The High Court
Case Details
IN THE HIGH COURT OF ORISSA AT CUTTACK ARBP No. 26 of 2023 & Batch In ARBP Nos.26, 28 & 29 of 2023 M/s. R.P. Construction, represented through its Managing Partner, Sri Rabindra Kumar Ray, aged about 61 years, Son of Jena, At- Tolakapada, P.O.- Satyabhamapur, Kashinath Tankapani Road, Bhubaneswar, Dist- Khurdha, Presently residing at Bhingarpur, P.O.- Bhatpatna, P.S.- Balianta, District- Khurdha In ARBP Nos.27 & 30 of 2023 Rabindra Prasad Barik, represented through its Proprietor Sri Rabindra Prasad Barik, aged about 59 years, Son of Late Gangadhar Barik, At- Haripur, P.O.- Korkora, Via- Arnapal, P.S.- Bhadrak, Dist- Bhadrak -versus- ….Petitioners M/s. Odisha State Disaster Management Authority, Represented through its Managing Director, Rajiv Bhawan, Unit- V, Bhubaneswar- 751001, Dist- Khurdha ….Opposite Party Advocates Appeared in these cases: For the Petitioners For the Opposite Party : :
Legal Reasoning
Mr. Sandeep Parida Mr. Sonak Mishra CORAM: HON’BLE THE CHIEF JUSTICE JUDGMENT 11.09.2024 Page 1 of 8 1. There were agreements between the petitioner and the opposite party, i.e., M/s. Odisha State Disaster Management Authority (OSDMA) executed on 01.11.2011 containing the arbitration clause for resolution of disputes arising out of the said agreements. It is not disputed that the sole Arbitrator Mr. L. Pangari, Senior Advocate was appointed with the consent of the parties on 05.02.2020. Later, the learned Arbitrator withdrew himself from the office of the Arbitrator as recorded in Order No.5 dated 11.03.2022 (Annexure-5 to this application). Consequent upon withdrawal of Mr. Pangari, learned Arbitrator from the office of the Arbitrator, the petitioner put the opposite party on a notice for appointment of a substitute arbitrator. As no substitute arbitrator could be appointed by the parties, the present petitions have been filed under Section 15(2) read with 11 of the Arbitration and Conciliation Act, 1996 (in short ‘the Act’) for appointment of a substitute arbitrator. 2. Section 14 of the Act prescribes inter alia that the mandate of an arbitrator shall terminate and he would be substituted by another arbitrator, if he withdraws from his office or parties agree to terminate of his mandate. Section 15 of the Act deals with termination of mandate and substitution of arbitrator, which reads as under: “Termination of mandate and substitution of arbitrator. (1) In addition to the circumstances referred to in section 13 or section 14, the mandate of an arbitrator shall terminate— (a) where he withdraws from office for any reason; or Page 2 of 8 (b) by or pursuant to agreement of the parties. (2) Where the mandate of an arbitrator terminates, a substitute arbitrator shall be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced. (3) Unless otherwise agreed by the parties, where an arbitrator is replaced under sub-section (2), any hearings previously held may be repeated at the discretion of the arbitral tribunal. (4) Unless otherwise agreed by the parties, an order or ruling of the arbitral tribunal made prior to the replacement of an arbitrator under this section shall not be invalid solely because there has been a change in the composition of the arbitral tribunal.” (Emphasis supplied) 3. It is with reference to sub-Section 2 of Section 15 of the Act that this application has been filed by the petitioner for appointment of a substitute arbitrator, in these applications. 4. Mr. Sandeep Parida, learned counsel appearing on behalf of the petitioner with reference to sub-Section 2 of Section 15 of the Act has submitted that a substitute arbitrator, in the given circumstance, is required to be appointed in accordance with the rules/laws applicable to the appointment of the arbitrator being replaced. He has submitted that following the provisions of the Act, the petitioner had put the opposite party on notice for appointment of an arbitrator and as the parties failed to appoint a substitute arbitrator, this application has been filed under Section 15(2) read with Section 11 of the Arbitration and Conciliation Act, 1996. Mr. Parida has placed reliance on a Supreme Court’s decision in case of Page 3 of 8 Sailesh Dhairyawan v. Mohan Balkrishna Lulla; (2016) 3 SCC 619. 5. Mr. Sonak Mishra, learned counsel appearing on behalf of the opposite party has not disputed the above legal position and has assisted this Court by referring to another Supreme Court’s decision in case of Yashwith Construction (P) Ltd. v. Simplex Concrete Piles India Ltd.; (2006) 6 SCC 204. 6. I have perused the contents of the application, the materials available on record and have examined the relevant statuory provisions and the laid down by the Supreme Court in case of Yashwith Construction (supra) and Sailesh Dhairyawan (supra). In the case of Yashwith Construction (supra) the Supreme Court has held that the withdrawal of an arbitrator from the office for any reason is within the purview of Section 15(1)(a) of the Act and, therefore, Section 15(2) would be attracted and a substitute arbitrator has to be appointed according to the rules that are applicable for appointment of arbitrator to be replaced. 