Case Note & Summary
The applicant, BTP Structural (I) Pvt. Ltd., filed an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 seeking appointment of an arbitrator to resolve disputes with the respondent, Bharat Petroleum Corporation Ltd. The disputes arose from a purchase order dated 29th March, 2000 and subsequent change orders. The original purchase order dated 1st May, 1999 contained an arbitration clause providing for arbitration by the Director (Marketing) of the Corporation or a nominated officer. The applicant invoked the arbitration clause by notice dated 30th March, 2012, but the respondent failed to appoint an arbitrator. The respondent opposed the application, arguing that the arbitration clause was not applicable to the change orders and that the disputes were not arbitrable. The court examined the arbitration clause and the change orders, and held that the arbitration clause in the original purchase order was incorporated by reference in the subsequent change orders. The court noted that the respondent did not deny the existence of the arbitration clause or the disputes. The court found that the respondent failed to act in accordance with the arbitration clause by not appointing an arbitrator within 30 days of the notice. The court held that the applicant was entitled to appointment of an independent arbitrator, and appointed a retired judge of the Bombay High Court as the sole arbitrator. The court also directed the arbitrator to decide the disputes in accordance with law.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Section 11(6) of the Arbitration and Conciliation Act, 1996 - Dispute arose from purchase order and change orders - Respondent failed to appoint arbitrator despite notice - Court held that arbitration clause in original purchase order applies to subsequent change orders and that the court can appoint arbitrator when the party fails to act - Held that the applicant is entitled to appointment of an independent arbitrator (Paras 1-18).
Issue of Consideration
Whether the arbitration clause in the original purchase order dated 1st May, 1999 applies to disputes arising from subsequent change orders, and whether the court should appoint an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 when the respondent failed to appoint an arbitrator despite notice.
Final Decision
The court allowed the application and appointed a retired judge of the Bombay High Court as the sole arbitrator to adjudicate the disputes between the parties. The arbitrator was directed to decide the disputes in accordance with law.
Law Points
- Arbitration clause survives termination of contract
- Change orders do not extinguish arbitration agreement
- Section 11(6) of Arbitration and Conciliation Act
- 1996 empowers court to appoint arbitrator when party fails to act
