# M/S Garg Gas Service v. Hindustan Petroleum Corp. Ltd

- **Citation:** (2020) 2 ILRA 1260
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2020-01-24
- **Case number:** Arbitration Application No. 20 of 2014
- **Bench:** Jaspreet Singh
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-garg-gas-service-v-hindustan-petroleum-corp-ltd-45654
- **Pages:** 11

## Headnote

A. Arbitration and Conciliation Act, 1996Section 11(6)- challenge to-appointment
of arbitrator-petitoner is the distributor
of L.P.G. Gas Cylinders in pursuance of
the
distributorship
agreement
with
Hindustan
Petroleum
Corporationrespondent issued show cause notice and
inspections were conducted-respondent
threatened the petitioner-being tired of
the attitude of the respondent, petitioner
requested to appoint arbitrator- after a
lapse of 30 days, petitioner approached
the court to invoke arbitration clausewhile
respondent
appointed
one
arbitrator in the meantime in excess of
jurisdiction-he
did
not
possess
the
authority to appoint the arbitrator-his
appointment is contrary to the settled
legal provisions and principles-hence, all
his actions would be rendered null and
void including the sittings held by himobjections of the respondent rejectedhence, a new arbitrator is appointed as
powers conferred u/s 11(6) of the
Act.(Para 31 to 38)

The application is allowed. (E-6)

List of Cases Cited:-

## Text

1260 INDIAN LAW REPORTS ALLAHABAD SERIES
(2020)02ILR A1260

ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 24.01.2020

BEFORE
THE HON'BLE JASPREET SINGH, J.

Arbitration Application No. 20 of 2014

M/S Garg Gas Service ...Applicant
Versus
Hindustan Petroleum Corp. Ltd.
 ..Opposite Party

Counsel for the Applicant:
Amarjeet Singh Rakhra

Counsel for the Opposite Party:
Anand Shanker Asthana

A. Arbitration and Conciliation Act, 1996Section 11(6)- challenge to-appointment
of arbitrator-petitoner is the distributor
of L.P.G. Gas Cylinders in pursuance of
the
distributorship
agreement
with
Hindustan
Petroleum
Corporationrespondent issued show cause notice and
inspections were conducted-respondent
threatened the petitioner-being tired of
the attitude of the respondent, petitioner
requested to appoint arbitrator- after a
lapse of 30 days, petitioner approached
the court to invoke arbitration clausewhile
respondent
appointed
one
arbitrator in the meantime in excess of
jurisdiction-he
did
not
possess
the
authority to appoint the arbitrator-his
appointment is contrary to the settled
legal provisions and principles-hence, all
his actions would be rendered null and
void including the sittings held by himobjections of the respondent rejectedhence, a new arbitrator is appointed as
powers conferred u/s 11(6) of the
Act.(Para 31 to 38)

The application is allowed. (E-6)

List of Cases Cited:-
1. Datar Switchgears Vs. Tata Finance Ltd.&
Another (2000) 8 SCC 151

2. TRF Ltd. Vs. Energo Engineering Projects
Ltd. (2017) 8 SCC 377

3. Perkins Eastman Architects DPC & Ors Vs.
HSCC (India) Ltd.,AIR 2020 SC 59

4. Walter Bau AG (2015) 3 SCC 100

(Delivered by Hon'ble Jaspreet Singh, J.)

1. An interesting question is involved
in this petition under Section 11(6) of the
Arbitration & Conciliation Act, 1996
shown of unecessary facts, the case setup
by the petitioner is that he is the distributor
for L.P.G. Gas cylinders and engaged in
the aforesaid business in pursuance of the
distributorship agreement with Hindustan
Petroleum Corporation dated 16.05.2008.
The petitioner is stated to be the distributor
of L.P.G. since last 31 years and the
distributorship
agreement
have
been
renewed from time to time and lastly it
was renewed on 15.05.2013, a copy of
which has been annexed as Annexure No.
1
with
the petition.
The
aforesaid
distribution
agreement
contains
an
arbitration clause which reads as under:-

