Supreme Court of India
M/S Durga Welding Works vs Chief Engineer Railway … on 4 January, 2022Author: Ajay Rastogi
Bench: Ajay Rastogi, Abhay S. Oka
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO(S).54 OF 2022
(Arising out of SLP(Civil) No(s). 28682 of 2019)
M/S. DURGA WELDING WORKS ….APPELLANT(S)
CHIEF ENGINEER, RAILWAY
ELECTRIFICATION, ALLAHABAD & ANR. …..RESPONDENT(S)
1. Leave granted.
2. The instant appeal has been filed assailing the order dated 26 th
July, 2019 declining to appoint an Arbitrator in exercise of its
Signature Not Verified
Digitally signed by
power under Section 11(6) of the Arbitration and Conciliation Act,
1996(hereinafter being referred to as “the Act”).
3. The seminal facts not in dispute are that the tender of the
appellant was accepted and the same was communicated by letter
dated 30th November, 2006 in reference to which a contract
agreement was executed between the parties containing clauses 63
and 64 of the general conditions of contract containing the clause of
arbitration for settlement of claims and/or disputes between the
parties. Since there were claims which could not be settled, the
appellant served a legal notice dated 3rd August, 2009 for
appointment of an Arbitrator and for settlement of claims.
Although, there was no express reference made of clauses 63 and
64 in the notice, but the pith and substance of the notice dated 3 rd
August, 2009 was for settlement of disputes through the process of
arbitration in terms of the clause of arbitration under general
conditions of agreement which is a part of the contract agreement
executed between the parties.
4. It is not disputed that the notice dated 3 rd August, 2009 was
duly served upon the respondents. It is alleged that since the
respondents failed to appoint an arbitrator pursuant to notice dated
3rd August 2009, Arbitration Petition(ARBP No. 61 of 2009) came to
be filed on 23rd October, 2009 in the High Court of Orissa for
appointment of an Arbitrator under Section 11(6) of the Act.
5. It reveals from the record that just after filing of the arbitration
petition, the appellant has completely forgotten of taking action in
furtherance thereto and it was never in notice of the respondents of
such petition being filed since no notice was served at any stage.
6. In the meanwhile, the respondents vide letter dated 28 th
January, 2010, in response to the letter of the appellant dated 3 rd
August, 2009 asked the appellant to select two names from a panel
of four persons.
7. It is alleged that immediately thereafter, on 17 th February
2010, Miscellaneous Case No. 4 of 2010 was filed in Arbitration
Petition No. 61 of 2009 seeking an order restraining the
respondents from appointing an Arbitrator and that application too
remained pending and no action was taken up by the appellant to
pursue either the Arbitration Petition No. 61 of 2009 or the
Miscellaneous Case No. 4 of 2010 before the High Court.
8. In the meanwhile, by letter dated 28 th August 2010, two
officers from the panel suggested by the respondents were selected
by the appellant and in furtherance thereto, the respondents
constituted an Arbitration Tribunal by letter dated 24 th September,
2010. The appellant thereafter appeared before the Arbitral
Tribunal on 25th October, 2010 and preferred statement of claim.
The respondents also submitted their statement of defence on 15 th
9. The appellant thereafter appeared before the Arbitral Tribunal
on 27th December, 2011 and submitted an application that the
Tribunal has not been nominated within the stipulated time and
hence, the constitution of the Arbitral Tribunal is not valid and
further submitted that the Tribunal should not proceed with the
arbitration proceedings. The fact still remains that the arbitration
petition filed by the appellant on 23rd October, 2009 has not seen
the light of the day except the fact that it was filed in the Registry of
the High Court.
10. Since the Arbitral Tribunal was constituted, with consent of
the appellant, the Tribunal proceeded with the arbitration
proceedings and since the appellant failed to participate despite the
opportunity being afforded, exparte award came to be passed on
21st June, 2013 rejecting the claim of the appellant. The fact is that
finally in the arbitration petition filed by the appellant, notices were
issued to the respondents by the High Court in the year 2016,
almost 3 years after passing of the exparte award dated 21 st June,
2013. The High Court, taking note of such peculiar facts and
circumstances, dismissed the arbitration petition by an Order dated
26th July, 2019 with liberty to the appellant to submit its objections
under Section 34 or 37 of the Act, if so advised.
11. We have heard learned counsel for the parties and with their
assistance perused the material available on record.
12. The exposition of legal principles is indeed well settled by this
Court in Datar Switchgears Ltd. Vs. Tata Finance Ltd. & Anr. 1
followed in Punj Lloyd Ltd. Vs. Petronet MHB Ltd.2 that once an
application under Section 11(6) of the Act has been filed for
appointment of an Arbitrator before the High Court, the
respondents forfeited their right to appoint an Arbitrator and the
1 2000(8) SCC 151
2 2006(2) SCC 638
High Court alone holds jurisdiction to appoint an Arbitrator in
exercise of power under Section 11(6) of the Act. Indisputedly, the
appointment of an Arbitrator was made by the respondents after
arbitration petition was filed by the appellant under Section 11(6) of
the Act in the Registry of the High Court on 23rd October, 2009.
13. This Court cannot be oblivious of the peculiar facts and
circumstances brought to our notice that after filing of an
arbitration petition on 23rd October 2009 in the Registry of the High
Court, the appellant completely slept over the matter and the
respondents were never served of any notice of the Arbitration
Petition (ARBP No. 61 of 2009) filed before the High Court of Orissa.
At the given time, when the respondents called upon the appellant
to suggest and select two names out of the panel of four for
constitution of the Arbitral Tribunal, the appellant vide letter dated
28th August, 2010 selected two officers from the panel suggested by
the respondents. Pursuant thereto, the Arbitral Tribunal was
constituted by the respondents vide letter dated 24 th September,
2010 and the appellant thereafter appeared before the Arbitral
Tribunal on 25th October, 2010 and submitted his statement of
claim and in furtherance, statement of defence was submitted by
14. The fact still remains that except the letter being once sent by
the appellant on 27th December, 2011 informing of the arbitration
petition being filed under Section 11(6) of the Act before the High
Court, no steps were taken thereafter to pursue his arbitration
application and since the appellant had not participated before the
Arbitral Tribunal after filing of the statement of claim, exparte
award came to be passed by the Arbitral Tribunal on 21 st June,
2013. It may be noticed that notices were issued for the first time
by the High Court of the arbitration petition filed by the appellant in
the year 2016 almost 3 years after passing of the exparte award
dated 21st June, 2013.
15. In the given facts and circumstances, the High Court was not
inclined to exercise its jurisdiction under Section 11(6) of the Act for
appointment of an Arbitrator and dismissed the petition by an
Order dated 26th July, 2019 with liberty to the appellant to submit
objections against the exparte award dated 21st June, 2013 under
Section 34 or 37 of the Act, if so advised.
16. In our considered view, so far as the question of law is
concerned, certainly being settled that after the application has
been filed for appointment of an Arbitrator under Section 11(6) of
the Act, before the High Court the respondents forfeited their right
to appoint an Arbitrator under the clause of arbitration thereafter
but from the narration of facts which has been noticed by us, we
are of the view that no error was committed by the High Court in
dismissing the petition filed under Section 11(6) of the Act for
appointment of an Arbitrator by an Order dated 26 th July, 2019.
17. Consequently, the appeal fails and accordingly dismissed.
18. Pending application(s), if any, stand disposed of.
(ABHAY S. OKA)
JANUARY 04, 2022