;;'^ '< './•' '); '^ V- IN THE HIGH COURT OF JUDICATURE CHHATTI8GARH AT BILASPUR SIN6LE 8EN6H MISC. APPEAL HO. 4-J^^-/ 2005 APFELLANT /Ae^ci&^'" ^' ' s Kay Iron. Works Private Limited Registered Under Indian. Cotnpauies Act having its Reglstered Offic.e at YsQiiuna NaRar, District Yaiauna Nagajr (Haryana) RESPONDENT .\^.S<T<'..-<<T-' ^ssy' ^^y ^•••^' ^c^ ^',«A'"fi'i-"' ^y' '^A.--'" VERSUS ;, (Ji Mjs Everest Ceaient Coinpany / Limited Raigarb (A Conipaay reg.stered under tfae Indian Coiupaaies Act) having its registered office at Everest House Danipara Raigarh Tahsil sa.lA District Raigarh ^0' %SCELLANEOUS APPEAL U/S^39flVVIi OF THE ARBITRATION ACT 1940 <s—«es' (^'^ Kill 3TI^?Tg?rR'li<h cPIT^STOTTO vdT;q-oi^irt«,y-fli'(-i<i<o, Rlrti-i-iy'; ^..\fi.:.^.:.kf7r:l.D\. an^?T q^p ('yljci.d) gRTKR^lfeT sn^ST 09-05-2005 Appellant/defendant by with Shri P.R.Patankar, Advoca l9s oile Heard on admission af (M.C.P.No. 587/2005) for stay. Brief facts of the case art July 1998 between the parti^s whereunder in case of a dispu| arbitration of a single arbitrato4 parties not agreeing for the aj? eactL party was to nominate ^? dispute was then to be referre^l Arbitration Act 1940. In pursuance of the defendant/appellant appointed| arbitrator and the plaintij Ravishankar Jha to act as several notices issued by Mr.Vij defendant/appellant.Mr. plaintiff/respondent completelyl proceedings. Thereafter, the notice dated 09.02.2004 to the[ any other arbitrator within 1 5 Mr. Vijay Bhatia would proceec^ above proceeding. Despite plaintiff/respondent did not well as on the applicafion that the agreement dated 25<fa contained arbitration clause i[te, the parties could refer it for However, in the event both the jipointment of single arbitrator, arbitrator of his choice. The to such arbitrators under the q>l<lfn<i1i *iiin)'^'fei^l '([uf«i>i ^aif^H ail^si Shri P. Diwakar, Sr. Advocate £.. itfe RavisHankar ^bove arbitration clause, the Mr. Vijay Bhatia to act as its ff/respondent appointed Mr. arbitrator. However, despite jay Bhatia the arbitrator for the Jha the arbitrator for the neglected to participate in the defendant/appellant issued a plaintiff/respondent to appoint 4ays, failing whioh his arbitrator to act as sole arbitrator in the [ssuance of such notice, the appoint a fresh arbitrator SP/FS/2005-20,000 XI-HC-78 vjTC|^wiri'y,y-al*(-i<is, Rrtixiyx *ii*iwi a*TT^ ^200 3Tr^8TWft:lTO a-anaii^sTspm; an^sTq^p (yiiy'e) ¥(ar8R;BferSII^ST - T- <hl<<(d^'t til*trt)"iI"Rs-^l tRntci's ^)3ff^HalA?T whereupon Mr. Vijay Bhatia a4ting as the sole arbitrator entered upon the reference and passeiji an award of Rs.71.372 lakhs in favour of the defendant arbitrator had not plaintiff/respondent. con3 The lower Court by pa appellant and against the plaintiff/respondent. The plaintiff/responden|t preferred an objection under Section 30 of the Arbitration A|ct alleging inter alia fhat the sole idered the claim of the sing the impugned order dated 09.02.2005 held that the defeE^dant had no authority to appoint Mr. Vijay Bhatia as the sole| between the parties did not coj that Mr. Vijay Bhatia did not i| as the sole arbitrator. On thei arbitrator since the agreement itain such a clause. Italsoheld |equest the Court to appoint hini se grounds, the lower Court held that the award passed by Mr. Vijay Bhatia being with mala fides was not lawful. Consequentl^, the lower Court set aside the award dated 24.3.2004 passec^ by Mr. Vijay Bhatia under the impugned order and gave oppc^rtunity to the parties to appoint fresh arbitrators. Record is perused. Secti reads as under: certaia cases, a sole arbitration agreement pr >n 9 of the Arbitration Act, 1940 9. Power to party to atjpoiat newarbitrator or In arbitrator.- Where an ivides that a referenceshall be to two arbitrators, o^e to be apppinted by each party, then unless a diff^rent intention is expressed in the agreement. -s- XI-HC-78 ^BEr "yrairiAi, yTil'd'is, Rrtwy *ll*tWI^TTT^ W^200 aTKaipif^ft^' gsiTsn^tTiPira; 3lT^?T'ra?P (yit^'si'e) OT?ITW?^feT3IT^9T -5- (a) If either of the appo] refuses to act, or is the party who appoin <hl<lirt41-l *<l*(<*T^Ts'<l •(I'fltcii ^Mf^Taii^n nted arbitrators neglects or Sncapable of acting, or dies, Ited him may appoint a new arbitrator in his place) (b) If one party fails to| appoint an arbitrator, either originally or by way i^f substitution as aforesaid, ."t - . - 1 . -Fj. - JJ "t - -. '' tor fifteen clear days, party of a nptice appointment such ot| his arbitrator may apf sole arbitrator in th( after the servioe by the other in writing to make the her party having appointed \oint that arbitrator to act as reference, and his award shall be binding ori b^th parties as if he had been appointed by consent:| Provided that the Co^irt may set aside any appointment assole arbitjrator made under clause (b) and either, on sufficientj cause being shown allow furthei; time to the defa^ilting