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Friday, May 10, 2013

ARBITRATION ACT = The law is well settled that where an Arbitrator had already been appointed and intimation thereof had been conveyed to the other party, a separate application for appointment of an Arbitrator is not maintainable. Once the power has been exercised under the Arbitration Agreement, there is no power left to, once again, refer the same disputes to arbitration under Section 11 of the 1996 Act, unless the order closing the proceedings is subsequently set aside. = when the Arbitral Tribunal is already seized of the disputes between the parties to the Arbitration Agreement, constitution of another Arbitral Tribunal in respect of those same issues which are already pending before the Arbitral Tribunal for adjudication, would be without jurisdiction.= In view of the language of Article 20 of the Arbitration Agreement which provided that the arbitration proceedings would be held in accordance with the rules and procedures of the International Chamber of Commerce or UNCITRAL, Devas was entitled to invoke the Rules of Arbitration of the ICC for the conduct of the arbitration proceedings. Article 19 of the Agreement provided that the rights and responsibilities of the parties thereunder would be subject to and construed in accordance with the laws of India. There is, therefore, a clear distinction between the law which was to operate as the governing law of the Agreement and the law which was to govern the arbitration proceedings. Once the provisions of the ICC Rules of Arbitration had been invoked by Devas, the proceedings initiated there under could not be interfered with in a proceeding under Section 11 of the 1996 Act. The invocation of the ICC Rules would, of course, be subject to challenge in appropriate proceedings but not by way of an application under Section 11(6) of the 1996 Act. Where the parties had agreed that the procedure for the arbitration would be governed by the ICC Rules, the same would necessarily include the appointment of an Arbitral Tribunal in terms of the Arbitration Agreement and the said Rules. Arbitration Petition No.20 of 2011 under Section 11(6) of the 1996 Act for the appointment of an Arbitrator must, therefore, fail and is rejected, but this will not prevent the Petitioner from taking recourse to other provisions of the aforesaid Act for appropriate relief. The Arbitration Petition is, therefore, dismissed.


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1
REPORTABLE
IN THE SUPREME COURT OF INDIA
ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO. 20 OF 2011
ANTRIX CORP. LTD. ...PETITIONER
Vs.
DEVAS MULTIMEDIA P. LTD. ...RESPONDENT
J U D G M E N T
ALTAMAS KABIR, CJI.
1. An application under Section 11(4) read with
Section 11(10) of the Arbitration and Conciliation
Act, 1996, hereinafter referred to as "the 1996
Act", has given rise to an important question of
law relating to the scope and ambit of the powersPage 2
2
of the Chief Justice under Section 11(6) of the
said Act. In view of the importance of the
question, which has arisen, the matter which was
being heard by the delegatee of the Chief Justice,
has been referred to a larger Bench for
determination thereof.
2. M/s. Antrix Corporation Limited, the Petitioner
herein, a Government Company incorporated under the
Companies Act, 1956, and engaged in the marketing
and sale of products and services of the Indian
Space Research Organization (ISRO), entered into an
Agreement with the Respondent, Devas Multimedia P.
Ltd., hereinafter referred to as "Devas" on 28th
January, 2005, for the lease of Space Segment
Capacity on ISRO/ Antrix S-Band Spacecraft.
Article 19 of the Agreement empowered the
Petitioner to terminate the Agreement in certain
contingencies. It also provided that the AgreementPage 3
3
and the rights and responsibilities of the parties
thereunder would be subject to and construed in
accordance with the laws of India. In other words,
the domestic law would be the governing law of the
Agreement.
3. Article 20 of the Agreement deals specially
with arbitration and provides that in the event any
dispute or difference arises between the parties as
to any clause or provision of the Agreement, or as
to the interpretation thereof, or as to any account
or valuation, or as to rights and liabilities,
acts, omissions of any party, such disputes would
be referred to the senior management of both the
parties to resolve the same within 3 weeks, failing
which the matter would be referred to an
Arbitral Tribunal comprising of three Arbitrators.
