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        Companies Law

        2001 (8) TMI 1281 - HC - Companies Law

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        Contractual arbitration appointment procedure prevails on default, and an unchallenged award remains executable as a decree. Where an arbitration clause expressly provides that the arbitrator already appointed by one party becomes the sole arbitrator on the other party's ...
                        Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
                          Provisions expressly mentioned in the judgment/order text.

                              Contractual arbitration appointment procedure prevails on default, and an unchallenged award remains executable as a decree.

                              Where an arbitration clause expressly provides that the arbitrator already appointed by one party becomes the sole arbitrator on the other party's default, that contractual mechanism governs and recourse to appointment by the Chief Justice under section 11(6)(c) is unnecessary. The tribunal's composition is then in accordance with the parties' agreement. An award not challenged in time under section 34 on the ground of improper composition or procedure attains finality under sections 35 and 36 and cannot be treated as a nullity in execution. The award was therefore executable as a decree, and the objections to execution failed.




                              Issues: (i) Whether, under the agreed arbitration clause, the arbitrator appointed by one party could validly proceed as sole arbitrator on the other party's failure to appoint its arbitrator, without recourse to the Chief Justice under section 11(6)(c); (ii) Whether the arbitral award could be executed as a decree where no objection was filed under section 34(2)(v) challenging the composition of the tribunal or the arbitral procedure.

                              Issue (i): Whether, under the agreed arbitration clause, the arbitrator appointed by one party could validly proceed as sole arbitrator on the other party's failure to appoint its arbitrator, without recourse to the Chief Justice under section 11(6)(c).

                              Analysis: Section 11(2) preserves party freedom to agree on the appointment procedure. The agreement here expressly provided that if the other party failed to appoint an arbitrator within the stipulated time, the arbitrator already appointed would become the sole arbitrator. That contractual mechanism constituted the agreed procedure for securing appointment, so the statutory resort to the Chief Justice under section 11(6)(c) was not attracted. The tribunal's composition was therefore in accordance with the parties' agreement.

                              Conclusion: The unilateral conversion of the appointed arbitrator into the sole arbitrator was valid and not without jurisdiction.

                              Issue (ii): Whether the arbitral award could be executed as a decree where no objection was filed under section 34(2)(v) challenging the composition of the tribunal or the arbitral procedure.

                              Analysis: An award not challenged under section 34 attains finality under section 35 and is enforceable under section 36. Since no objection was raised within limitation to assail the tribunal's composition or procedure, the award could not be treated as a nullity in execution. The executing court cannot go behind a decree, and the same principle applies to enforcement of a final award.

                              Conclusion: The award was liable to be executed as a decree and the objections to execution were unsustainable.

                              Final Conclusion: The judgment under appeal was set aside, the execution petitions were restored, and the award was directed to be enforced in accordance with law.

                              Ratio Decidendi: Where the arbitration agreement itself provides an alternative mechanism for appointment on a party's default, that contractual procedure governs and excludes recourse to section 11(6); if the award is not timely challenged under section 34 on the ground of improper composition or procedure, it attains finality and is executable under sections 35 and 36.


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                              ActsIncome Tax
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