39. Any dispute of difference of
any nature whatsoever or regarding any
rights, liability, act, omission, or account
of any of the parties, here to arising out of
or in relation to this agreement (other than
those in respect of which the decision
ofany person, is by the Agreement
expressed to be final and binding) shall be
referred to the sole Arbitration of the
Chairman and Managing Director of the
Corporation or of retired officer of oher
PSUs or retired Senior Central Govt.
Officer who may be nominated by the
Chairman and Managing Director. The
2 All. M/S Garg Gas Service Vs. Hindustan Petroleum Corp. Ltd.
1261
dealer will not be entitled to raise any
objection to any such Arbitrator on the
ground that the Arbitrator is or was an
officer and/or share holder of the
Corporation or that in the course of his
duties as an officer of the Corporation he
had expressed views on all or any of the
matter in dispute of difference. In the event
of the Arbitrator to whom the matter is
originally referred vacating his office or
being unable to act for any reasons the
Chairman and Managing Director as
aforesaid at the time of such vacation of
office or inability to act, shall designate
person who shall be entitled to proceed
with the reference from the point at which
it was left by his predecessor. It is also a
term to this contract that on person other
than
the
Chairman
and
Managing
Director or person nominaed by such
Chairman and Managing Director of the
Corporation as aforesaid shall act as
Arbitrator hereunder, the cost of the
arbitration shall be shared equally by the
parties. The award of the Arbitrator so
appointed shall be final, conclusive and
binding on all parties to the Agreement,
subject to the provisions of the Arbitration
and Conciliation Act, 1996 or any
statutory modification or of re-enactment
there of and the rules made thereunder
and for the time being in force shall apply
to the Arbitration proceeding under this
Clause. The award shall be made in
writing and published by the Arbitrator
"within six month after entering upon the
reference or within such extended time not
exceeding further four months as the sole
arbitrator shall by a writing under his own
hands appoint.

The arbitrator shall have power
to order and direct either of the parties to
abide by, observe and perform all such
difference i.e. dispute before him. The
arbitrator shall have all summary powers
and may take such evidence, oral and/or
documentary as the arbitrator in his
obsolute discretion thinks it and shall be
entitled toercise all power under the
Indian Arbitration Act, 1940 including
admission of any affidavit as evidence of
the matter in difference i.e. dispute before
him. The arbitrator shall be at liberty to
appoint, if necessary any accountant or
engineering or other technical person to
assist him, and to act by the opinion so
taken.

The arbitrator shall have power
to make one or more awards, whether
interim or otherwise in respect of the
dispute and difference and in particular
will be entitled to make separate awards in
respect of claims or cross claims of the
parties.

The parties hereby agree that the
courts in the city of LUCKNOW alone
shall have jurisdiction to entertain any
application or other proceeding in respect
of any thing arising under this agreement
and any award or awards made by the sole
arbitrator hereunder shall be filed in the
concerned courts if the city of LUCKNOW
only."

2. It is stated by the petitioner that
the
respondent-Corporation
had
been
issuing show cause notices at the drop of a
hat
and
various
inspections
were
conducted on the distributorship of the
peitioner. Though the petitioner had
replied to the show cause notices which
were issued from time to time yet the
attitude of the respondent was threatening
and being tired of being victimized at the
behest of the respondent, the petitioner is
said to have invoked the arbitration clause
by means of its letter dated 03.05.2014.

3. This letter dated 03.05.2014
invoking the arbitration clause is in the eye
1262 INDIAN LAW REPORTS ALLAHABAD SERIES
of the storm and is of which much
significance as it is only on the aforesaid
notice and its service, the result of this
petition balances.

4. The petitioner again sent a
reminder for appointment of the arbitrator
by means of its letter dated 13.05.2014 and
after having waited for the statutory period
of 30 days, the petitioner insituted the
instant petitioner before the High Court on
03.06.2014.

5. The respondent through counsel
appeared before the High Court on the first
date and made a statement that it had not
received the notice as stated by the
petitioner dated 03.05.2014. In light of the
statement so made, a coordinate Bench of
this Court passed the following order dated
05.06.2014 which reads as under:-

Sri K.S. Pawar, Advocate has
filed
Vakalatnama
on
behalf
of
respondent. The same is taken on record.

Heard Sri A.S. Rakhra, learned
counsel for the applicant and Sri K.S.
Pawar for respondent.

By means of the present writ
petition, the petitioner has prayed for an
appointment of Arbitrator so that the present
dispute may be resolved.

Learned counsel for the applicant
states that the distributorship agreement dated
16.05.2008 as well as 15.05.2013 there was a
categorical provision for arbitration in the
matter and as per Clause-39 of the
distributorship agreement dated 15.05.2013,
he is entitle for referring the dispute to the
arbitrator. The applicant has already moved
an application before the opposite party for
appointment of an arbitrator and till today
nothing has happened and till today.

Aggrieved with the non action of the
respondent, the present writ petition has been
filed. However, learned counsel for the
opposite party on the basis of instruction
submits that till today, the said application has
not been received in the office of opposite party
and the moment, it would received, the same
shall be properly replied forthwith.

