Arbitration appointment deadline controls: failure to act within the contractual period after receipt of notice forfeits the appointment right.

Where a contract requires disputes to be referred to an arbitration committee within 30 days of receipt of the demand notice and fee, the period runs from actual receipt of the notice, not from any later internal office entry. If the respondent does not take an effective step within that stipulated time, it forfeits the contractual right to make the appointment under the agreed procedure. In that default situation, recourse under Section 11 of the Arbitration and Conciliation Act, 1996 becomes available, and the court may appoint an arbitrator. The decision therefore treats non-compliance with the contractual timeframe as a waiver of the appointment right and upholds judicial intervention to constitute the tribunal.

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Issues: Whether the respondents forfeited their contractual right to refer the dispute to the arbitration committee after expiry of 30 days from receipt of the notice, and whether the order refusing appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 was sustainable.

Analysis: The contractual clause required the dispute to be referred within one month from the date of receipt of the application and prescribed fee. The notice demanding arbitration, along with the cheque, was received in the respondents' office on 26.8.2002. The period of 30 days therefore had to be computed from that date and not from the later internal processing entry in the dispatch register. Since no effective step was taken within the stipulated period, the respondents failed to act in accordance with the agreed procedure. In such a situation, the Chief Justice or the judge designated by him was required to appoint an arbitrator under Section 11 of the Act of 1996.

Conclusion: The respondents lost their right to appoint the arbitral committee after expiry of the contractual period, and the refusal to appoint an arbitrator was unsustainable.

Final Conclusion: The writ petition was allowed, the order of the learned Single Judge was set aside, and a sole arbitrator was appointed with costs imposed on the respondents.

Ratio Decidendi: Where the agreed contractual procedure for appointment of an arbitrator is not acted upon within the stipulated period from the actual receipt of the demand notice, the defaulting party forfeits its right to make the appointment and recourse under Section 11 of the Arbitration and Conciliation Act, 1996 becomes available.

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