Heard Sri P.N. Saxena, learned Senior Counsel assisted by Sri Namit Kumar Sharma for the applicant and Sri Shailendra on behalf respondent nos.1 & 2.
Applicant before this Court is a Company duly registered under the Companies Act, 1956. The respondent no.1 is a State University established under the U.P. State Universities Act, 1973 while respondent no.2 is the Finance Officer of the said University.
The applicant has entered into an agreement with the respondent University on 18.9.2010 whereunder he was required to carry out the work of computerization of the examination department of the University and for the purpose to supply certain material.
A dispute has arisen between the applicant and the University because of the order of cancellation of the agreement, leavy of the penalty and forfeiture of the security as per the order of the Finance Officer dated 20.6.2011.
According to the applicant the Vice Chancellor himself was instrumental in cancellation of the contract/agreement. He will not be able to act fairly in the matter and therefore, the applicant by means of his notice dated 16.7.2011 requested the Finance Officer of the University to appoint any of the three named retired judges of Delhi High Court as the Arbitrator. A copy of the notice has been brought on record as Annexure No.12 to the application. Since no response has been received to the said notice even after expiry of more than 30 days. The applicant has approached this Court under Section 11 of the Arbitration & Conciliation Act, 1996 for appointment of Arbitrator.
Counsel for the applicant submits that although under the agreement it was agreed between the parties that Vice Chancellor would be the sole Arbitrator in case of dispute between the parties, yet since the Vice Chancellor in the facts of the case will not be able to independently decide the dispute between the parties, some independent Arbitrator be appointed by this Court. Relinace has been placed upon the judgment of Hon'ble Supreme Court in the case of "Denel (Proprietary Limited) Vs. Bharat Electronics Ltd. and another (Arbitration Petition No.16 of 2009) decided on 10.05.2010, reported in 2010 (5) UJ SC 2615.
In support of the plea raised before this Court it is stated that as per letter of the Finance Officer dated 6.5.2011 the Vice Chancellor had directed that since goods as per the agreement had not been supplied, the examinations had to be postponed and the Registrar was asked to submit his comment. He then proceeded to issue a direction to ensure that the relevant examination material is received by 13.3.2011 i.e. prior to the revised scheduled of examination which were to commenced from 22.3.2011. Reference has also made to the letter of the Finance Officer dated 6.5.2011, copy whereof has been marked to the Vice Chancellor. Reply submitted thereto by the applicant to the Finance Officer, copy whereof has been marked to the Vince Chancellor as well as the other letter of Finance Officer dated 16.5.2011, copy whereof has been marked to the Vice Chancellor.
It is contended that since the Vice Chancellor was always being posted by the Finance Officer qua the development in the matter. It is to be presumed that he has taken the decision to cancel the agreement and therefore, the presumption of bias arises.
Sri Shailendra, learned counsel for the respondents contends that the contention raised on behalf of the applicant qua the Vice Chancellor being not in a position to examine the matter independently and fairly is not supported by any material worth consideration. The applicant has drawn presumption out of his imagination. He submits that the legal position with regard to appointment of named Arbitrator as agreed between the parties has been settled by Hon'ble Supreme Court in the cases of Datar Switchgears Ltd. Vs. Tata Finance Ltd. and another, 2000 (8) SCC 151, Bhupinder Singh Bindra Vs. Union of India and another, AIR 1995 SC 2464, Ace Pipeline Contracts Private Limited Vs. Bharat Petroleum Corporation Limited, 2007 (5) SCC 304, para 21, National Highways Authority of India and another Vs. Bumihiway DDB Ltd. (JV) and others, 2006 (10) SCC 763, para 44.
I have heard counsel for the parties and have examined the records.
It would be worthwhile to reproduce the relevant clause of the agreement entered into between the parties which contains the Arbitration Clause, the same is quoted below:-
"fufonkdrkZ rFkk fufonknkrk nksuksa i{kksa esa dksbZ fookn gksusa ij dqyifr th gh vkjchVzsVj gksaxs ftudk fu.kZ; vfUre gksxk rFkk nksuksa i{kksa dks ekU; gksxkA fdlh Hkh izdkj ds fookn ds fy;s U;k;ky; vkxjk gksxkA"
The parties have thus agreed to the named Arbitrator namely Vice Chancellor of the University.
