IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH Arbitration Case No. 9 of 2010 Date of Decision: 17.5.2010 M/s Parsvnath Film City Ltd. ..Petitioner Versus Chandigarh Administration & another ..Respondents CORAM: HON'BLE MR. JUSTICE MUKUL MUDGAL, CHIEF JUSTICE 1.Whether Reporters of local papers may be allowed to see the judgment ? 2. Whether to be referred to the Reporters or not ? 3. Whether the judgment should be reported in the Digest? Present :- Mr. P.C.Markanda, Sr. Advocate, with Ms. Kavita Markanda, Advocate, for the petitioner. Mr. Amar Vivek, Advocate with Mr. Nirdosh Dhiyal, Advocate for the respondents. *** MUKUL MUDGAL, C.J. (Oral) 1. This petition has been filed by the petitioner under Section 11(4) of the Arbitration & Conciliation Act, 1996 (for short ' the Act), for appointment of second Arbitrator to adjudicate upon the disputes between the parties. 2. Clause 20.3 of the agreement contains the Arbitration Clause which reads as under:- Arbitration Case No. 9 of 2010 [2] “ In case the dispute is referred to arbitration under the Arbitration & Conciliation Act, 1996 the arbitration shall be by a panel of three arbitrators, one to be appointed by each party and the third to be appointed by the two arbitrators appointed by the parties. A party requiring arbitration shall appoint an Arbitrator in writing, inform the other party about such appointment and call upon the other party to appoint its Arbitrator, the party appointing Arbitrator shall take steps in accordance with the Arbitration & Conciliation Act, 1996 and subsequent amendments thereto.” 3. Upon notice, the respondents put in appearance and filed their reply. Invocation of the arbitration clause is not disputed. Learned counsel for the respondents took a ground during the course of arguments for not appointing their nominee that since the contract was terminated, the arbitration clause became inapplicable. 4. Learned counsel appearing for the petitioner to rebut the plea raised by the respondents contended that the Hon'ble Apex Court in Branch Manager, Magma Leasing and Finance Limited and another V. Potluri Madhavilata and another (2009) 10 Supreme Court Cases 103 has held that with the termination of contract due to breach, the arbitration clause neither perishes nor becomes inoperative. 5. After hearing learned counsel for the parties and on going through the pleadings, I am of the view that the Hon'ble Supreme Court in Branch Manager's case (supra) has already settled this issue while observing as under:- “14. The statement of law expounded by Viscount Simon, L.C. in Heyman as noticed above, in our view, equally applies to the situation where the contract is terminated by one party on account of the breach committed by the other particularly in a case where the clause is framed in wide and general terms. Merely because the contract has come to an end by its termination due to breach, the arbitration clause does not get perished nor is rendered inoperative; rather it survives for resolution of disputes arising “in respect of” or “with regard to” or “under” the contract. Arbitration Case No. 9 of 2010 [2] This is in line with the earlier decisions of this Court, particularly as laid down in Kishorilal Gupta.” 6. Otherwise also, whether on termination of the contract due to breach, the arbitration clause becomes inoperative is itself a dispute which is required to be adjudicated upon by the Arbitrator and such a plea could be raised before the Arbitrator. 7. In view of the law laid down by the Hon'ble Apex Court, this petition is allowed. Since the petitioner has already appointed its Arbitrator, I appoint Justice M.R.Agnihotri, a former Judge of this Court, as nominee Arbitrator on behalf of the respondents while exercising powers conferred under Section 11(4) of the Act. Both the nominee Arbitrators shall appoint the Presiding Arbitrator within a period of four weeks from today. In case the nominee Arbitrators fail to appoint the Presiding Arbitrator within the stipulated period, Justice Kuldip Singh, a former Judge of the Supreme Court shall be the third Arbitrator so as to complete the Arbitral Tribunal. He shall fix his own fee. 8. In the meanwhile, the parties will exchange the statements of claim and response thereof. The statement of claim be supplied to counsel for the respondents within four weeks and response to the statement of claim shall be supplied to the counsel for the petitioner within four weeks thereafter. The parties shall appear before the Arbitral Tribunal on 23.08.2010 or on an agreed date convenient to the parties but not later than a fortnight from the date of exchange of pleadings as directed aforesaid. The Arbitral Tribunal shall dispose of the reference not later than six months from the date of first appearance Arbitration Case No. 9 of 2010 [4] of the parties. However, it is made clear that the arbitration proceedings will be held at Chandigarh as provided in the agreement. With these directions, this petition stands disposed of. (MUKUL MUDGAL) CHIEF JUSTICE 17.05.2010 'ravinder'