Bombay High Court Considers Petition for Appointment of Substitute Arbitrator After Court-Appointed Arbitrator Recuses. Dispute Centers on Whether Party Can Unilaterally Fill Vacancy Under Section 15(2) When Original Appointment Was by Court Under Section 11(6) of Arbitration Act.

Application under Section 11 read with Sections 14 and 15 of the Arbitration and Conciliation Act, 1996 for appointment of a substitute arbitrator on behalf of the respondent.

Petitioner seeks court appointment of a substitute arbitrator to fill vacancy caused by recusal of Justice D.B. Bhosale, originally appointed by the court as the respondent's nominee arbitrator.

Respondent unilaterally nominated a substitute arbitrator after the court-appointed arbitrator resigned, which petitioner contends is impermissible since the original appointment was by the court due to respondent's default.

Earlier, Commercial Arbitration Application No.61 of 2018 led to court appointment of Justice D.B. Bhosale as respondent's arbitrator on 30 November 2018 under Section 11(6). Supreme Court in SLP(C) No.33555/2018 disposed on 2 January 2019, declining to interfere, and directed appointment of third arbitrator. Subsequently, arbitral tribunal constituted with Justice Madan B. Lokur as presiding arbitrator.

Whether the respondent, after the court-appointed arbitrator recused himself, has the right to unilaterally appoint a substitute arbitrator under Section 15(2) of the Arbitration and Conciliation Act, 1996, when the original appointment was made by the court under Section 11(6) due to the respondent's failure to appoint an arbitrator.

Petitioner contended that the respondent, having failed to appoint an arbitrator when called upon, which led to the court appointment, cannot take advantage of the recusal to now suo moto nominate an arbitrator; and that the appointment of a substitute arbitrator must follow the appropriate process by applying to the court. Respondent contended that under Section 15(2) it has the right to appoint a substitute arbitrator according to the rules (arbitration agreement), that Section 14 petition is not maintainable, and that the court has no power under Section 14 to appoint a substitute arbitrator.

This is an application under Section 11 read with Section 14 and 15 of the Arbitration and Conciliation Act,1996 (for short 'the Act'), whereby the petitioner prays for appointment of a substitute arbitrator on behalf of the respondent, in place of the arbitrator previously appointed by the Court by an order passed under Section 11(6) of the Act. (Para 1) On 25 March 2019 Mr.Justice D.B.Bhosale (Retd), the arbitrator appointed by this Court for the respondent, addressed two letters, one to the coarbitrators and one to the parties and their Advocates, interalia recording that he has been appointed as a Member Lokpal (Judicial), under the Lokpal and Lokayuktas Act,2013, effective immediately, and consequently, was forthwith recusing himself as a member of the arbitral tribunal in the arbitration proceedings. (Para 5) From: Surabhi Sharan Sent: 26 March 2019 12.40 To:'MadanLokur', vijaycdaga@gmail.com ; bhosale.dilip56@gmail. com CC: Farhad Sorabjee; Pratik Pawar; Arti Raghavan;Siddhesh Pradhan; Shanaya Cyrus Irani; 'Hiroo Advani', Yusuf Sheikh, deepak.lad@advaniandco.com ; 'Kanika Arora'; Chirag.bhatia@advaniandco.com Subject: Re: Arbitration matter between SAP and Cox & Kings Nomination of CoArbitrator. … In light of Hon'ble Mr.Justice Dilip Bhosale (Retd) recusing himself as a CoArbitrator in the captioned matter, we hereby nominate Hon'ble Justice Dr.Arijit Pasayat (Retd.), Former Judge of the Supreme Court of India . (Para 6) the Advocates for the respondent replied to the said email … recording that earlier the respondent had not appointed an arbitrator as it was the respondent's case that due to a fraud the issue was not arbitrable, and that the High Court took a contrary view and appointed Mr.Justice D.B.Bhosale (Retd) as an arbitrator on behalf of the respondent and as Mr.Justice D.B.Bhosale (Retd) has withdrawn from the arbitration, the respondent had a right to appoint a substitute arbitrator under Section 15 of the Act. (Para 8) It is contended that Section 15(2) does not confer any power on any Court to make an appointment of a substitute arbitrator, as Section 15(2) merely lays down that the vacancy on the arbitrator's panel can be filled by appointing a substitute arbitrator “according to the rules” that were applicable to the appointment of the arbitrator being replaced. It is contended that the word “ rules ” as used in subsection (2) of Section 15 as held by the Supreme Court would mean the 'arbitration agreement' between the parties. (Para 10)

Agreement dated 30 October 2015 between petitioner and respondent containing arbitration clause 15.7. Disputes arose; petitioner nominated Justice V.C. Daga as arbitrator and called upon respondent to appoint its arbitrator. Respondent refused, citing fraud. Petitioner filed Commercial Arbitration Application No.61 of 2018 under Section 11(6). Court appointed Justice D.B. Bhosale as respondent’s nominee arbitrator on 30 November 2018. Respondent challenged in Supreme Court via SLP(C) No.33555/2018; Supreme Court on 2 January 2019 declined to interfere, directed appointment of third arbitrator. The two party-appointed arbitrators then appointed Justice Madan B. Lokur as presiding arbitrator. On 25 March 2019, Justice Bhosale recused due to appointment as Member Lokpal. On 26 March 2019, respondent unilaterally nominated Dr. Justice Arijit Pasayat as substitute arbitrator. Petitioner objected and filed the present petition. Heard on 8 April 2019, judgment reserved.

• Arbitration and Conciliation Act, 1996: 11, 14, 15