IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 8TH DAY OF FEBRUARY, 2019 BEFORE THE HON’BLE MR.JUSTICE ALOK ARADHE C.M.P.No.258/2017 BETWEEN:
M/s. Karnasree Drink and Food Products (P) Ltd., Represented by Board of Director, Mr. M.R.Shivakumar Swamy, Having its registered office at No.25, Anandanagar, Marthahalli, Outer Ring Road, Bangalore – 560 037. … PETITIONER (By Smt. K.R.Roopa, Adv.) AND:
M/s. Divine Engineering, Represented by Proprietor, Mr. Ravi Kotiyan, Office at No.16/17, 1st Floor, Herohalli Cross, Anjana Nagar, Vishwaneedam Post, Magadi Main Road, Bangalore – 560 091. … RESPONDENT (By Sri B.Ravindra, Adv.) This civil miscellaneous petition is filed under Section 11(5) of the Arbitration and Conciliation Act, 1996, praying to appoint an arbitrator to resolve the dispute between the petitioner and the respondent.
This petition coming on for admission, this day, the Court made the following:
ORDER Smt. K.R.Roopa, learned Counsel for the petitioner and Sri B.Ravindra, learned Counsel for the respondent.
Respondent though served, has remained unrepresented.
2. The petition is admitted for hearing and the same is heard finally.
3. By means of this petition under Section 11 of the Arbitration & Conciliation Act, 1996 (hereinafter referred as ‘the Act’, for short), the petitioner inter alia seeks appointment of an arbitrator to adjudicate the dispute that has arisen between the petitioner and the respondent.
4. Admittedly, the parties had entered into an agreement on 14.05.2014. Clause 21 of the agreement contains the arbitral clause, which reads as under:
“21. In case of any dispute or differences between the parties, whether in respect of quality of materials used by the SECOND PARTY or work done or in respect of delay in completion of works or in respect of payment of extra work required to be done and so executed or in respect of delay of payment to the SECOND PARTY or touching the interpretation, fulfillment of any of the terms of these presents or any other matter arising out of or in connection with these presents or carrying out of work, shall be referred to arbitration of two arbitrators, one to be appointed by each party. The arbitrators shall appoint an umpire before entering upon the reference. The arbitrators shall make their award within six months from the date of entering on the reference. If the arbitrators do not make their award within the stipulated period or have delivered to any party or to the umpire a notice in writing stating that they cannot agree, the umpire shall forthwith enter on the reference and shall make his award within three months of entering on the reference or within such extended time as the parties may agree and in the absence of such agreement, as the Court may allow. The arbitrators or umpire, as the case may be, shall be entitled to consult any expert, after previous notice to the parties, the cost whereof shall be borne by the parties equally.
The proceedings of the arbitrators shall be recorded in English, a copy whereof shall be furnished to each party. The provisions of the Arbitration and Conciliation Act, 1996 so far as applicable and are not inconsistent or repugnant to these presents, shall apply in this reference to arbitration. The cost of the reference and award shall be the discretion of the arbitrators who may direct by whom and in what manner, the same or any part thereof shall be paid. The award of the arbitrators or umpire shall be final and binding on the parties and the parties, their executors and administrators shall on their respective parts obey, abide by the award and shall not challenge on any ground excepting fraud or collision or error apparent on the face of the award. It is hereby agreed between the parties that the parties shall resort to arbitration, before filing any suit for the enforcement of any right under these presents.”
5. The petitioner in pursuance of the aforesaid clause has sent a notice on 23.12.2015, by which the name of one Sri B.S.Reddy, Retired District Judge, was proposed as arbitrator, whereupon the respondent was supposed to suggest one arbitrator and both the arbitrators were supposed to nominate another person as umpire whose decision shall be final and binding on the parties. However, despite service of notice dated 23.12.2005, the respondent has failed to nominate the arbitrator.
6. A three Judge bench of the Supreme Court in the case of ‘M/S. DEEP TRADING COMPANY VS M/S. INDIAN OIL CORPORATION & ORS., AIR 2013 SC 1479’, while taking into account the requirement of Section 11(6) of the Act, in paragraph 20 has held as under:
“20. If we apply the legal position exposited by this Court in Datar Switchgears to the admitted facts, it will be seen that the Corporation has forfeited its right to appoint the arbitrator. It is so for the reason that on 09.08.2004, the dealer called upon the Corporation to appoint the arbitrator in accordance with terms of Section 29 of the agreement but that was not done till the dealer had made application under Section 11(6) to the Chief Justice of the Allahabad High Court for appointment of the arbitrator. The appointment was made by the Corporation only during the pendency of the proceedings under Section 11(6). Such appointment by the Corporation after forfeiture of its right is of no consequence and has not disentitled the dealer to seek appointment of the arbitrator by the Chief Justice under Section 11(6). We answer the above questions accordingly.”
7. Thus, in view of the aforesaid enunciation of law, the respondent has forfeited the right to appoint an arbitrator. Accordingly, in view of the law laid down in M/s. Deep Trading Company stated supra and with a view to ensure appointment of an independent and impartial arbitrator as laid in Section 11(8) of the Act, I deem it appropriate to appoint Sri S.R.Somashekhar, Retired District Judge, as the sole arbitrator, to adjudicate the dispute between the parties. Office is directed to transmit the copy of this order to Sri S.R.Somashekhar. Accordingly, petition is disposed of.
Sd/- JUDGE KK