-1- IN THE HIGH COURT OF JUDICATURE AT BOMBAY O.O.C.J. Arbitration Petition No. 427 of 2008 Nathalal Gokuldas Thakkar of Bombay Indian Inhabitant aged about 85 years at present residing Gokul Niwas Parleshwar Road, Vile Parle (East), Mumbai 400 057 ..Petitioner vs. Bharati Navnit Raithatha of Bombay Indian Inhabitant having her address at Skyscraper, 17th floor Bhulabhai Desai Road, Warden Road, Mumbai 400 026 ..Respondent Mr.Sandeep Parikh with Mr.M.S.Shah i/b M/s Shantilal and Co. for the petitioner. None for respondent. CORAM: S.J.KATHAWALLA J. CORAM: S.J.KATHAWALLA J. CORAM: S.J.KATHAWALLA J. 11th February, 2009 11th February, 2009 11th February, 2009 P.C. P.C. P.C. 1. This petition is filed under sections 11, 14 and 15 of the Arbitration and Conciliation Act,1996 for substituting an Arbitrator in place of the deceased sole Arbitrator Mr.Justice A.B.Palkar (Retd.) who was appointed as Arbitrator by consent of the parties as per the order dated 6th February, 2006 in terms of the minutes of the order dated 3rd February, 2006. The order dated 6th February 2006 was passed by the Hon’ble Division Bench of this Court in Appeal no.1144 of 1996 in Notice of Motion -2- No.1549 of 1993 in Suit no.1024 of 1993 annexed as Exh.A to the petition. 2. In the minutes of order which are signed by the original plaintiff as well as original defendant who are the petitioner and respondent respectively in this petition parties have interalia agreed as under: "It is hereby agreed between the appellants (original defendant no.1) and respondent no.1 (original plaintiff) ("the parties") as under:- (1) The parties refer all their claims, disputes and differences in the above suit and arising out of or in connection with the partnership deed dated 1.7.1988 and supplementary deed dated 1.5.1992 to Arbitration to be conducted in accordance with the provision of the Arbitration and Conciliation Act, 1996; (2) The parties appoint Shri Justice Palkar (retired Judge, H.C.Bombay) as sole arbitrator to hear and decide all questions referred to arbitration as -3- mentioned in clause (1) hereinabove." The appeal before the Hon’ble Division Bench was accordingly disposed of by the said order dated 6th February, 2006. 3. The learned sole arbitrator Mr.Justice A.B.Palkar (Retd.) expired in May, 2008. The petitioner herein by his letters dated 18th June, 2008 and 3rd July, 2008 called upon the respondent to submit his suggestion as regards the name of the new arbitrator to be substituted for the sole arbitrator whose mandate stood terminated due to his demise. 4. The learned Advocate appearing for the petitioner has submitted that the respondent has not only failed to agree to one of the names suggested by the petitioner for being substituted as a new arbitrator but has also failed to appear before this Court even after the petition was served on them on 16th September, 2008. 5. In view thereof, the petitioner has relied upon clause (2) of section 15 of the Arbitration and Conciliation Act, 1996 which provides that -4- "when mandate of the Arbitrator terminates, a substitute arbitrator shall be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced." It is submitted on behalf of the petitioner that in view of section 15(2) of the Arbitration and Conciliation Act, 1996, this Court should appoint an Arbitrator on behalf of the parties in place of the deceased sole arbitrator. 6. In Yeshwith Constructions (P) Ltd. Vs. Yeshwith Constructions (P) Ltd. Vs. Yeshwith Constructions (P) Ltd. Vs. Simplex Concrete Piles India Ltd. and another Simplex Concrete Piles India Ltd. and another Simplex Concrete Piles India Ltd. and another reported in (2006) 6 Supreme Court Cases 204, the Hon’ble Supreme Court in paragraph 4 of the said judgment has held thus: ".....The term ’rules’ in Section 15(2) obviously referred to the provision for appointment contained in the arbitration agreement or any rules of any institution under which the disputes were referred to arbitration...... ...When section 15(2) says that the substitute arbitrator can be appointed according to rules that were applicable to the appointment of the arbitrator -5- originally, it is not confined to an appointment under any statutory rule or rule framed under the Act or under the scheme. It only means that the appointment of the substitute arbitrator must be done according to the original agreement or provision applicable to the appointment of the arbitrator at the initial stage." This interpretation of the "Rules" applicable to the appointment of arbitrator being replaced as per section 15(2) is reiterated by the Hon’ble Supreme Court in its decision in the case of National Highways Authority of India and another National Highways Authority of India and another National Highways Authority of India and another Vs. Bumihdiway DDB Ltd.(JV) and others Vs. Bumihdiway DDB Ltd.(JV) and others Vs. Bumihdiway DDB Ltd.(JV) and others reported in (2006) 10 Supreme Court Cases 763. 7. In view of the aforesaid decisions of the Hon’ble Supreme Court the appointment of the substitute arbitrator in the instant case has to be done according to the original agreement or provisions applicable to the appointment of the Arbitrator at the initial stage. In the instant case, the sole arbitrator was appointed under the original agreement arrived at between the parties in the minutes of order dated 3rd -6- February, 2006 in Appeal no.1144 of 1996 in Notice of Motion No.1549 of 1993 in Suit No.1024 of 1993. The sole arbitrator was appointed under an agreement arrived between the parties by consent. Therefore, in a case where mandate of the sole arbitrator who was appointed by consent have come to an end because of his demise, the substitute arbitrator has to be appointed by consent of the parties. Since the parties have failed to appoint the substitute arbitrator by consent the only remedy available to the petitioner for appointment of the substitute arbitrator is to move the Hon’ble the Chief Justice under section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of the substitute arbitrator. 8. The present petition, therefore, cannot be decided by this Court and is directed to be placed before the Hon’ble the Chief Justice for appropriate orders. (S.J.KATHAWALLA J.) (S.J.KATHAWALLA J.) (S.J.KATHAWALLA J.)