party to appoint an arbitrator or pass such ot Thus under Secfion 9 of her order as it'thinks fit. ^.he Arbitration Act, 1940 upon neglect by one of the arbitrators| to participate in fhe arbitration proceedings, the other party majr serve the defaulting party with a 15 days clear notice to appoij-it another arhitrator and upon such failyre appoint his arbitraljor to act as a sole arbitrator in the reference and his award shal if he had been appointed by con^ It is clearly borne put tl arbitrator appointed for the pl 11 be binding on both parties as ent. " . aat Mr. Ravishankar Jha, the intiff/respondent had grossly neglected to participate in the a|rbitral proceedings which gave the authority to the defendant /4ppellant under Section 9 ofthe Arbitration Act, 1940 to appoint his arbitrator Mr. Vijya Bhatia 'v XI-HC-78 VJ'CTJ ^iyid^, u-nl'd<i<s, Rrti'<iy<< HINril ^m^ 3IT^?Tq5PP (yii^l-s) ^200 air^sTiiiTfSFrtw cTaiTarAffsCTto g^tr«R^feT3II^?T -^- <bl']lfd41't *11lldT^ffec8 •<|u|'(ci'< ^3ri^1:[3nt?T to act as the sole arbitrator. Section (9) (b) of the Arbitratio^i appellant/defendant in this refe arbitrator for the appellant/4* authority to act as the sole arb) documents filed by the proceedings drawn by Mr. Vij; at no point of time, after the n): defendant/appellant, Mr. Vijj arbitrator had issued a notice any olaim/objections befoj defendant/appellant has also from the record. The.award pj Bhatia also shows that he had as the claim of the plaintiff/r] proceedings drawn by the arbj had entered upon the referenc) reliance upon Javatilal Kesha-d A notice as contemplated under Act, 1940 was also given by the ;ard, Thus Mr. Vijay Bhatia, the sfendant assumed, in law, the |trator. However, a perusal of the |appellant/defendant and the Bhatia clearly go to show that ^tice dated 9.2.2004 given by the ^y Bhatia acting as the sole ;o the respondent/plaintiff to file him. Counsel for the rlot been able to demonstrate this issed by the arbitrator Mr. Vijay c&mpletely shut his eyesso far ^spondent was concerned. The itrator also do not show that he as a sole arbitrator. Placin; tlaL Dave Vs, Surendra_Gangsa Johrapurkar A.I.R. 1956 Punjab State and another vs. N^gpur 245, paragraph 16 and Qhander Bhan Harbhajan Lal and anoter, A.I.R. 1964Pui(jab 42j in its entirety, of the claim of sole arbitrator amounts to proceedings by the arbitrator ground for setting aside the ai </r.S.-(u-t3T '^- ^"t>0Ki that non-consideration, the plaintiff/respondent, by the ^nis-conducting the arbitration and would constitute a valid ^bitral award passed by the_sole -r. XI-HC-78 v3-OT;l-^|A|tri^,yTTlwi<i, firtmy IIIWIWTT^ 3ir^nqiT)^ii<R (TaiTan^STrtili* 3n^9T'raq'(yi('}lsi's) ^200 8^ii<RTrfia3ii^?r -T As regards the finding (bl^id'^l'l t||41d1'^ffolfi '(lul'!^!'? ^ai^isii^?! arbitrator Mr. Vijay Bhatia un<|ler Section 30 of the Arbitration Act, 1940. of the lower Court that the arbitrator Mr. Vijay Bhatia ha|d acted with mala fides or in other words had inisconductl ri hiinself is concerned, this ground is not made out. The fiijiding of the lower Court that the defendant did not have the righ|t to appoint Mr. Vijay Bhatia as the sole arbitrator is also not t^nable in view of the neglect by the arbitrator Mr. Ravishank^r Jha in participating in the arbitral proceedings. On the (jither hand, it is ciear that Mr. Vijay Bhatia, the sole arbitrato r had clearly misconducted the proceedings by not issuing a n<|)tice to the plaintiff/respondent for filing claim/objections and t|y completely ignoring the claim of the plaintiff/respondent. Thejreby the award passed by him on 24.03.2004 was liable to be sbt aside under Section 30 of the Arbitration Act, 1940 and the| lower Court was justified. in ordering appointment of fresh| arbitrators which power was vested in it under the proviso to The lower Court ought \ aspect of the matter while deciiping tbe objection preferred by the plaintiff under Section 30 of Section 9. ;o have oonsidered the above he Arbitration Act 1940. Had it done so it would have set aside the arbitral award and the appointment of the sole arbitrati|ir under the provisp to Section 9 on the ground of the proceedings. irbitrator misconducting the _i_^}-^ _tni_ir l~i~r i;\^ii k-u^k.y XI-HC-78 VJCT) ^WIri^, yxi1'<-i<io, Rrti<(l^<< • *II*1rtl ?SW ^200 an^STiRiiS-iitb ?fqT3TI^»T<PTOP 61s \<y 3iT^9Tq'ra'(i?tgcis) g^Tr!!R;'!Tf%cf3n^^T In the result, the par( 27.06/2005 before the lower opportunity to both the parties] other than Mr. Vijay Bhatia| thereafter proceed to refer tt\ arbitrators so appointed.' The order is maintained. With the aforesaid direoti. <)>Wft'.^'<*<l«riT^fclA^t^-i ^aif^Tan^sT :ies are directed to appear on Court which shall give another to nominate fresh arbitrator (i.e. 8s Mr. Ravishankar Jha) and matter for arbitration to the (perative pprtion of the iinpugned t>n, the appeal is disposed of. Sd/- Dilip Raosaheb Deshmukh Judge