitration agreement is forged and the application is barred by limitation.
Applicant contended that the earlier section 11 order having attained finality, such objections cannot be raised.
Ratio Decidendi
Once an order under section 11 of the Arbitration and Conciliation Act, 1996 for the initial appointment of an arbitrator attains finality, the existence and validity of the arbitration agreement and other objections that could have been raised in that application cannot be re-agitated in a subsequent application for appointment of a substitute arbitrator under section 15(2) of the Act. The earlier order is binding on the parties at all stages.
Judgment Excerpts
Once an application under section 11 of the said Act for the initial appointment of an arbitrator is allowed, in an application for the appointment of a substitute arbitrator, a party cannot be permitted to raise the objections which were available to it in the original application under section 11 for the initial appointment of an arbitrator.
The order under section 11 for the initial appointment of an arbitrator, if not set aside, is final and binding between the parties at all stages on the question as to whether there is a valid arbitration agreement and as to whether the disputes ought to be referred to arbitration.
Procedural History
Applicant filed Arbitration Petition No.5 of 2005 under section 11 for appointment of arbitrator. By order dated 14.10.2005, Justice D.R. Dhanuka (Retd.) was appointed. By order dated 13.1.2006, it was clarified that the appointment was not with consent. The arbitrator resigned on 10.1.2006. Applicant filed Civil Application No.1 of 2006 for substitute arbitrator, and by order dated 17.3.2006, Justice B.C. Gadgil (Retd.) was appointed. Respondent's SLP against that order was dismissed on 16.3.2007. The arbitrator withdrew by letter dated 4.2.2009. Applicant then filed the present Civil Application No.8 of 2010 for appointment of another substitute arbitrator.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 11, Section 15(2)