It was provided that the seat of arbitration would
be New Delhi in India. It was also provided thatPage 4
4
the arbitration proceedings would be held in
accordance with the rules and procedures of the
International Chamber of Commerce (ICC) or
UNCITRAL.
4. On 25th February, 2011, the Petitioner Company
terminated the Agreement with immediate effect in
terms of Article 7(c) read with Article 11(b) of
the Agreement in keeping with the directives of the
Government, which it was bound to follow under
Article 103 of its Articles of Association. By its
letter dated 28th February, 2011, the Respondent
objected to the termination. On 15th April, 2011,
the Petitioner Company sent to the Respondent
Company a cheque for Rs. 58.37 crores refunding the
Upfront Capacity Reservation Fee received from
Devas. The said cheque was, however, returned by
Devas on 18th April, 2011, insisting that the
Agreement was still subsisting. Page 5
5
5. In keeping with the provisions of Article 20 of
the Arbitration Agreement, the Petitioner wrote to
the Respondent Company on 15th June, 2011,
nominating its senior management to discuss the
matter and to try and resolve the dispute between
the parties. However, without exhausting the
mediation process, as contemplated under Article
20(a) of the Agreement, Devas unilaterally and
without prior notice to the Petitioner, addressed a
Request for Arbitration to the ICC International
Court of Arbitration on 29th June, 2011, seeking
resolution of the dispute arising under the
Agreement. Through the unilateral Request for
Arbitration, Devas sought the constitution of an
Arbitral Tribunal in accordance with the ICC Rules
of Arbitration, hereinafter referred to as "the ICC
Rules", and nominated one Mr. V.V. Veedar, Queen's
Counsel, as its nominee Arbitrator, in accordance
with the ICC Rules. Page 6
6
6. According to the Petitioner, it is only on 5th
July, 2011, that it came to learn that Devas had
approached the ICC and had nominated Mr. V.V.
Veedar, as its nominee Arbitrator, upon receipt of
a copy of the Respondent's Request for Arbitration
forwarded by the ICC. By the said letter, the
Petitioner was also invited to nominate its nominee
Arbitrator.
7. Instead of nominating its Arbitrator, the
Petitioner, by its letter dated 11th July, 2011,
once again requested Devas to convene the Senior
Management Team meet on 27th July, 2011, in terms
of the Agreement. Pursuant to such request, a
meeting of the Senior Management Team was held, but
Devas insisted that the parties should proceed to
arbitration and did not discuss the issues in
accordance with Article 20(a) of the Agreement.
Despite the attempt to resolve the dispute throughPage 7
7
the Senior Management Team and despite the fact
that Devas had already invoked the Arbitration
Agreement by making a Request for Arbitration to
the ICC and had also appointed its nominee
Arbitrator under the ICC Rules, the Petitioner
appointed Mrs. Justice Sujata V. Manohar, as its
Arbitrator and called upon Devas to appoint its
nominee Arbitrator within 30 days of receipt of the
notice. Consequently, while Devas had invoked the
jurisdiction of the ICC on 29th June, 2011, the
Petitioner subsequently invoked the Arbitration
Agreement in accordance with the UNCITRAL Rules on
the ground that Devas had invoked ICC Rules
unilaterally, without allowing the Petitioner to
exercise its choice. Having invoked the
Arbitration Agreement under the UNCITRAL Rules, the
Petitioner called upon the Respondent to appoint
its Arbitrator within 30 days of receipt of the
notice.Page 8
8
8. On 5th August, 2011, the Petitioner wrote to
the Secretariat of the ICC Court stating that it
had appointed its Arbitrator, in accordance with
the Agreement between the parties, asserting that
in view of Article 20 of the Agreement, the
arbitral proceedings would be governed by the
Indian law, viz., the Arbitration and Conciliation
Act, 1996.
9. The Respondent did not reply to the
Petitioner's letter dated 30th July, 2011.