From the document enclosed as Annexure 11 to the application, the letter of the Finance Officer which according to the petitioner is leads to a presumption that Vice Chancellor has already taken a decision in the matter and that he may not be able to act fairly while adjudicating the dispute between the parties only records as follows:-
"vf/kd`r ,tsUlh o"kZ &2011] tSlk fd vkidks fofnr gS fd o"kZ 2011 dh ijh{kk;sa ijh{kk lfefr ds fu.kZ; ds vuqikyu esa 16 ekpZ 2011 ls vk;ksftr gksuk izLrkfor FkhA 16 ekpZ 2011 ls ijh{kk vk;kstu lEcU/kh izi= vkids }kjk le; ls miyC/k ugha djk;s tkus ds dkj.kksa dks n`f"Vxr mDr ijh{kk 22 ekpZ 2011 ls vk;ksftr djk;s tkus gsrq ekuuh; dqyifr us vius vkns'k fn0 7&2&2011 ls vuqeksnu djrs gq, funsZf'kr fd;k gS fd vf/kd`r ,tsUlh us le; ls izos'k&[email protected] mifLFkfr [email protected] jksy fyLV ,oa vU; vko';d izi= le; ls ugha nsus dk dkj.k jgsa gSA d`i;k viuh vk[;k ls voxr djk;saA vr% iqu% 22 ekpZ 2011 ls vuqeksfnr dk;Zdze ds vuqlkj vkids }kjk fn0 13 ekpZ 2011 rd mi;qZDr lkexzh vFkkZr izos'k&[email protected] mifLFkfr [email protected] jksy fyLV vkfn fn;k tkuk Fkk ijUrq vkids }kjk fn0 13 ekpZ 2011 rd lkexzh miyC/k ugha djk;h x;h gS A vki dqyifr th ds vkns'kksa ds vuqikyu esa vfoyEc ijh{kk lkexzh fn0 14&3&2011 ds e/;kUg rd miyC/k djkus dk d"V djsa ftlls ijh{kk lkexzh uksMy dsUnzksa ij forj.k gsrq le; jgrs miyC/k djk;h tk lds rFkk ;g Hkh lqfuf'pr dj fy;k tk;s fd izos'k i= osolkbV ij Hkh ijh{kkfFkZ;ksa ds voyksdukFkZ ,oa iz;ksxkFkZ izlkfjr Hkh fd;k tkuk gS ftlls le; jgrs lEcfU/kr egkfo|ky;@lEcfU?kr ijh{kkFkhZ ;fn dksbZ =qfV muds laKku esa vkrh gS rks og lq/kkj djk ldsaA blds vfrfjDr jksyfyLV ,oa vuqdzekWd miyC/k u djkus ds dkj.k 22 Qjojh 2011 ls izk;ksfxd ijh{kk;sa Hkh lEiUu ugha gks ldh gSA vuqcU/k ds vuqlkj izR;sd uksMy dsUnz ij buQkesZ'ku lsUVj dh LFkkiuk Hkh dh tkuh Fkh ftlls egkfo+|ky;[email protected]=ksa dh leL;kvksa dk Rofjr fuokj.k fd;k tk lds ijUrq mDr O;oLFkk Hkh vkt rd ugha gks ik;h gSA blds iwoZ Hkh dqylfpo mDr O;oLFkk djus gsrq le; le; ij cSBd dj fn'kk funsZ'k Hkh ns pqds gSA vr% of.kZr n'kk esa vkt gh oLrqfLFkfr ls voxr djkus dk d"V djsa rkfd rnkuqlkj dqyifr th dks lwfpr fd;k tk ldsA Hkonh;
mi dqylfpo ¼ijh{kk½"
I am of the considered opinion that from the aforesaid letter absolutely no decision adverse to the petitioner can be said to have been taken by the Vice Chancellor. He has only called for an explanation from the Registrar for non-receipt of the relevant examination material resulting in delay and postponement of the examinations with a further direction to ensure that the relevant material is received prior to the commencement of re-scheduled examinations. Such noting of the Vice Chancellor cannot in any way lead to a presumption that he is biased against the petitioner or that he will not be able to do justice and act fairly as arbitrator in terms of the agreement entered into between the parties. The allegations of malafide/bias are required to be established by cogent evidence. This Court further finds that mere forwarding copies of the notices and the reply thereto by the petitioner cannot lead to a presumption that any decision adverse to the applicant has been taken by the Vice Chancellor in the facts of the case or that he will not be able to act independently while deciding the disputes between the parties.
Suffice it to refer to para 22 of the judgment relied upon by the learned counsel for the applicant himself in the case of Denel (Proprietary Limited) (supra), the relevant part where of reads as follows:-
"In the case of Datar Switchgears Ltd. v. Tata Finance Ltd. & Anr., [(2000) 8 SCC 151], this Court while considering the powers of the Court to appoint arbitrator under Section 8 of the Arbitration Act, 1940, cited the decision of this Court in the case of Bhupinder Singh Bindra v. Union of India and Anr. [AIR1995 SC 2464]. It was held in that case that "It is settled law that court cannot interpose and interdict the appointment of an arbitrator, whom the parties have chosen under the terms of the contract unless legal misconduct of the arbitrator, fraud, disqualification etc. is pleaded and proved. It is not in the power of the party at his own will or pleasure to revoke the authority of the arbitrator appointed with his consent. There must be just and sufficient cause for revocation." The said principle has to abide by in the normal course. However, considering the peculiar conditions in the present case, whereby the arbitrator sought to be appointed under the arbitration clause, is the Managing Director of the company against whom the dispute is raised (the Respondents). In addition to that, the said Managing Director of Bharat Electronics Ltd which is a `Government Company', is also bound by the direction/instruction issued by his superior authorities. It is also the case of the respondent in the reply to the notice issued by the respondent, though it is liable to pay the amount due under the Purchase Orders, it is not in a position to settle the dues only because of the directions issued by Ministry of Defence, Government of India. It only shows that the Managing Director may not be in a position to independently decide the dispute between the parties."
Reference may also be had to the same paragraph of the judgment whereunder the Hon'ble Supreme Court has specifically recorded that considering the peculiar conditions of the case it had come to the conclusion that named Arbitrator may not be able to act independently.
Similarly in para 25 of the same judgment it was clarified that in the peculiar facts and circumstances of the case, it would be in the interest of both the parties to appoint an independent Arbitrator.
In the facts of the case, this Court is of the considered opinion that the applicant has hopelessly failed to establish any relevant fact which can lead this Court to believe that Vice Chancellor will not be able to act independently while acting as Arbitrator in respect of the dispute between the parties.
From the record it is apparent that the applicant has not made any application till date for Vice Chancellor to enter into the dispute as Arbitrator in terms of the agreement executed between the parties.
For the reasons best known to the applicant he was interested in appointment of one of named three retired judges of Delhi High Court as Arbitrator.
No case is made out for any indulgence under Section 11 of the Arbitration Act.
Application is rejected. However, this order could not prejudice the right of the applicant to invoke the arbitration clause by asking the Vice Chancellor to enter in the dispute.
Order Date :- 5.9.2011 Kpy