Therefore, in the interest of justice, I
hereby direct the opposite party to take
suitable action in the matter, meanwhile.

List in the second week of July,
2014 as fresh.

6. The respondent by means of its
letter dated 09.07.2014 appointed one Sri
A.K. Reddy as the sole arbitrator. The
petitioner
on
20.08.2014
filed
a
supplementary affidavt in the instant case
appraising the Court that the respondent
has appointed Sri A.K. Reddy as the sole
arbitrator and the appointment of the said
Arbitrator is contrary to the settled legal
position, inasmuch as, the same has been
done after the petitioner had approached
this Court for appointing the arbitrator
while the respondent had forefeited its
right to appoint the arbitrator. The
petitioner
once
again
filed
another
supplementary affidavit dated 20.03.2015
appraising the Court that the alleged
arbitrator Sri A.K. Reddy is proceeding in
the matter and that despite the petitioner
informing him that his appointment is not
valid and the matter is alreaday engaging
the attention of the High Court but the sole
arbitrator was adament in asking the
petitioner to submit to his jurisdiction. The
petitioner also filed an application for
early hearing bringing on record the
extract
of
proceedings
which
were
transpiring before the arbitrator who was
moving ahead with the arbitration while
the petitioner had been contending that his
appointment was illegal and he should not
proceed and should wait until the petition
is decided by this Court.
2 All. M/S Garg Gas Service Vs. Hindustan Petroleum Corp. Ltd.
1263

7. On the other hand, the respondent
filed its counter affidavit on 12.03.2018
and raised a plea that it had not received
the letter dated 03.05.2014. It was stated
by the respondent that the petitioner had
sent a different letter by which he had
sought the report regarding some CBI
inspection.
Since
the
postal
receipt
annexed with the letter dated 03.05.20104
was in respect of the inquiry report and not
in
respect
of
the
request
seeking
appointment of arbitrator, hence the
petitioner was not maintainable.

8. It is also the case of the respondent
that it had appointed the arbitrator in
pursuance fo the order pased by this Court
dated
05.06.2014
which
has
been
reproduced
above.
The
respondent
thereafter filed a supplementary affidavit
and it has brought on record the letters by
which the petitioner had sought the report
of the CBI inquiry and it has further taken
a stand that it did not even receive the
reminder dated 13th of May 2014. It was
also stated that the petitioner had filed a
statement of claim before the arbitrator
and thus has submitted to the jurisdiction
of the arbitrator and as such is not entitled
to raise this dispute before this Court.

9. The petitioner filed a rejoinder
affidavit denying the contentions of the
respondent and reiterating its stand and
additionally submitted that during the
pendency of the above petition the
arbitrator has passed an order dated
27.06.2017 terminating the proceedings in
terms of Section 25 as the claimant failed
to submit/communicate its statement of
claim.

10. It is in this backdrop, that the
controversy, to be adjudicated by this
Court is two fold.

(i) Whether the appointment of
the arbitrator by the respondent by means
of its lette dated 09.07.2014 is valid and
(ii) whether what is the effect of the
proceedings which transpired before the
said sole arbitrator Sri A.K. Reddy who
terminated the proceedings by means of its
order dated 27.06.2017.

11. The Court has heard Sri A.K.
Rakhra, learned counsel for the appellant
and Sri A.S. Asthana for the respondentCorporation.

12. As far as the facts are concerned,
the same are not disputed between the
parties, inasmuch as, both the parties agree
that there is a distributionship agreement
which contains an arbritation clause and
both are bound by it. The contention of
learned counsel for the petitioner is that
once it had invoked the arbitration clause
by means of the letter dated 03.05.2014
and the respondent did not cooperate in
appointment of an arbitrator. In the
meantime, the petitioner had approached
this Court by means of the instant petition
in the month of June, 2014, thereafter, the
respondent forefeited its right to appoint
an arbitrator, consequently, the alleged
appointment of Sri A.K. Reddy by the
respondent on 09.07.2014 is illegal and all
subsequen
actions
and
proceedings
underaken by the said arbitrator are also
void and it is now for this Court to appoint
an arbitrator in exercise of the powers
conferred under Section 11 (6) of the
Arbitration and Conciliation Act, 1996.

13. Per contra, Sri Asthana has
submitted that the alleged letter dated
03.05.2014 which is the source of
invocation of the arbitration clause was not
recieved by the respondent-Corporation. It
is also submitted that once they did not
1264 INDIAN LAW REPORTS ALLAHABAD SERIES
receive the intial notice dated 03.05.2014
then even assuming the petitioner had sent
another reminder on 13.05.2014 that will
be of no consequence since a reminder
cannot be treated to be the notice invoking
arbitration. Moreover, if the reminder is
taken as the notice invoking the arbitration
then the instant petition filed before the
High Court on 05.06.2014 would be
premature, inasmuch as, 30 days would
not have lapsed since sending of the said
reminder notice.