However, the International Chamber of Commerce, by
its letter dated 3rd August, 2011, responded to the
Petitioner's letter dated 30th July, 2011, and
indicated as follows :
"We refer to our letter dated 18
July, 2011, and remind the
parties that the issues raised
regarding the arbitration clause
would shortly be submitted to the
Court for consideration. All
comments submitted by the partiesPage 9
9
will be brought to the Court's
attention. In this regard, any
final comments from the parties
may be submitted to us by 5
August, 2011.
Should the Court decide that this
arbitration shall proceed
pursuant to Article 6(2) of the
Rules, any decision as to the
jurisdiction of the Arbitral
Tribunal shall be taken by the
Arbitral Tribunal itself."
10. It is in such circumstances that the
application under Section 11(4) read with Section
11(10) of the 1996 Act, being Arbitration Petition
No. 20 of 2011, came to be filed by the Petitioner,
inter alia, for a direction upon Devas to nominate
its Arbitrator in accordance with the Agreement
dated 28th January, 2005, and the UNCITRAL Rules,
to adjudicate upon the disputes, which had arisen
between the parties and to constitute the Arbitral
Tribunal and to proceed with the Arbitration.Page 10
10
11. The said application came to be listed before
one of us, Surinder Singh Nijjar, J., the Designate
of the Chief Justice, who was of the view that the
questions involved in the application were required
to be heard by a larger Bench. The parties were
requested to propose the questions of law to be
considered by the Larger Bench and the same are as
follows:
"i) Where the arbitration clause
contemplates the application of
either ICC Rules or UNCITRAL
Rules after the constitution of
the Tribunal, could a party
unilaterally proceed to invoke
ICC to constitute the Tribunal
and proceed thereafter?
ii) Whether the judgment of this
Hon'ble Court in TDM
Infrastructure v. UE Development
reported in (2008) 14 SCC 271
lays down the correct law with
reference to the definition of
International Commercial
Arbitration?
iii) Whether the jurisdiction of the
Court under Section 11 extendsPage 11
11
to declaring as invalid the
constitution of an arbitral
tribunal purportedly under an
arbitration agreement, especially, where the tribunal has
been constituted by an
Institution purportedly acting
under the Arbitration agreement?
iv) Whether the jurisdiction of an
arbitral tribunal constituted by
an institution purportedly
acting under an arbitration
agreement can be assailed only
before the Tribunal and in
proceedings arising from the
decision or award of such
Tribunal and not before the
Court under Section 11 of the
Act?
v) Whether, once an arbitral
tribunal has been constituted,
the Court has jurisdiction under
Section 11 of the Act to
interfere and constitute another
Tribunal?
vi) Whether an arbitration between
two Indian companies could be an
international commercial arbitration within the meaning of
Section 2(1)(f) of the Act if
the management and control of
one of the said companies is
exercised in any country other
than India?Page 12
12
vii) Whether the petition is
maintainable in light of the
reliefs claimed and whether the
conditions precedent for the
exercise of jurisdiction under
Section 11 of the Act are
satisfied or not?"
12. While the matter was pending, most of the seven
questions raised were resolved. However, the most
important issue as to whether Section 11 of the
1996 Act could be invoked when the ICC Rules had
already been invoked by one of the parties, remains
to be decided.
13. On behalf of the Petitioner, reliance was
sought to be placed on the decision of this Court
in Sumitomo Heavy Industries Ltd. Vs. ONGC Ltd. &
Ors. [(1998) 1 SCC 305], wherein different laws
that could apply to an arbitral relationship had
been explained, namely :
(i) The proper law of the underlying contract
is the law governing the contract whichPage 13
13
creates the substantive rights and
obligations of the parties with regard to
the contract.
(ii) The proper law of the arbitration agreement
is the law governing the rights and
obligations of the parties arising from
the arbitration agreement.
(iii) The proper law of the reference is the
law governing the contract which
regulates the individual reference to
arbitration.
