2022 (5) TMI 1109 - HC - Indian Laws

Fresh Arbitration Application Allowed under Section 11(6)(C) for Unresolved Dispute

M/s Modern Construction Company Versus State of Jharkhand

The Court found that a fresh application under Section 11(6)(C) of the Arbitration and Conciliation Act, 1996, was maintainable as the dispute remained ... Appointment of Arbitrator - condition stipulated under Clause 51 of the Arbitration Agreement dated 12.03.1987 - Section 11(6)(C) of the Act, 1996 - HELD THAT:- The admitted fact, as would appear from the material available on record that the petitioner/applicant has entered into an agreement on 12.03.1987 for construction of Officer's Bungalows at Jubilee Park site and Adityapur Site, Jamshedpur, presently in Jharkhand State - The petitioner/applicant has concluded the work but certain claim pertaining to disbursement of amount has been crept up, as such, recourse available under the contract has been resorted to by making request before the concerned competent authority of the State of Jharkhand for appointment of sole Arbitrator. The Hon'ble Apex Court further in the case of PROJECT DIRECTOR, NATIONAL HIGHWAYS NO. 45 E AND 220 NATIONAL HIGHWAYS AUTHORITY OF INDIA VERSUS M. HAKEEM & ANR. [2021 (7) TMI 1343 - SUPREME COURT], has been pleased to hold at paragraph-25 thereof that the application under Section 11(6)(C) of the Act, 1996, is maintainable for appointment of sole Arbitrator once award is being quashed by the competent court of law. This Court, after taking into consideration the aforesaid proposition of law, as has been settled by the Hon'ble Apex Court and after going across the facts of the given case, wherefrom, it is evident that even though the award was pronounced on 20.12.2005 which was affirmed by the Court in exercise of power conferred under Section 34 of the Act, 1996, but, has been quashed and set aside by this Court in exercise of power under Section 37 of the Act, 1996 and subsequent thereto, the Hon'ble Apex Court has also affirmed the order passed by this Court in exercise of power conferred under Section 37 of the Act, 1996, is of the view that the dispute remain unresolved, therefore, if application under Section 11(6)(C) of the Act, 1996 has been filed by the petitioner/applicant, the same cannot be held to be not maintainable. This Court, in view of the aforesaid finding, is of the considered view that a fresh Arbitrator is required to be appointed, so that the claim in question be resolved - Application allowed. Issues Involved:1. Maintainability of a fresh application under Section 11(6)(C) of the Arbitration and Conciliation Act, 1996.2. Appointment of a new Arbitrator after the previous award was quashed.Issue-wise Detailed Analysis:1. Maintainability of a fresh application under Section 11(6)(C) of the Arbitration and Conciliation Act, 1996:The petitioner filed an application under Section 11(6)(C) of the Arbitration and Conciliation Act, 1996, for the appointment of an Arbitrator due to unresolved disputes under an agreement dated 12.03.1987. The respondent State of Jharkhand argued that a fresh application was not maintainable because no liberty was granted by the Court under Section 37 of the Act, 1996, for appointing a new Arbitrator after the previous award was quashed.The Court examined whether the absence of explicit liberty to appoint a new Arbitrator in the order under Section 37 of the Act, 1996, precludes the maintainability of a fresh application under Section 11(6)(C). The Court emphasized that the Arbitration and Conciliation Act, 1996, is enacted for resolving disputes according to the terms of the agreement, and a person cannot be left remediless. The Court referred to the arbitration clause in the contract, which provided a mechanism for dispute resolution.The Court noted that the dispute remained unresolved due to the quashing of the previous award and the order under Section 37 of the Act, 1996. The Court referred to the judgment in McDermott International Inc. Vs. Burn Standard Co. Ltd. & Ors., which stated that if an award is quashed, parties are free to begin arbitration again. This principle was further supported by the Supreme Court in Project Director, National Highways No. 45 E and 220 National Highways Authority of India Vs. M. Hakeem & Anr., and Dakshin Haryana Bijli Vitran Nigam Limited Vrs. Navigant Technologies Private Limited, emphasizing that unresolved disputes should be decided afresh.2. Appointment of a new Arbitrator after the previous award was quashed:The Court found that the dispute remained unresolved despite the quashing of the previous award and subsequent affirmation by the Supreme Court. Therefore, the Court held that a fresh application under Section 11(6)(C) of the Act, 1996, was maintainable. The Court decided that a new Arbitrator should be appointed to resolve the dispute.The Court appointed Mr. Sudhir Kumar Katriar, Former Judge of the Patna High Court, as the sole Arbitrator, subject to the provisions of Section 12(5) of the Arbitration and Conciliation Act, 1996. The Arbitrator was requested to decide the dispute within four months from the commencement of the arbitration proceedings. The Arbitrator was given the liberty to determine fees and expenses, considering the ceiling prescribed under Schedule IV of the Act, 1996, and to expedite the proceedings in accordance with Section 29-A of the Act, 1996.The Registrar General of the Court was directed to send a copy of the arbitration application along with all annexures to the learned Arbitrator.