Arbitration clause invoked by notice; late appointment after a Section 11 petition could not defeat appointment of a sole arbitrator.
A notice expressly stating that disputes should be referred to arbitration was treated as a clear and sufficient invocation of the arbitration agreement, and a later notice merely repeated that demand. The respondent failed to appoint an arbitrator within the prescribed period after receipt of the first notice, so a subsequent appointment made after the Section 11 petition had already been filed could not defeat the petitioner's right to seek court intervention. The court therefore held that the post-petition appointment had no effect and appointed a sole arbitrator to decide the disputes.
Issues: (i) Whether the notice dated 04.02.2013 constituted a valid demand for reference of disputes to arbitration and thereby invoked the arbitration clause. (ii) Whether the respondent's appointment of an arbitrator after the filing of the petition could defeat the petitioner's request for appointment under Section 11 of the Arbitration and Conciliation Act, 1996.
Issue (i): Whether the notice dated 04.02.2013 constituted a valid demand for reference of disputes to arbitration and thereby invoked the arbitration clause.
Analysis: The notice dated 04.02.2013 expressly stated that the dispute gave rise to a cause of action to refer the matter to arbitration as agreed between the parties. Read with the arbitration clause, this was held to be a clear and sufficient invocation of the arbitration agreement. The later notice of 07.05.2013 was treated only as a reiteration and did not detract from the earlier demand.
Conclusion: The arbitration clause was duly invoked by the notice dated 04.02.2013.
Issue (ii): Whether the respondent's appointment of an arbitrator after the filing of the petition could defeat the petitioner's request for appointment under Section 11 of the Arbitration and Conciliation Act, 1996.
Analysis: The respondent did not appoint an arbitrator within 30 days of receipt of the first notice. The petition had already been filed when the respondent attempted to appoint an arbitrator. Once the statutory time had expired and the petition was pending, the subsequent appointment could not displace the petitioner's entitlement to seek appointment under Section 11(4), Section 11(5), and Section 11(6).
Conclusion: The post-petition appointment by the respondent did not defeat the petitioner's request for appointment of an arbitrator.
Final Conclusion: The petition succeeded, the respondent's unilateral appointment ceased to have effect, and a sole arbitrator was appointed for adjudication of the disputes.
Ratio Decidendi: A valid and express demand for arbitration in a prior notice triggers the arbitration clause, and once the respondent fails to act within the prescribed period, a later appointment of an arbitrator after institution of proceedings does not bar relief under Section 11 of the Arbitration and Conciliation Act, 1996.
TaxTMI 
AI Drafter ✕
TaxTMI 