(iv) The curial law is the law governing the
arbitration proceedings and the manner in
which the reference has to be conducted.
It governs the procedural powers and
duties of the arbitrators, questions ofPage 14
14
evidence and the determination of the
proper law of the contract.
14. It was submitted that in the instant case, the
proper law of the contract is the Indian law and
the proper law of the Arbitration Agreement is the
Arbitration and Conciliation Act, 1996.
Accordingly, matters relating to the constitution
of the Arbitral Tribunal would be governed by
Sections 10 to 15 of the 1996 Act. It was pointed
out by learned counsel that the parties had agreed
that the arbitration proceedings could be conducted
either in accordance with the rules and procedures
of the ICC or UNCITRAL. The choice of the procedure
to be adopted by the Arbitral Tribunal in
conducting the arbitration was left to the
determination of the parties under Section 19(2) of
the 1996 Act. It was submitted that the choice of
the applicable procedural law could be exercisedPage 15
15
only after the constitution of the Arbitral
Tribunal and not at any stage prior thereto.
15. It was also submitted that in addition to the
clear provision of Section 2(2) of the 1996 Act and
the Agreement between the parties that the place of
arbitration would be New Delhi, the Agreement would
be expressly governed by Indian law under Article
19 of the Agreement. Accordingly, as was held in
National Thermal Power Corporation Vs. Singer
Company [(1992) 3 SCC 551], the proper law of the
contract would be the Indian law which would govern
the arbitration Agreement. It was submitted that
the cardinal test, as suggested by Dicey in his
"Conflict of Laws", stood fully satisfied and that
the governing law of the arbitration would be the
law chosen by the parties, or in the absence of any
agreement, the law of the country in which the
arbitration is held. Learned counsel submittedPage 16
16
that according to Dicey, the proper law of the
arbitration is normally the same as the proper law
of the contract. It is only in exceptional cases
that it is not so, even where the proper law of the
contract is expressly chosen by the parties.
16. However, as indicated hereinbefore, the
question with which we are concerned is whether the
Arbitration Agreement contemplates the application
of Section 11 of the 1996 Act after the ICC Rules
had been invoked by one of the parties which also
appointed its nominee Arbitrator. Equally important
is the question whether Section 11 of the 1996 Act
empowers the Chief Justice to constitute a Tribunal
in supersession of the Tribunal already in the
stage of constitution under the ICC Rules,
notwithstanding the fact that one of the parties
had proceeded unilaterally in the matter. Learned
counsel for the Petitioner urged that since thePage 17
17
Arbitration Agreement contemplates the constitution
of an Arbitral Tribunal without any reference to
the ICC Rules or the ICC Court, the recourse taken
by Devas to approach the ICC Court was without any
basis and was contrary to the express agreement
between the parties. Learned counsel also referred
to the decision of this Court in SBP & Co. vs.
Patel Engineering Ltd. & Anr. [(2005) 8 SCC 618],
in this regard.
17. Learned counsel further urged that the issue as
to whether once an Arbitral Tribunal has been
constituted, the Chief Justice has jurisdiction
under Section 11 of the 1996 Act to constitute
another Tribunal, presupposes that an Arbitral
Tribunal has been validly constituted and is not a
Tribunal constituted by one party acting entirely
in contravention of the Arbitration Agreement
between the parties. It was contended that tillPage 18
18
such time as the question of jurisdiction was
considered by the Court under Section 11, the
question of a separate Tribunal being constituted
by the International Chamber of Commerce did not
arise. According to learned counsel, in fact, the
constitution of the Arbitral Tribunal by the ICC
Court amounted to usurpation of the exclusive
jurisdiction of the Chief Justice under Section 11
of the 1996 Act. It was submitted that initially
the Court would have to be moved under Section 11
of the 1996 Act and it would have to examine
whether it would have the jurisdiction to entertain
the request and whether the condition for exercise
of its powers to take necessary measures to secure
the appointment of the Arbitrator, at all existed.
