M/S. S.B.P. & CO. versus M/S. PATEL ENGINEERING LTD. & ANR.

M/S. S.B.P. & CO. versus M/S. PATEL ENGINEERING LTD. & ANR.

In absence of a provision in the arbitration agreement allowing appointment of a substitute arbitrator when their original appointee refuses to act, s.15(2) of the Arbitration and Conciliation Act, 1996 does not permit such substitution. The only consequence is that the arbitrator appointed by the other party becomes the sole arbitrator. The Designate Judge erred in appointing the third arbitrator.

Parties
Appellant: MIS. S.B.P. & CO.; Respondent No.1: MIS. PATEL ENGINEERING LTD.; Arbitrator Appointed by Appellant: Respondent No.2 (T.G. Radhakrishna)
Jurisdiction
India
Judgment Date
21 October 2009
Procedural Posture
Civil Appeal / Appeal From High Court Decision Appointing Third Arbitrator Under S.11(6) Arbitration and Conciliation Act, 1996
Outcome
Appeals allowed
Legal Topics
Appointment of Arbitrators, Arbitration and Conciliation Act, 1996 S.15(2), Arbitration Clause Interpretation, Judicial Vs Administrative Nature of Orders Under S.11
Arbitration Appointment of Arbitrators Arbitration and Conciliation Act, 1996 S.15(2) Arbitration Clause Interpretation Judicial Vs Administrative Nature of Orders Under S.11

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Parties

MIS. S.B.P. & CO.

Appellant

MIS. PATEL ENGINEERING LTD.

Respondent No.1

Respondent No.2 (T.G. Radhakrishna)

Arbitrator Appointed by Appellant

Procedural Posture

Civil Appeal / Appeal From High Court Decision Appointing Third Arbitrator Under S.11(6) Arbitration and Conciliation Act, 1996

Legal Issues

  1. 1 Whether s.15(2) of Arbitration and Conciliation Act, 1996 permits appointment of substitute arbitrator when appointed arbitrator refuses to act
  2. 2 Whether the appointment of a substitute arbitrator under the arbitration clause in the agreement was lawful
  3. 3 Interpretation of 'refuse' and 'withdraw' in context of arbitrator's mandate

Ratio Decidendi

In absence of a provision in the arbitration agreement allowing appointment of a substitute arbitrator when their original appointee refuses to act, s.15(2) of the Arbitration and Conciliation Act, 1996 does not permit such substitution. The only consequence is that the arbitrator appointed by the other party becomes the sole arbitrator. The Designate Judge erred in appointing the third arbitrator.

Court Disposition

Appeals allowed

Orders

  • Orders appointing third arbitrator set aside
  • Respondent No.2 to proceed as sole arbitrator and render award within three months