14. It has been submitted that for the
said reason, the petition is bad and has also
additionally argued that the arbitrator was
appointed by the respondent in pursuance
of the order passed by this Court
05.06.2014.
Once
the
petitioner
participated
and
the
order
dated
27.06.2017 terminating the proceedings
under Section 25 was passed, the same
partkakes the nature of an award for which
the petitioner ought to have taken recourse
under Section 34 of the Arbitration and
Conciliation Act, 1996 and the same is not
open to be assailed in proceedings under
Section 4 (6).

15. In order to decide the controversy
its it is important to ascertain whether the
notice dated 03.05.2014 was served on the
respondent and what would be its outcome
in case if despite service the respondent
did not appoint an arbitrator and as borne
out from the record and admitted to the
parties, the arbitrator was appointed only
on 09.07.2014 after the petitioner had
already knocked the door of this Court by
filing the instant petition on 05.06.2014.

16. Before proceeding further, it will
be worthwhile to examine the relevant law
on the aforesaid subject. This issue was
considered by the Apex Court for the first
time in the case of Datar Switchgears Vs.
Tata Finance Ltd. and Another reported
2000 (8) SCC 151. Thereafter there has
been a consistent view taken by the Apex
Court which has been followed even as
late as in the year 2017 wherein a large
Bench of the Apex Court in the case of
TRF
Ltd.
Vs.
Energo
Enginerring
Projects Ltd. reported in 2017 (8) SCC
377. The relevant portion reads as under:-

24. In Deep Trading Co. v.
Indian Oil Corpn. [Deep Trading Co. v.
Indian Oil Corpn., (2013) 4 SCC 35 :
(2013) 2 SCC (Civ) 449] , the three-Judge
Bench referred to Clause 29 of the
agreement, analysed sub-sections (1), (2),
(6) and (8) of Section 11 of the Act,
referred to the authorities in Datar
Switchgears [Datar Switchgears Ltd. v.
Tata Finance Ltd., (2000) 8 SCC 151] and
Punj Lloyd Ltd. v. Petronet MHB Ltd.
[Punj Lloyd Ltd. v. Petronet MHB Ltd.,
(2006) 2 SCC 638] and came to hold that:
(Deep Trading case [Deep Trading Co. v.
Indian Oil Corpn., (2013) 4 SCC 35 :
(2013) 2 SCC (Civ) 449] , SCC p. 42,
paras 19-20)

"19. If we apply the legal
position exposited by this Court in Datar
Switchgears [Datar Switchgears Ltd. v.
Tata Finance Ltd., (2000) 8 SCC 151] to
the admitted facts, it will be seen that the
Corporation has forfeited its right to
appoint the arbitrator. It is so for the
reason that on 9-8-2004, the dealer called
upon the Corporation to appoint the
arbitrator in accordance with the terms of
Clause 29 of the agreement but that was
not done till the dealer had made
application under Section 11(6) to the
Chief Justice of the Allahabad High Court
for appointment of the arbitrator. The
appointment was made by the Corporation
only
during
the
pendency
of
the
2 All. M/S Garg Gas Service Vs. Hindustan Petroleum Corp. Ltd.
1265
proceedings under Section 11(6). Such
appointment by the Corporation after
forfeiture of its right is of no consequence
and has not disentitled the dealer to seek
appointment of the arbitrator by the Chief
Justice under Section 11(6). We answer
the above questions accordingly.

20. Section 11(8) does not help
the Corporation at all in the fact situation.
Firstly, there is no qualification for the
arbitrator prescribed in the agreement.
Secondly, to secure the appointment of an
independent and impartial arbitrator, it is
rather necessary that someone other than
an officer of the Corporation is appointed
as arbitrator once the Corporation has
forfeited its right to appoint the arbitrator
under Clause 29 of the agreement."