If the answer to both the issues was in the
affirmative, the Court was duty bound to appoint
the Arbitrator. Page 19
19
18. On the other hand, on behalf of Devas it was
submitted that the choice of an institution under
whose auspices the arbitration was to be held,
would have to be made once the Arbitral Tribunal
had been constituted. It was contended that what
was intended by the Arbitration Agreement was the
formation of an ad-hoc Tribunal which would have to
follow one of the two procedures prescribed.
19. It was submitted that Devas had already invoked
the Arbitration Agreement and had sought the
constitution of an Arbitral Tribunal, after having
chosen its nominee Arbitrator, in accordance with
the ICC Rules of Arbitration. It was further
submitted that since the Arbitral Tribunal had been
constituted under the ICC Rules, any objection as
to whether or not the Tribunal had been properly
constituted would have to be raised before the
Arbitral Tribunal itself. It is only in suchPage 20
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objection that the Arbitral Tribunal would have to
decide as to whether a Tribunal was required to be
constituted before application of the ICC or
UNCITRAL Rules, inasmuch as, according to the
Agreement, the Claimant in the arbitration has the
right to choose any of the two Rules when
commencing the arbitration.
20. Reliance was placed on Section 16 of the 1996
Act which incorporates the Kompetenz Kompetenz
principle within its scope. Since the arbitration
was to be governed by Part I of the 1996 Act, the
Tribunal would have complete authority over all
issues, including the validity of its constitution.
21. Reference was also made to the decision of this
Court in Gas Authority of India Ltd. vs. Keti
Construction (I) Ltd. & Ors.[(2007) 5 SCC 38],
wherein the aforesaid principle contained in
Section 16 of the 1996 Act had been referred to.Page 21
21
Learned counsel submitted that in arriving at the
aforesaid decision, this Court had fully considered
its decision in SBP & Co. (supra). It was submitted
that the question regarding the validity of the
constitution of the Arbitral Tribunal, upon a
proper construction of Article 20 of the Agreement
would, therefore, have to be left for decision to
the said Tribunal.
22. On the question as to whether the Chief Justice
or his Designate would be entitled in exercise of
their jurisdiction under Section 11 of the 1996
Act, to question the validity of the appointment of
an Arbitral Tribunal, both the parties were ad idem
that they could not. It was urged that the decision
in SBP & Co. (supra) does not contemplate such a
course of action. In this regard, reference was
also made by learned counsel for the Respondent to
the decision of this Court in Sudarsan Trading Co.Page 22
22
vs. Government of Kerala & Anr. [(1989) 2 SCC 38],
wherein it was held that once there is no dispute
as to the contract, the interpretation thereof is
for the Arbitrator and not the Courts, and the
Court cannot substitute its own decision for that
taken by the learned Arbitrator. It was urged that
Section 5 of the 1996 Act also supports such
construction as it bars any interference by the
Court, except as provided in the Act. Learned
counsel also submitted that as had been held by
this Court in McDermott International Inc. vs. Burn
Standard Co. Ltd. & Ors.[(2006) 11 SCC 181], after
the 1996 Act came into force, it was for the party
questioning the authority of the Arbitrator to
raise such question at the earliest point of time
after the commencement of the Arbitration
proceedings, under Section 16 of the 1996 Act, and
a decision thereupon could be challenged under
Section 34 of the said Act. Page 23
23
23. On behalf of Devas, it was also contended that
the issue raised relating to jurisdiction falls
outside the first category of cases, on account of
the fact that the Petitioner's claim that the
Tribunal must be constituted first before
application of either of the ICC Rules or the
UNCITRAL Rules, essentially involves the question
as to whether the Arbitration clause excludes the
applicability of the Rules prior to the
constitution of the Tribunal and that the
constitution of the Tribunal is, therefore,
reserved for a decision under Section 11 of the
1996 Act. Learned counsel for the Respondent
submitted that in the facts of the case, the Chief
Justice, in exercise of his power under Section
11(6) of the 1996 Act, was not entitled to question
the validity of the appointment of the Arbitral
Tribunal and the instant Arbitration Petition was
liable to be dismissed. Page 24
24
24. As indicated hereinbefore, the question which
we are called upon to decide is whether when one of
the parties has invoked the jurisdiction of the
International Chamber of Commerce and pursuant
thereto an Arbitrator has already been appointed,
the other party to the dispute would be entitled to
proceed in terms of Section 11(6) of the 1996 Act.