7. Clarifying further, the Supreme Court has held that what Section 15(2) contemplates is an appointment of the substituted arbitrator or the replacing of the arbitrator by another according to the ‘rules’ that were applicable to the appointment of the original arbitrator who was being replaced. The term ‘rules’ in Section 15(2), the Supreme Court has held, refers to the provision for appointment contained in the arbitration agreement or any rules of any institution under which the disputes were referred to arbitration. Page 4 of 8 8. In case of Sailesh Dhairyawan (supra), the Supreme Court, speaking through Justice Nariman, J. has held in paragraphs 19 and 21 as under: “19. The scheme of Section 8 of the 1940 Act and the scheme of Section 15(2) of the 1996 Act now need to be appreciated. Under Section 8(1)(b) read with Section 8(2) of the 1940 Act if a situation arises in which an arbitrator refuses to act, any party may serve the other parties or the arbitrators, as the case may be, with a written notice to concur in a fresh appointment, and if such appointment is not made within 15 clear days after service of notice, the Court steps in to appoint such fresh arbitrator who, by a deeming fiction, is to act as if he has been appointed by the consent of all parties. This can only be done where the arbitration agreement does not show that it was intended that the vacancy caused be not supplied. However, under Section 15(2), where the mandate of an arbitrator terminates, a substitute arbitrator “shall” be appointed. Had Section 15(2) ended there, it would be clear that in accordance with the object sought to be achieved by the Arbitration and Conciliation Act, 1996 in all cases and for whatever reason the mandate of an is arbitrator mandatorily to be appointed. This Court, however, in the judgments noticed above, has interpreted the latter part of the section as including a reference to the arbitration agreement or arbitration clause which would the then be “the rules” applicable appointment of the arbitrator being replaced. It is in this manner that the scheme of the repealed Section 8 of the 1940 Act is resurrected while construing Section 15(2) of the 1996 Act. The arbitration agreement between the parties has now to be seen, and it is for this reason that unless it is clear that an arbitration agreement on the facts of a particular case excludes either expressly or by necessary implication the substitution of an arbitrator, whether named or otherwise, such a substitution must take place. In fact, terminates, a substitute arbitrator to Page 5 of 8 sub-sections (3) and (4) of Section 15 also throw considerable light on the correct construction of sub- section (2). Under sub-section (3), when an arbitrator is replaced, any hearings previously held by the replaced arbitrator may or may not be repeated at the discretion of the newly-appointed Tribunal, unless the parties have agreed otherwise. Equally, orders or rulings of the earlier Arbitral Tribunal are not to be invalid only because there has been a change in the composition of the earlier Tribunal, subject, of course, to a contrary agreement by parties. This also indicates that the object of speedy resolution of disputes by arbitration would best be subserved by a substitute arbitrator continuing at the point at which the earlier arbitrator has left off. judicial conciliation, 21. In fact, as has correctly been pointed out by the learned counsel for the respondent, Section 89 CPC specifically provides that a court hearing a suit may formulate terms of settlement between the parties and may either settle the same or refer the same for settlement by settlement, mediation or arbitration. On the facts in the present case, it is clear that following the mandate of Section 89, the Bombay High Court disposed of the suit between the parties by recording the settlement between the parties in Clauses 1 to 7 of the consent terms and by referring the remaining disputes to arbitration. In the present case therefore it is clear that it is the Bombay High Court that was the appointing authority which had in fact appointed Mrs Justice Sujata Manohar as arbitrator in terms of Clause 8 of the consent terms. We must remember, as was held in C.F. Angadi v. Y.S. Hirannayya [C.F. Angadi v. Y.S. Hirannayya, (1972) 2 SCR 515 at p. 523 : (1972) 1 SCC 191 at pp. 197-199] , that an order by consent is not a mere contract between the parties but is something more because there is superadded to it the command of a Judge. On the facts of the present case, it is clear that the Bombay High Court applied its mind to the consent terms as a whole and appointed Mrs Justice Sujata Manohar as arbitrator for the disputes Page 6 of 8 that were left to be resolved by the parties. The said appointing authority has been approached by the respondent for appointment of a substitute arbitrator, which was then done by the impugned judgment. This would therefore be “according to the rules that were applicable to the appointment of the arbitrator being replaced” in accordance with Section 15(2) of the Act. We, therefore, find that the High Court correctly appointed another independent retired Judge as substitute arbitrator in terms of Section 15(2) of the therefore, Arbitration Act, 1996. The appeal is, dismissed.” 9. After having gone through the averments made in this application, examined the statutory provisions of the law laid down by the Supreme Court in case of Sailesh Dhairyawan (supra) and Yashwith Construction (supra), I am satisfied that in a case where the mandate of an arbitrator stands terminated because of his withdrawal from his office, this Court has the jurisdiction to appoint a substitute arbitrator in accordance with the provision under Section 15(2) read with Section 11 of the Arbitration and Conciliation Act, 1996, if the parties fail to appoint an arbitrator on an application made by a party after satisfying the requirements of appointment of an arbitrator under the provision under Section 11 of the Act. 10. With the consent of learned counsel appearing on behalf of the parties, Sri Justice B.K. Nayak, a former Judge of this Court is appointed as the Arbitrator to conduct the arbitration proceedings and adjudicate the dispute between the parties including their claims and counter claims. The arbitration proceedings shall take place under the aegis of the High Court of Orissa Arbitration Centre. Page 7 of 8
Decision
11. Accordingly, these petitions stand disposed of. 12. A copy of this order be communicated to the learned Arbitrator as well as the Coordinator, High Court of Orissa Arbitration Centre forthwith. (Chakradhari Sharan Singh) Chief Justice S. Behera Signature Not Verified Digitally Signed Signed by: SUMANTA BEHERA Designation: Senior Stenographer Reason: Authentication Location: High Court of Orissa, Cuttack Date: 19-Sep-2024 15:06:13 Page 8 of 8