Case Reference
:
SLPs(C) Nos.11522-26 of 1999 with No.19549 of 1999
with WP (C) No.81 of 2000 and SLPs (C) Nos.11317, 12323, 8563
and 8581 of 1999, decided on August 21, 2000
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| The learned Judges observed that
in order to decide the Special Leave Petitions before them
it would be necessary to find out the true intention of the
legislature in substituting the Arbitration Act, 1940, with
the Arbitration and Conciliation Act, 1996. The increasing
growth of global trade and delays in disposal of cases in
courts in several countries made it imperative to have the
perception of an alternative dispute resolution system, more
particularly in the matter of commercial disputes. The Indian
Parliament enacted the Arbitration and Conciliation Act,1996,
(for short, “the Act”) on the UNCITRAL Model and
therefore in interpreting any provisions of the Act, the courts
must not ignore the objects and purpose of the Act. The Act
is enacted for the purpose of limiting the intervention of
courts in an arbitral process to the minimum to achieve the
object of expeditious resolution of disputes, so that trade
and commerce are not affected on account of litigations before
a court.
When an application is made to the Chief Justice or his nominee
for appointment of an Arbitrator, it is imperative for the
Chief Justice or nominee to bear in mind the legislative intent
that the arbitral process should be set in motion without
any delay and all contentious issues are left to be raised
before the Arbitral Tribunal itself. At such a stage, if would
not be appropriate for the Chief Justice or his nominee to
entertain any contentious issues and decide the same. Section
13 (1) of the Act provides that a party would be free to agree
on a procedure for challenging an Arbitrator. Sub-Section
(2) of the said Section provides that failing any such agreement,
a party intending to challenge an Arbitrator, either on grounds
of independence or impartiality or on the grounds of lack
of requisite qualifications, shall within 15 days of becoming
aware of the constitution of the Arbitral Tribunal send a
written statement for the challenge to the Arbitral Tribunal
itself. Section 13(3) provides that unless the Arbitrator
withdraws or the other party agrees to the challenge, the
Arbitral Tribunal itself shall decide on the challenge. Sub-Section
(4) of section 13 mandates an Arbitrator to continue the arbitral
proceedings and to make an award. Section 16 empowers the
Arbitral Tribunal to rule on its own as well as on objections
with respect to the existence or validity of the arbitration
agreement. Conferment of such power on the Arbitrator under
the Act indicates the intention of the legislature and its
anxiety to see that the arbitral process is set in motion.
This being the legislative intent, if would be proper for
the Chief Justice or his nominee to appoint an Arbitrator
without wasting any time or entertaining any contentious issues
at that stage, by a party objecting to the appointment of
an Arbitrator. If it is held that an order under Section 11
(6) is a judicial or quasi-judicial order then the said order
would be amenable to judicial intervention and any reluctant
party may frustrate the entire purpose of the Act by adopting
dilatory tactics in approaching a Court of law even against
an order of appointment of an Arbitrator.
The learned Judges observed that the nature and function
performed by the Chief Justice or his nominee under Section
11(6), being essentially to aid the constitution of the Arbitral
Tribunal, cannot be held to be a judicial function as otherwise
the legislature could have used the expression “court”
or “judicial authority” instead of choosing the
expression “ the Chief Justice or his nominee”.
Under the English Arbitration Act, 1996 it is the court which
has been vested with the function of appointment of an Arbitrator
upon the failure of the agreed appointment procedure, whereas
under the Arbitration and Conciliation Act, 1996 the power
of appointment of Arbitrator is vested with the Chief Justice
or his nominee. Since the order of appointment of the Arbitrator
passed by the Chief Justice or his nominee is administrative
in nature and the Chief Justice or his nominee does not function
as a Court or Tribunal, the said order is not amenable to
the jurisdiction of the Supreme Court under Article 136 of
the Constitution.
In the event when the Chief Justice or his nominee refuses
erroneously to make the appointment of an Arbitrator under
Section 11(6), an intervention could be possible by a court
in the same way as an intervention is possible against an
administrative order of the executive. In other words, it
would be a case of non-performance of duty by the Chief Justice
or his nominee, and therefore, a mandamus would lie.
The Special Leave Petitions filed in this regard were dismissed
by the court.
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