25. In order to answer the said question, we will
have to refer back to the provisions relating to
arbitration in the agreement entered into between
the Petitioner and the Respondent on 28th January,
2005. Article 19 in clear terms provides that the
rights and responsibilities of the parties under
the Agreement would be subject to and construed in
accordance with the laws in India, which, in
effect, means the Arbitration and Conciliation Act,
1996. Article 20 of the Agreement specifically
deals with arbitration and provides that disputesPage 25
25
between the parties regarding the provisions of the
Agreement or the interpretation thereof, would be
referred to the Senior Management of both the
parties for resolution within three weeks, failing
which the dispute would be referred to an Arbitral
Tribunal comprising of three Arbitrators. It was
also provided that the seat of arbitration would be
New Delhi in India and the arbitration would be
conducted in accordance with the rules and
procedures of the International Chamber of Commerce
or UNCITRAL.
26. The Respondent has invoked the provisions of
Article 20 of the Agreement and has approached the
ICC for the appointment of an Arbitral Tribunal in
accordance with the rules of arbitration and,
pursuant thereto, the Respondent appointed its
nominee Arbitrator. In fact, after the Respondent
had invoked the arbitration clause, the PetitionerPage 26
26
came to know of the same from the Respondent's
request for arbitration which was forwarded by the
ICC to the Petitioner on 5th July, 2011. By the
said letter, the Petitioner was also invited by the
ICC to nominate its nominee Arbitrator, but, as
mentioned hereinbefore, instead of nominating its
Arbitrator, the Petitioner once again requested
Devas to convene the Senior Management Meet on 27th
July, 2011, in terms of the Agreement.
Simultaneously, the Petitioner appointed a former
Judge of this Court, Mrs. Sujata V. Manohar, as its
Arbitrator and informed the ICC Court accordingly.
However, disputes were also raised by the
Petitioner with the ICC that since the Agreement
clearly intended that the arbitration proceedings
would be governed by the Indian law, which was
based on the UNCITRAL model, it was not available
to the Respondent to unilaterally decide which of
the rules were to be followed. It was onlyPage 27
27
thereafter that the Petitioner took recourse to the
provisions of Section 11(4) of the 1996 Act, giving
rise to the questions which have been set out
hereinbefore in paragraph 11, of which only one has
survived for our consideration.
27. Section 11 of the 1996 Act is very clear as to
the circumstances in which parties to a dispute,
and governed by an Arbitration Agreement, may apply
for the appointment of an Arbitrator by the Chief
Justice of the High Court or the Supreme Court.
For the sake of reference, the relevant provisions
of Section 11 are reproduced hereinbelow :-
"11. Appointment of arbitrators.
(1) A person of any nationality may be an
arbitrator, unless otherwise agreed by the
parties.
(2) Subject to sub-section (6), the
parties are free to agree on a procedure
for appointing the arbitrator or
arbitrators.Page 28
28
(3) Failing any agreement referred to in
sub-section (2), in an arbitration with
three arbitrators, each party shall appoint
one arbitrator, and the two appointed
arbitrators shall appoint the third
arbitrator who shall act as the presiding
arbitrator.
(4) If the appointment procedure in subsection (3) applies and-
(a) a party fails to appoint an
arbitrator within thirty days from the
receipt of a request to do so from the
other party; or
(b) the two appointed arbitrators fail
to agree on the third arbitrator
within thirty days from the date of
their appointment,
the appointment shall be made, upon request
of a party, by the Chief Justice or any
person or institution designated by him.