25. The Court accepted the legal
position laid down in Newton Engg.
[Newton Engg. and Chemicals Ltd. v.
Indian Oil Corpn. Ltd., (2013) 4 SCC 44 :
(2013) 2 SCC (Civ) 457] and referred to
Deep Trading Co. [Deep Trading Co. v.
Indian Oil Corpn., (2013) 4 SCC 35 :
(2013) 2 SCC (Civ) 449] and opined that
as the Corporation had failed to act as
required under the procedure agreed upon
and did not make the appointment until the
application was made under Section 11(6)
of the Act, it had forfeited its right of
appointment of an arbitrator. In such a
circumstance, the Chief Justice or his
designate ought to have exercised his
jurisdiction to appoint an arbitrator under
Section 11(6) of the Act. Be it noted, the
three-Judge Bench also expressly stated its
full agreement with the legal position that
has been laid down in Datar Switchgears
Ltd. [Datar Switchgears Ltd. v. Tata
Finance Ltd., (2000) 8 SCC 151]

17. From the above extraction of the
principle and the consistent view taken by
the Apex Court, it is no more res-integra
that the right of the respondent to appoint
an arbitrator commences from the time a
request is made by the petitioner and
within 30 days of the receiving of such
request and in any case not beyond the
date when the petitioner approached this
Court by filing the instant petition.

18. Thus, the cut-off date for the
respondent to appoint an arbitrator was
05.06.2014. Having said that, the question
still arises as to whether the respondent
received the letter invoking the arbitration
clause dated 03.05.2014. In case if the
answer to the aforesaid issue is "No" then
the petitioner cannot press, that the
respondent lost the right to appoint the
arbitrator upon filing of the petition before
this Court, however, in case if it is found
that the letter dated 03.05.2014 was served
then the submission of the petitioner holds
good.

19. The learned counsel for the
respondents has urged vehemently and
has taken the Court through the record
to indicate that the postal receipt which
has been annexed by the petitioner
with
the
letter
dated
03.05.2014
actually relates to the other letter by
which the petitioner had sought the
inquiry report from the respondents.
Thus, the submission is that the
petitioner while sending the letter for
seeking inquiry repor is using the said
postal receipt to state that it was the
lette dated 03.05.2014 which was sent
under the said registered cover.

20.

Though,
initially
the
respondent had taken a stand that it did
not receive the letter dated 03.05.2014
and thus even assuming that the notice
dated
13.05.2014
(reminder)
was
served it would be of no consequence.
1266 INDIAN LAW REPORTS ALLAHABAD SERIES

21. However, subsequently, it even
denied the receiving of the reminder dated
13.05.2014 and in respect thereto it again
took the stand that by the postal receipt
dated 13.05.2014, the petitioner had
sought the inquiry report and it did not
relate to the reminder letter as alleged.

22. The learned counsel for the
petitioner has streneously urged that the
respondents have been playing a mischief,
inasmuch as, they have been shifting their
stand from time to time. However, the
learned counsel for the petitioner has
drawn the attention of the Court to the
letter dated 09.07.2014 by which the
respondent had appointed the arbitrator.

23. Upon the perusal of the said letter
dated 09.07.2014 it would be interesting to
note that the said letter is written by the
Chairman and the Managing Director
informing the petitioner that Sri A.K.
Reddy has been appointed as the sole
arbitrator. What is more interesting is that
while referring to the documents, its
specifically refers to the letter dated
03.05.2014 & 13.05.2014 and it is quoted
hereinbelow as under:-

"Dear Sirs,

I refer to (i) Copy of H.P. Gas
(Liquefied Petroleum Gas) Dealership
(Domestic & Commercial) Agreement
dated 15.05.2013 entered into by and
between
M/s
Hindustan
Petroleum
Corporation Limited (Respondent) and
Shri Rajesh Kumar Garg, who is carrying
on business in the firm name/style of M/s.
Garg Gas Service, Fazalganj, Kanpur
(Claimant) (ii) Copy of Show Cause Notice
dated
14.11.2013
issued
by
the
Respondent to the Claimant (iii) Copy of
reply dated 16.12.2013 of the Claimant to
the Show Cause Notice dated 14.11.2013
(iv) Copies of letters dated 03.05.2014 and
13.05.2014 of the Claimant requesting for
appointment of an arbitrator as per
Clause
No.
39
of
the
Dealership
Agreement (v) copy of order dated
05.06.2014
passed
by
the
Hon'ble
Lucknow Bench of Allahabad High Court
in Arbitration Application No. 20 of 2014
(vi)
and
all
other
related
correspondence/documents.

By virtue of the order dated
05.06.2014
passed
by
the
Hon'ble
Lucknow Bench of Allahabad High Court
in Arbitration Application No. 20 of 2014,
as per request made by the Claimant vide
his letters dated 03.05.2014 and in terms
of Clause 39 of the Dealership Agreement,
I hereby appoint Shri K.A. Reddy, an
officer of the Corporation, as Sole
Arbitrator ot adjudicate the disputes and
differences between the parties.

