Case Note & Summary
The applicant, M/s. Krishna Industries, a partnership firm, filed an application under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking appointment of a sole arbitrator to adjudicate disputes with the respondent, Steel Authority of India Ltd. (SAIL), a government company. The disputes arose out of a tripartite agreement dated 15th December, 2004, which contained an arbitration clause (clause 28). The applicant contended that this arbitration clause was incorporated by reference in a subsequent agreement dated 7th November, 2012. The applicant invoked the arbitration clause by a notice dated 15th September, 2014, addressed to the Chief Executive of Central Marketing Organisation of SAIL, requesting nomination of a sole arbitrator. The respondent did not respond to this notice. Consequently, the applicant filed the present application on 4th April, 2015. The respondent, through its counsel, submitted that on 25th April, 2015, after the filing of the application, it had notified three names to the applicant for appointment of one as sole arbitrator. The respondent argued that clause 28.4 of the agreement did not prescribe any time limit for notifying the three names, and that the procedure for a public undertaking was time-consuming. The court, per R.D. Dhanuka, J., held that the respondent had failed to act within a reasonable time. The court noted that the applicant had invoked arbitration on 15th September, 2014, and the respondent did not respond until after the application was filed. The court rejected the respondent's argument that no time limit was prescribed, stating that the respondent must act within a reasonable time. The court allowed the application and appointed a 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 Act - The applicant invoked arbitration by notice dated 15th September, 2014, but the respondent did not respond. The respondent later, on 25th April, 2015, after the filing of the application, notified three names. The court held that the respondent failed to act within a reasonable time, and thus the court could appoint an arbitrator under Section 11(6). (Paras 1-5) B) Arbitration Law - Incorporation of Arbitration Clause - Clause 28 of Agreement dated 15th December, 2004 - The arbitration clause in the tripartite agreement dated 15th December, 2004 was incorporated by reference in the subsequent agreement dated 7th November, 2012. The court accepted this submission. (Para 2) C) Arbitration Law - Reasonable Time for Nomination - Clause 28.4 of Agreement - No time limit prescribed for notifying three names, but the court held that the respondent must act within a reasonable time. The respondent's delay from 15th September, 2014 to 25th April, 2015 was not reasonable, especially since the application was filed on 4th April, 2015. (Paras 4-5)
Issue of Consideration
Whether the court should appoint an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 when the respondent failed to nominate arbitrators within a reasonable time after the applicant invoked the arbitration clause.
Final Decision
The court allowed the application and appointed a sole arbitrator to adjudicate the disputes between the parties.
Law Points
- Section 11(6) of the Arbitration and Conciliation Act
- 1996
- Appointment of arbitrator by court when party fails to act as per agreed procedure
- No time limit prescribed for nomination of arbitrators
- Reasonable time for nomination
- Incorporation of arbitration clause by reference
