1 ARAP98/11 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ARBITRATION APPLICATION NO.98 OF 2011 Satellite Developers Ltd. ...Applicants v/s Gayatridham CHS Ltd. and others ...Respondents Mr N.G. Thakkar, Sr. Counsel i/b Mr Vijay Dhingreja for Applicants. Mr R. Agarwal for Respondents. CORAM : D.K.DESHMUKH J. DATE : 16TH JUNE 2011. 2 ARAP98/11 P.C. :- 1] This is an application filed under section 11 of the Arbitration and Conciliation Act 1996. There is an agreement between the parties for appointment of two named Arbitrators. By this application, the applicants seek an order for appointment of third Arbitrator. There was a request made to two Arbitrators to appoint third Arbitrator, they did not appoint third Arbitrator, therefore this application has been filed. The learned counsel appearing for respondents, relies on the judgment of the Supreme Court in the case of Narayan Prasad Lohia v/s Nikunj Kumar Lohia and others, reported in AIR 2002 SC 1139, especially what is contained in paragraph 17. Paragraph 17 reads as under :- 17. We are also unable to accept Mr Venugopal s argument that, as a matter of public policy, section 10 should be held to be non-derogable. Even though the said Act 3 ARAP98/11 is now an integrated law on the subject of Arbitration. It cannot and does not provide for all contingencies. An arbitration being a creature of agreement between the parties, it would be impossible for the Legislature to cover all aspects. Just by way of example section 10 permits the parties to determine the number of arbitrators, provided that such number is not an even number. Section 11(2) permits parties to agree on a procedure for appointing the arbitrator or arbitrators. Section 11 then provides how arbitrators are to be appointed if the parties do not agree on a procedure or if there is failure of the agreed procedure. A reading of section 11 would show that it only provides for appointments in cases where there is only one arbitrator or three arbitrators. By agreement parties may provide for appointment of 5 or 7 arbitrators. If they do not provide for a procedure for their 4 ARAP98/11 appointment or there is failure of the agreed procedure, then section 11 does not contain any provision for such a contingency. Can this be taken to mean that the Agreement of the parties is invalid. The answer obviously has to be in the negative. Undoubtedly the procedure provided in section 11 will mutatis mutandis apply for appointment of 5 or 7 or more arbitrators. Similarly even if parties provide for appointment of only two arbitrators, that does not mean that the agreement becomes invalid. Under section 11(3) the two arbitrators should then appoint a third arbitrator who shall act as the presiding arbitrator. Such an appointment should preferably be made at the beginning. However, we see no reason, why the two arbitrators cannot appoint a third arbitrator at a later stage i.e. If and when they differ. This would ensure that on a difference of opinion the 5 ARAP98/11 arbitration proceedings are not frustrated. But if the two Arbitrators agree and give a common award there is no frustration of the proceedings. In such a case their common opinion would have prevailed, even if the third arbitrator, presuming there was one, had differed. Thus we do not see how there would be waste of time, money and expense if a party, with open eyes, agrees to go to Arbitration of two persons and then participates in the proceedings. On the contrary there would be waste of time, money and energy if such a party is allowed to resile because the award is not of his liking. Allowing such a party to resile would not be in furtherance of any public policy and would be most inequitable. It is clear from the above paragraph of the judgment of the Supreme Court that parties are free to appoint two Arbitrators and it is upto the two Arbitrators to decide at what point of time third 6 ARAP98/11 Arbitrator is to be appointed or third Arbitrator is to be appointed at all. In these circumstances, it is clear as that as the arbitration had not commenced, two Arbitrators would be entitled to continue the proceedings and they may appoint third Arbitrator only in the event they defer. The present application is therefore premature and misconceived and therefore rejected. Parties to act on the copy of this order duly authenticated by the Associate / Private Secretary of this Court. Certified copy expedited. ( JUSTICE D.K. DESHMUKH )