24. From the perusal of the aforesaid
quoted paragraphs it would indicate that it
refers to the copies of the letter dated
03.05.2014 and 13.05.2014 as sent by the
claimant requesting appointment of an
arbitrator and it further provides that as per
the request made by the claimant vide his
letters dated 03.05.2014 and 13.05.2014 in
terms of Clause 39 of the Dealership
Agreement.

25. In light of the aforesaid lettter the
stand taken by the respondent that it did
not receive the aforesaid letter dated
03.05.2014 and 13.05.2014 is diluted. In
furtherance of the letter dated 09.07.2014,
the arbitrator also sent a notice dated
04.08.2014
addressed
to
the parties
informing them of his appointment as the
sole arbitrator and he also refers to the
letter for the Chairman and Managing
Direcotr of the respondent-Corporation
dated 09.07.2014 which also makes a
2 All. M/S Garg Gas Service Vs. Hindustan Petroleum Corp. Ltd.
1267
mention of the letters dated 03.05.2014
and 13.05.2014 sent by the claimant.

26. Once a senior and resposible
Authority of the respondent-Corporation
writes a letter appointing an arbitrator
wherein there is a clear reference to the
letters dated 03.05.2014 and 13.05.2014,
this Court is of the view that the stand
taken by the respondent stating that it did
not
receive
the
letter
pales
into
insignificance. Admission of a party is the
best piece of evidence.

27. Sri Asthana, learned counsel
appearing for the respondent-Corporation
could not give any plausible explanation as
to why the reference of the letters were
given in the appointment order of Sri A.K.
Reddy when the respondent-Corporation
did not receive the aforesaid letters.
Moreover, from the perusal of the
language written in the letter dated
09.07.2014 it is clear that while appointing
the sole arbitrator, the aforementioned
documents/letters were present since the
CMD specifically refers to the said
documents while taking its decision.

28. In light of the aforesaid, this
Court is clearly of the view that the stand
taken by the respondent that it did not
receive the aforesaid letters cannot be
countenanced.

29. Once it is so held, now it is to be
examined that whether despite the fact, the
petitioner had approached this Court on
05.06.2014 could the respondent appoint
the arbitrator on the 09.07.2014 and
whether this Court by means of the order
dated 05.06.2014 directed the respondent
to appoint an arbitrator. The order dated
05.06.2014 has already been reproduced
hereinabove.

30. From the perusal of the order
dated 05.06.2014 passed by this Court, it
transpires that the Court had recorded the
submissions of the learned counsel for the
parties and thereafter its stated as under:-

" Therefore, in the interest of
justice, I hereby direct the opposite party
to take suitable action in the matter,
meanwhile."

31. This above quoted extract from
the order dated 05.06.2014 is to be read in
context with the submission of the parties
which is mentioned in the paragraph
preceding the said order dated 05.06.201.
The Court had noted the submission of the
learned counsel for the responent that till
date i.e. 05.06.2014 it did not receive the
request for appointment of an arbitrator
and the moment it would receive, it shall
be properly reply forthwith. Thus, at best,
what can be culled out is that the
respondent by then had not received the
letter requesting for an appointment of an
arbitrator and the learned counsel for the
respondents submitted that the moment
they did receive they would reply to it
forthwith and this is what the Court held
directing the opposite party to take suitable
action in the matter. As far as the legal
position as extracted hereinabove is
concerned, it is clear that the moment upon
making a request and after a lapse of 30
days, the party approaches the Court under
Section 11 then the right of the other party
to appoint an arbitrator ceases.

32. This legal position which is
settled cannot be ignored and thus, upon
the perusal of the material on record, this
Court finds that this Court had not directed
or granted jurisdiction to the respondent to
appoint an arbitrator. Thus, what can be
deduced out is that the petitioner had made
1268 INDIAN LAW REPORTS ALLAHABAD SERIES
the request for appointment of an arbitrator
by means of the letter dated 03.05.2014,
the same was not responded by the
opposite party, thereafter, the petitioner
approached this Court by filing a petition
after 30 days from invoking the arbitration
clause. The arbitrator Sri A.K. Reddy was
appointed on 09.07.2014 which in light of
the decision as referred to hereinabove
TRF (Supra) is not justified nor valid,
accordingly, it is so held and the first
question framed by the Cour is answered
accordingly.

33. Once it is found that the
respondent did not possess the jurisdiction
or the authority to appoint the arbitrator,
and the petitioner had invoked the
jurisdiction of this Court by filing the
instant petition, however, in the meantime,
many subsequent developments occurred
including the insistence of the said
arbitrator, requiring the petitioner to
participate, the reluctance of the petitioner
to submit to his jurisdiction and ultimately
termination of the proceedings by the said
arbitrator by means of its order dated
27.06.2017.

