The Supreme Court of India judgment on 22nd march 2013 in M/ S Deepa Trading Company v. M/S Indian Oil Corporation and others in Civil Appeal No. 2673 of 2013. If the party to an arbitration agreement does not exercise its right to appoint an arbitrator within the time specified in the agreement, and appoints the Arbitrator after the deadline, then the opposite party need not accept the same and has the right to get the arbitrator appointed through the Court. The Apex court in the above mentioned case set aside the order of the High Court and ordered reference of the application of the Petitioner Deepa Trading to the Allahabad High Court for fresh consideration of the matter again. The court ordered Allahabad High court to pass appropriate orders under Section 11 (6) of the Arbitration and Conciliation Act, 1996. The matter in the above appeal petition pertained to the appointment of the arbitrator under section 11 of the Act. The petitioner and Respondent Corporation had entered into a dealership agreement in 1998. This agreement had provided clause 29 that provided reference of dispute to the arbitrator. A dispute arose between petitioner and the respondent after which the petitioner issued notice to the respondent to appoint the arbitrator for the resolution of dispute. The respondent did not appoint the same and the petitioner thereafter filed petition to the Chief Justice of Allahabad High court under section 11 (6) of the arbitration act 1996 for the appointment of the arbitrator in accordance to the agreement. Meanwhile the respondent also appointed arbitrator in accordance to the agreement after the filing of application by the petitioner under section 11 (6). The Chief Justice upon hearing of the petition dismissed the petition and observed that there was no need to appoint fresh arbitrator as the respondents had already appointed the arbitrator. The petitioner questioned this decision in the present appeal and alleged that the respondent had forfeited their right to appoint arbitrator after having not appointed the arbitrator at the time when the demand was made and at the time when the application under section 11 (6) was made. The petitioner contended that the appointment of the arbitrator by the respondent after the filing of application is of no legal consequence and the Chief Justice ought to have made the appointment in accordance to section 11. Section 11 (6) provides that if any of parties fails to appoint an arbitrator in accordance to the agreed procedure or fails to reach an agreement in respect of the procedure or person fails to do the function entrusted to him under the procedure than the any of parties may request chief justice or any person designated to take necessary measures for the appointment of the arbitrator. The Apex Court accepted the contentions of the petitioner and relying upon Datar Switchgears Ltd. v. Tata Finance Ltd. [(2000) 8 SCC 151] observed that the right to appoint arbitrator is not forfeited in case the opposite party does not make the appointment within 30 days of the demand. The court said that this right in fact continues but the opposite party should make the appointment of arbitrator before the first party makes the application under section 11 (6) to the court for the appointment of the arbitrator. The court further said that if the opposite party does not make the appointment till the time the application under section 11 (6) is made than the right to appoint arbitrator ceases and is forfeited. The court after looking into facts and circumstances of the case observed that respondents did not make the appointment until the application was made under section 11 (6) of arbitration act and thus forfeited their right to appoint arbitrator. The court held that the appointment of arbitrator was made during the pendency of petition and thus was of no legal consequence as it was made after the forfeiture of the right to appoint the Arbitrator. The court held that thus petitioner were not disentitled to seek appointment of the arbitrator by Chief justice and the Chief Justice ought to have exercised his jurisdiction in the appointment of the arbitrator. The apex court set aside the order of the High court and ordered fresh consideration of matter again by the Allahabad High court for the appointment of the Arbitrator.
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