ACC LIMITED (FORMERLY KNOWN AS THE ASSOCIATED CEMENT CO. LTD.) v. GLOBAL CEMENTS LTD

HELD: 1.1. Section 14 of the Arbitration and Conciliation Act, 1996 provides for the circumstances in C which the mandate of the arbitrator is to terminate. It says that the mandate of an arbitrator will end when it becomes impossible for him to perform his functions de facto or de jure or for some other reasons he fails to act without undue delay or withdraws from office or the D parties agree to terminate his mandate. Section 15(2) of the Act provides that where a substitute arbitrator has to be appointed due to termination of the mandate of the previous arbitrator, the appointment must be made according to the rules that were applicable to the E appointment of the arbitrator being replaced. No further application for appointment of an independent arbitrator under Section 11 will lie where there has been compliance with the procedure for appointment of a substitute arbitrator. On appointment of the substitute F arbitrator in the same manner as the first, no application for appointment of independent arbitrator under Section 11 could be filed. Of course, the procedure agreed upon by the parties for the appointment of the original arbitrator is equally applicable to the appointment of a G substitute arbitrator, even if the agreement does not specifically say so. [Para 14] [224-F-H; 225-A-B] Yashwitha Constructions (P.) Ltd. v. Simplex Concrete Piles India Ltd. (2006) 6 SCC 204: 2006 (3) Suppl. SCR 96 - referred to. H ACC LTD. (FORMERLY KNOWN AS THE ASSTD. CEMENT CO. 217 LTD.) v. GLOBAL CEMENTS LTD.

1.2. Sections 14 and 15 provide the grounds for A termination of the mandate of the arbitrator on the ground of incapability of the arbitrator to act or if he withdraws from his office or when the parties agree to the termination of the mandate of the arbitrator. Section 15(2) states that a substitute arbitrator shall be appointed as B per the rules that were applicable to the appointment of the arbitrator bein_g replaced. Section 15(2), therefore, has to be given a liberal interpretation so as to apply to all possible circumstan~es under which the mandate may be terminated. Section 11 (6) would not apply only if it is c established _that parties had intended not to supply the vacancy occurred due to the inability of the arbitrator to resolve the dispute or due to whatever reasons but that intention should be clearly spelt out from the terms of the arbitration clause in the Agreement. [Paras 15, 17] [225- C-E; 226-A-B] 0 \ San-A Trading Company Ltd. v. IC Textiles Ltd. (2006) Arb. LR 11 - referred to.

1.3. The legislative policy embodied in Sections 14 E and 15 of the Act is to facilitat' the parties to resolve the dispute by way of arbitration. The arbitration clause if clearly spells out any prohibition or debarment, the court has to keep its hands off and there is no question of persuadjng or pressurising the parties to resolve the F dispu, te ·py a substitute arbitrator. Generally, this stands out as an exception and that should be discernible from the language of the aroitration clause and the intention of the parties. In the absence--of such debarment or prohibition of appointment of a substitute arbitrator, the G court's duty is to give effect to the policy of law that is to promote efficacy of arbitra, tion. [Para 18] [226-B-D] Situ Sahu and Ors .. v. State of Jharkhand and Ors. (2004) 8 SCC 340i 2004 (4) Suppl. SCR 258; lbrahimpatnam Taluk Vyavasaya Cootie Sanghem v. K. Suresh Reddy and Ors. H 218 SUPREME COURT REPORTS [2012] 6 S.C.R.