34. Considering the fact that the
appointment of Sri A.K. Reddy in the first
place was in excess of jurisdiction and
contrary to the settled legal provisions and
principles, this Court is of the view that no
jurisdiction could be conferred on the said
arbitrator and any proceedings undertaken
by him cannot be legitimatized. Once his
appointment is found to be bad in the eyes
of law, all his actions would be rendered
null and void including the sittings held by
him and passing of the order dated
27.06.2017 terminating the proceedings.

35. This Court is fortified in its view
and draw strength from the decision of the
Apex Court in the case of Perkins
Eastman Achitects DPC and Others Vs.
HSCC (India) Ltd. reported in AIR 2020
SC 59 wherein the question before the
Apex Court, was what is the power that
can be exercised by a court under Section
11 (6) when the appointment of the
arbitrator is made by the respondent and
whether a party is to be left to raise the
challenge at an appropriate stage in terms
of the remedies available in law. The Apex
Court relying upon another decision in the
case of Walter Bau AG reported in 2015
(3) SCC 100 framed the question and
thereafter noticing the legal position has
held as under. The relevant portion is
being reproduced hereinafter:-

21. The further question that
arises is whether the power can be
exercised by this Court under Section 11
of the Act when the appointment of an
arbitrator has already been made by the
respondent and whether the appellant
should be left to raise challenge at an
appropriate stage in terms of remedies
available in law. Similar controversy was
gone into by a Designated Judge of this
Court
in
Walter
Bau
AG
MANU
SC/0053/2015 : (2015) 3 SCC 800 and the
discussion on the point was as under:-

"9. While it is correct that in
Antrix MANU/SC/0514/2013 : (2014) 11
SCC
560
and
Pricol
Ltd.
MANU/SC/1165/2014 : (2015) 4 SCC 177,
it was opined by this Court that after
appointment of an arbitrator is made, the
remedy of the aggrieved party is not under
Section 11 (6) but such remedy lies
elsewhere and under different provisions
of the Arbitration Act (Sections 12 and
13), the context in which the aforesaid
view was expressed cannot be lost sight of.
In Antrix MANU/SC/0514/2013 : (2014)
11
SCC
560,
appointment
of
the
2 All. M/S Garg Gas Service Vs. Hindustan Petroleum Corp. Ltd.
1269
arbitrator, as per the ICC Rules, was as
per the alternative procedure agreed upon,
whereas
in
Pricol
Ltd.
MANU/SC/1165/2014 : (2015) 4 SCC 177,
17., the party which had filed the
application under Section 11 (6) of the
Arbitration Act had already submitted to
the jurisdiction of the arbitrator. In the
present case, the situation is otherwise.

10. Unless the appointment of
the arbitrator is ex facie valid and such
appointment satisfies the Court exercising
jurisdiction under Section 11 (6) of the
Arbitration Act, acceptance of such
appointment as a fait accompli to debar
the jurisdiction under Section 11 (6)
cannot be countenanced in law. In the
present case, the agreed upon procedure
between the parties contemplated the
appointment of the arbitrator by the
second party within 30 days of receipt of a
notice from the first party. While the
decision
in
Datar
Switchgears
Ltd.
MANU/SC/0651/200 : (2000) 8 SCC 151
may have introduced some flexibility in the
time frame agreed upon by the parties by
extending it till a point of time anterior to
the filing of the application under Section
11 (6) of the Arbitration Act, it cannot be
lost sight of that in the present case the
appointment of Shri Justice A.D. Mane is
clearly contrary to the provisions of the
Rules governing the appointment of
arbitrators by ICADR, which the parties
had agreed to abide by in the matter of
such appointment. The option given to the
respondent Corporation to go beyond the
panel submitted by ICADR and to appoint
any person of its choice was clearly not in
the contemplation of the parties. If that be
so, obviously, the appointment of Shri
Justice A.D. Mane is non est in law. Such
an appointment, therefore, will not inhibit
the exercise of jurisdiction by this Court
under Section 11 (6) of the Arbitration Act.
It cannot, therefore, be held that the
present proceeding is not maintainable in
law. The appointment of Shri Justice A.D.
Mane made beyond 30 days of the receipt
of notice by the petitioner, though may
appear to be in conformity with the law
laid down in Datar Switchgears Ltd.
MANU/SC/0651/2000 : (2000) 8 SCC 151,
is clearly contrary to the agreed procedure
which required the appointment made by
the respondent Corporation to be from the
panel submitted by ICADR. The said
appointment, therefore, is clearly invalid
in law."

