Case: Hindustan Copper Ltd Vs. Monarch Gold Mining Co. Ltd

3. When the special leave petition filed by M/s. Choudhury Construction came up for consideration before the Bench, the learned counsel for the petitioner submitted that the procedure adopted by the Designate Judge while hearing petition under Section 11 of 1996 Act was unknown in law and not sanctioned by Section 11 inasmuch as although the Designate Judge has held that there are live disputes between the parties which have to be resolved through arbitration, yet the matter has been ordered to be placed before the Chief Justice for appointment of the arbitrator. In light of the submission made by the learned counsel, Registrar General, Calcutta High Court was ordered to be impleaded as party respondent.  4. In the matter of Hindustan Copper Limited, by an order dated 18.7.2012 this Court felt that the views of the Registrar General, Calcutta High Court were necessary as the issue involved was whether an application under Section 11(6) of the 1996 Act for appointment of an arbitrator could be considered in piecemeal by two Designate Judges.  5. In the matter of Hindustan Copper Limited, one Designate Judge first passed the order on 9.6.2011 holding that the request for appointment of the arbitrator was proper and then ordered that the application should be referred to Honble Delegate of the Chief Justice for appointment of an arbitrator. The relevant part of the order dated 9.6.2011 reads as under :Therefore, the request for appointment of arbitrator was proper. There is an arbitral dispute between the parties, as held above.  I also notice that the petitioner have not appointed their arbitrator, which they ought to have done by this time. Therefore, in the circumstances, I think this application should be referred to the Honble delegate of the Honble the Chief Justice for appointment of an arbitrator/arbitrators to adjudicate the disputes between the parties as mentioned in the letter of the petitioner dated 28th December, 2009. I order accordingly.6. In pursuance of the order dated 9.6.2011, the matter came up before another Designate Judge and he appointed the arbitrator by an order dated 8.7.2011. The following order reads as under :It appears from the order dated 9th June, 2011 passed by a learned Judge of this Court that His Lordship has already found that there exists an arbitration agreement between the parties and the dispute involved herein is covered by the said agreement.  In view of such fact, I, in exercise of power conferred under section 11(6) of the Arbitration & Conciliation Act, 1996 appoint Sri Rudrendra Nath Banerjee, a retired Judge of this Court as the Arbitrator on the fees of Rs. 15,000/- for each sitting.7. In the appeal of M/s. Choudhury Construction, the Designate Judge on 6.9.2011 passed the following order :The State does not dispute the existence of the arbitration agreement but says that matters specifically excepted by the agreement cannot be made the subject matter of any arbitral reference. If there is any excepted matter which is raised by the petitioner as claimant, it will be open to the State to object thereto, inter alia, under Section 16 of the Arbitration and Conciliation Act, 1996. Since it appears that there are live disputes to go to arbitration and the parties have failed to agree in the composition of the arbitral tribunal, AP No. 394 of 2009 is directed to be placed before the Honble Designate of the Honble The Chief Justice for constitution of an arbitral tribunal in accordance with the agreement between the parties to adjudicate upon the disputes covered thereby. There will be no order as to costs

Reasoning:
17. The exposition of law by a seven-Judge Bench of this Court in SBP & Co.2 , leaves no manner of doubt that the procedure that is being followed by the Calcutta High Court with regard to the consideration of the applications under Section 11 of the 1996 Act is legally impermissible. The piecemeal consideration of the application under Section 11 by the Designate Judge and another Designate Judge or the Chief Justice, as the case may be, is not contemplated by Section 11. The function of the Chief Justice or Designate Judge in consideration of the application under Section 11 is judicial and such application has to be dealt with in its entirety by either Chief Justice himself or the Designate Judge and not by both by making it a two-tier procedure as held in Modi Korea Telecommunications Ltd.1. The distinction drawn by the Division Bench of Calcutta High Court in Modi Korea Telecommunications Ltd.1 between the procedure for appointment of arbitrator and the actual appointment of the arbitrator is not at all well founded. Modi Korea Telecommunications Ltd.1 to the extent it is inconsistent with SBP & Co.2 stands overruled.