Case Note & Summary
The dispute arose out of a Memorandum of Understanding dated 23 October 2006 and an additional Memorandum of Understanding dated 27 March 2008 between Rosy Blue (India) Pvt. Ltd. (the applicant in the Chamber Summons) and Orbit Corporation Ltd. (the respondent). A Deed of Conveyance was executed on 28 March 2006. The applicant had been paid Rs.87.70 crores, leaving a balance of Rs.22.99 crores for which cheques were deposited with an escrow agent. The applicant invoked arbitration on 31 March 2011, expressing readiness to deliver possession of the building against payment. The respondent filed an Arbitration Application under Section 11 of the Arbitration and Conciliation Act, 1996, and by consent of parties, a sole arbitrator was appointed on 1 July 2011. When the arbitrator declined to act, a substitute arbitrator was appointed by consent on 22 July 2011. The arbitrator passed an interim order under Section 17 on 5 January 2012, directing the applicant to hand over possession subject to the respondent furnishing an irrevocable bank guarantee of Rs.27 crores. The applicant then filed a Chamber Summons seeking to withdraw its consent for the appointment of the arbitrator and to recall the orders dated 1 July 2011 and 22 July 2011, on the ground that the respondent had failed to disclose three documents dated 24 December 2008, 31 July 2009, and 6 December 2010. The court held that consent once given cannot be unilaterally withdrawn after the arbitrator has entered upon reference, unless there is fraud, coercion, or mutual agreement. Non-disclosure of documents does not vitiate consent unless it goes to the root of the arbitration agreement. The Chamber Summons was dismissed with costs.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Withdrawal of Consent - Section 11 of the Arbitration and Conciliation Act, 1996 - The applicant sought to withdraw consent given for appointment of arbitrator on ground of non-disclosure of documents by respondent - Court held that consent once given cannot be unilaterally withdrawn after arbitrator has entered upon reference, unless there is fraud, coercion, or mutual agreement - Non-disclosure of documents does not vitiate consent unless it goes to root of arbitration agreement - Application dismissed (Paras 1-8).
Issue of Consideration
Whether a party can unilaterally withdraw its consent to the appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 after the arbitrator has entered upon reference, on the ground of non-disclosure of documents by the other party.
Final Decision
Chamber Summons dismissed with costs.
Law Points
- Consent to appointment of arbitrator under Section 11 of Arbitration and Conciliation Act
- 1996 cannot be unilaterally withdrawn after the arbitrator has entered upon reference
- Withdrawal of consent is permissible only if there is fraud
- coercion
- or mutual agreement
- Non-disclosure of documents does not vitiate consent unless it goes to the root of the arbitration agreement