22. It may be noted here that the
aforesaid view of the Designated Judge in
Walter Bau AG MANU/ SC/0053/2015 :
(2015) 3 SCC 800 was pressed into service
on behalf of the appellant in TRF Limited
MANU/SC/0755/2017 : (2017) 8 SCC 377
and
the
opinion
expressed
by
the
Designated Judge was found to be in
consonance with the binding authorities of
this Court. It was observed:-

"32. Mr Sundaram, learned
Senior Counsel for the appellant has also
drawn inspiration from the judgment
passed by the Designated Judge of this
Court
in
Walter
Bau
AG
MANU/SC/0053/2015 : (2015) 3 SCC 800,
where the learned Judge, after referring to
Antrix Corpn. Ltd. MANU/SC/0514/2013 :
(2014) 11 SCC 560, distinguished the
same and also distinguished the authority
in Pricol Ltd. V. Johnson Controls
Enterprise Ltd. MANU/SC/1165/2014 ;
(2015) 4 SCC 177 and came to hold that:
(Walter
Bau
AG
case
MANU/SC/0053/2015 : (2015) 3 SCC 800
SCC p. 806, para 10)

"10. Unless the appointment of
the arbitrator is ex facie valid and such
appointment satisfies the Court exercising
jurisdiction under Section 11 (6) of the
Arbitration Act, acceptance of such
1270 INDIAN LAW REPORTS ALLAHABAD SERIES
appointment as a fait accompli to debar
the jurisdiction under Section 11 (6)
cannot be countenanced in law. ..."

33. We may immediately state
that the opinion expressed in the aforesaid
case is in consonance with the binding
authorities
we
have
referred
to
hereinbefore."

25.
In
the
aforesaid
circumstances, in our view a case is made
out to entertain the instant application
preferred by the Applicants. We, therefore,
accept the application, annul the effect of
the letter dated 30.07.2019 issued by the
respondent and of the appointment of the
arbitrator. In exercise of the power
conferred by section 11 (6) of the Act, we
appoint Dr. Justice A.K. Sikri, former
Judge of this Court as the sole arbitrator
to decide all the disputes arising out of the
Agreement dated 22.05.2017, between the
parties,
subject
to
the
mandatory
declaration made under the amended
Section 12 of the Act with respect to
independence and impartiality and the
ability to devote sufficient time to complete
the arbitration within the period as per
Section 29A of the Act. A copy of the
Order be dispatched to Dr. Justice A. K.
Sikri at 144, Sundar Nagar, New Delhi -
110003 (Tel. No.:- 011 - 41802321). The
arbitrator shall be entitled to charge fees
in terms of the Fourth Schedule to the Act.
The fees and other expenses shall be
shared by the parties equally.

36. Thus, in light of what has been held
above, this Court finds that the appointment of
Sri A.K. Reddy was against the provision of
law and thus it conferred no jurisdiction on
him and all proceedings held by him were
rendered null and void. Thus in light of the
above discussions the objections of the
respondent are rejected. Since there is no
dispute in between the parties regarding the
arbitration clause and that there are live
disputes between the parties, accordingly, this
Court in exercise of the powers conferred
under Section 11 (6) of the Arbitration and
Conciliation Act, 1996 proposes the name of
Hon'ble Justice Anirudh Singh (Rtd. Judge) of
this Court who is residing at 1108 I Block,
Ganga Apartment, Sector 4, Gomti Nagar
Vistar, Lucknow, Pin Code No. 226010, Mob.
9454412315 to appoint as a sole arbitrator.

37. The learned counsel for the petitioner
shall provide a complete set of paper book
with the office to be forwarded to the proposed
arbitrator for seeking his consent in terms of
Section 12 (3) of the Act of 1996.

38. Accordingly, list this matter on
19.02.2020.
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(2020)02ILR A1270

ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 31.01.2020

BEFORE
THE HON'BLE ABDUL MOIN, J.

Contempt No. 249 of 2020

Lalsar ...Applicant
Versus
Rohit
Kumar
Maurya,
Tehsildar,
Balrampur ...Opposite Party

Counsel for the Applicant:
Alok Kumar Tripathi, Anurakt Singh,
Deepak Kumar Pandey

Counsel for the Opposite Parties:
-----

A Contempt of Courts Act, 1971 - section
2(b) - civil contempt - an act of
contempt to be made out against the
contemnor - there has to be a deliberate
and willful disobedience and defiance of