Party Seeking Appointment Of Arbitrator U/S 11(6) Must Demonstrate Failure By Other Party In Following Procedure: J&K&L High Court

A bench comprising Chief Justice Pankaj Mithal was hearing a plea under Section 11 (6) of Jammu and Kashmir Arbitration and Conciliation Act, 1997 which is pari materia with the Arbitration and Conciliation Act, 1996, for the appointment of an independent arbitrator to resolve the dispute regarding renewal of allotment of shop allotted to him by the respondent.

The petitioner claimed that he had legitimate expectation of getting the agreement renewed for the subsequent years as per the past practice and as the same was not renewed and the petitioner was asked to vacate the shop, he preferred an application under Section 9 of the Act for interim protection before the District Judge/Additional District Judge, Jammu wherein the respondent took a stand that the Agreement does not contain an arbitration clause. In this backdrop, the Petitioner instead of approaching the respondent for appointment of an arbitrator directly approached the High Court under Section 11.

Adjudicating upon the matter, Chief Justice Mithal observed that the exercise of power by the Chief Justice or his designate in the matter of appointment of an arbitrator is a judicial power and not an administrative one.

The Chief Justice or his designate in appointing an arbitrator under Section 11(6) of the Act is enjoined upon to examine the existence of the arbitration agreement between the parties and whether there exists a live arbitral claim/dispute, the bench underscored.

"The petitioner has not served any legal notice upon the respondent invoking the arbitration clause specifying the disputes which require to be resolved by an independent arbitrator. The notice demanding reference of disputes to arbitration would have indicated the specific disputes which the petitioner wants to be adjudicated upon by the arbitrator. In the absence of such a notice, demand for arbitration and the mentioning of the specific dispute which require adjudication it cannot be said that there actually exists any arbitral dispute between the parties which is referable to arbitration", Chief Justice Mithal recorded.

Explaining the intent behind section 11 of the said Act the bench observed that Section 11 clearly provides for the appointment of arbitrators and leaves parties free to decide on the procedure to be followed for the appointment of arbitrator or arbitrators. The Court steps into the picture for the appointment of arbitrator only when the parties fail to agree on the arbitrator within 30 days of the receipt of the request by one party and therefore, request for the appointment of arbitrator or the invocation of the arbitration clause is a sine qua non for getting an arbitrator appointed by the court, the bench observed.

Discussing further the said proposition of law the bench observed that in order to establish that the procedure for the appointment of arbitrator as agreed upon has failed, it is mandatory to prove the invocation of the arbitration clause by the party interested and denial or inaction on part of the other party for the appointment of the arbitrator. It is only when the demand made is not fulfilled that the party can move to the court, the bench underscored.

The bench also noted that Sec 21 of the Act in specific terms lays down that the arbitral proceedings commences on the date on which the request to refer the said dispute to arbitration is received by the other side. Therefore, the date of request to refer the dispute to arbitration is imperative to ascertain the date of commencement of the arbitral proceedings. Petitioner has not made any request seeking an arbitration and has straight away come to the High Court and in the absence of such a request or notice, the petition is apparently premature and it cannot be said that the other party has failed to act as required under the procedure to warrant appointment of an arbitrator by the court.

In view of the aforesaid facts the petitioner is not entitled for appointment of an arbitrator for its failure to prove that the other party has failed to perform its part of the procedure in the matter of appointment of the arbitrator, the bench concluded while dismissing the application.

Case Title : Arshad Hussain Vs General Officer Commanding 56 APO

Citation : 2022 LiveLaw (JKL) 102

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