(5) Failing any agreement referred to in
sub-section (2), in an arbitration with a
sole arbitrator, if the parties fail to
agree on the arbitrator within thirty days
from receipt of a request by one party from
the other party to so agree the appointment
shall be made, upon request of a party, by
the Chief Justice or any person or
institution designated by him.
(6) Where, under an appointment procedure
agreed upon by the parties,-Page 29
29
(a) a party fails to act as required
under that procedure; or
(b) the parties, or the two appointed
arbitrators, fail to reach an
agreement expected of them under that
procedure; or
(c) a person, including an
institution, fails to perform any
function entrusted to him or it under
that procedure,
a party may request the Chief Justice or
any person or institution designated by him
to take the necessary measure, unless the
agreement on the appointment procedure
provides other means for securing the
appointment.
(7) A decision on a matter entrusted by
sub-section (4) or sub-section (5) or subsection (6) to the Chief Justice or the
person or institution designated by him is
final."
28. As will be evident from the aforesaid
provisions, when any of the parties to an
Arbitration Agreement fails to act in terms
thereof, on the application of the other party, the
Chief Justice of the High Courts and the SupremePage 30
30
Court, in different situations, may appoint an
Arbitrator.
29. In the instant case, Devas, without responding
to the Petitioner's letter written in terms of
Article 20 of the Arbitration Agreement,
unilaterally addressed a Request for Arbitration to
the ICC International Court of Arbitration for
resolution of the disputes arising under the
Agreement and also appointed its nominee
Arbitrator. On the other hand, the Petitioner
appointed its nominee Arbitrator with the caveat
that the arbitration would be governed by the 1996
Act and called upon Devas to appoint its nominee
Arbitrator under the said provisions. As Devas did
not respond to the Petitioner's letter dated 30th
July, 2011, the Petitioner filed the application
under Section 11(6) of the 1996 Act. Page 31
31
30. In the instant case, the Arbitration Agreement
provides that the arbitration proceedings would be
held in accordance with the rules and procedures of
the International Chamber of Commerce or UNCITRAL.
Rightly or wrongly, Devas made a request for
arbitration to the ICC International Court of
Arbitration on 29th June, 2011, in accordance with
the aforesaid Agreement and one Mr. V.V. Veedar was
appointed by Devas as its nominee Arbitrator. By
the letter written by the International Chamber of
Commerce on 5th July, 2011, the Petitioner was
required to appoint its nominee Arbitrator, but it
chose not to do so and instead made an application
under Section 11(6) of the 1996 Act and also
indicated that it had appointed Mrs. Justice Sujata
V. Manohar, as its Arbitrator in terms of Article
20(9) of the Agreement. Page 32
32
31. The matter is not as complex as it seems and in
our view, once the Arbitration Agreement had been
invoked by Devas and a nominee Arbitrator had also
been appointed by it, the Arbitration Agreement
could not have been invoked for a second time by
the Petitioner, which was fully aware of the
appointment made by the Respondent. It would lead
to an anomalous state of affairs if the appointment
of an Arbitrator once made, could be questioned in
a subsequent proceeding initiated by the other
party also for the appointment of an Arbitrator.
In our view, while the Petitioner was certainly
entitled to challenge the appointment of the
Arbitrator at the instance of Devas, it could not
do so by way of an independent proceeding under
Section 11(6) of the 1996 Act. While power has
been vested in the Chief Justice to appoint an
Arbitrator under Section 11(6) of the 1996 Act,
such appointment can be questioned under Section 13Page 33
33
thereof. In a proceeding under Section 11 of the
1996 Act, the Chief Justice cannot replace one
Arbitrator already appointed in exercise of the
Arbitration Agreement. It may be noted that in
case of Gesellschaft Fur Biotechnologische Forschun
GMBH Vs. Kopran Laboratories Ltd. & Anr. [(2004) 13
SCC 630], a learned Single Judge of the Bombay High
Court, while hearing an appeal under Section 8 of
the 1996 Act, directed the claims/disputes of the
parties to be referred to the sole arbitration of a
retired Chief Justice with the venue at Bombay,
despite the fact that under the Arbitration
Agreement it had been indicated that any disputes,
controversy or claim arising out of or in relation
to the Agreement, would be settled by arbitration
in accordance with the Rules of Reconciliation of
the International Chamber of Commerce, Paris, with
the venue of arbitration in Bombay, Maharashtra,
India. This Court held that when there was aPage 34
34
deviation from the methodology for appointment of
an Arbitrator, it was incumbent on the part of the
Chief Justice to assign reasons for such departure.
32. Sub-Section (6) of Section 11 of the 1996 Act,
quite categorically provides that where the parties
fail to act in terms of a procedure agreed upon by
them, the provisions of Sub-Section (6) may be
invoked by any of the parties. Where in terms of
the Agreement, the arbitration clause has already
been invoked by one of the parties thereto under
the I.C.C. Rules, the provisions of Sub-section (6)
cannot be invoked again, and, in case the other
party is dissatisfied or aggrieved by the
appointment of an Arbitrator in terms of the
Agreement, his/its remedy would be by way of a
petition under Section 13, and, thereafter, under
Section 34 of the 1996 Act. Page 35
35
33. The law is well settled that where an
Arbitrator had already been appointed and
intimation thereof had been conveyed to the other
party, a separate application for appointment of an
Arbitrator is not maintainable. Once the power has
been exercised under the Arbitration Agreement,
there is no power left to, once again, refer the
same disputes to arbitration under Section 11 of
the 1996 Act, unless the order closing the
proceedings is subsequently set aside. 
In Som Datt
Builders Pvt. Ltd. Vs. State of Punjab [2006 (3)
RAJ 144 (P&H)], the Division Bench of the Punjab &
Haryana High Court held, and
we agree with the
finding, that
when the Arbitral Tribunal is already
seized of the disputes between the parties to the
Arbitration Agreement, constitution of another
Arbitral Tribunal in respect of those same issues
which are already pending before the Arbitral
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36
Tribunal for adjudication, would be without
jurisdiction.
34. In view of the language of Article 20 of the
Arbitration Agreement which provided that the
arbitration proceedings would be held in accordance
with the rules and procedures of the International
Chamber of Commerce or UNCITRAL,
 Devas was entitled
to invoke the Rules of Arbitration of the ICC for
the conduct of the arbitration proceedings.
Article 19 of the Agreement provided that the
rights and responsibilities of the parties
thereunder would be subject to and construed in
accordance with the laws of India. 
There is,
therefore, a clear distinction between the law
which was to operate as the governing law of the
Agreement and the law which was to govern the
arbitration proceedings. 
Once the provisions of the
ICC Rules of Arbitration had been invoked by Devas,
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37
the proceedings initiated thereunder could not be
interfered with in a proceeding under Section 11 of
the 1996 Act. 
The invocation of the ICC Rules
would, of course, be subject to challenge in
appropriate proceedings but not by way of an
application under Section 11(6) of the 1996 Act.

Where the parties had agreed that the procedure for
the arbitration would be governed by the ICC Rules,
the same would necessarily include the appointment
of an Arbitral Tribunal in terms of the Arbitration
Agreement and the said Rules. 
Arbitration Petition
No.20 of 2011 under Section 11(6) of the 1996 Act
for the appointment of an Arbitrator must,
therefore, fail and is rejected, but this will not
prevent the Petitioner from taking recourse to
other provisions of the aforesaid Act for
appropriate relief. 
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35. The Arbitration Petition is, therefore,
dismissed. 
36. Having regard to the facts of the case, each
party shall bear its own costs.
...................CJI.
(ALTAMAS KABIR)
.....................J.
(SURINDER SINGH NIJJAR)
New Delhi
Dated: May 10, 2013.

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