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Calcutta HC appoints fresh arbitrator as parties demand fresh adjudication

The award passed on October 5, 2020 was challenged by the petitioner, primarily on the ground that proper opportunity was not accorded to represent himself in the arbitration proceedings.

ILNS: The Calcutta High Court on Wednesday appointed Justice Sahidullah Munshi (Retd) as an independent arbitrator to adjudicate claims of an award holder, who asked for a different arbitrator, to further adjudicate on the claim.

Justice Moushumi Bhattacharya of the High Court noted,

“The fundamental objective of Section 12 of the Arbitration and Conciliation Act, 1996 is to ensure that the arbitrator is impartial and independent.”

The said award passed on October 5, 2020 was challenged by the award debtor (petitioner), primarily on the ground that proper opportunity was not accorded to represent himself in the arbitration proceedings, as this is one of the ground as stipulated under Section 34(2)(a) (iii) of the Arbitration and Conciliation Act.

The Bench noted, “The tricky issue is finding the permissible statutory route, where the award-holder also expresses discomfort with the award and wants a different arbitrator to decide the matter afresh.”

A disputed question of law arising out of the application preferred under Section 34 of the Arbitration and Conciliation Act, 1996 for setting aside the award made in favour of SREI Equipment Finance Limited (award holder) by Jagdish Kishinchand Valecha (award debtor) dealt by the High Court of Calcutta, wherein it was asked from the court whether the court can appoint an independent /different arbitrator in pursuant to Section 11 of the Arbitration and Conciliation Act, 1996 adjudicating claims among the parties afresh, or the same arbitrator can be appointed by the court, who had already passed the arbitral award.

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Another question, which was raised in the petition, was that if both parties consent to decide the claims afresh by such an independent arbitrator appointed by the court, whether the court can remand back the matter to the same arbitrator who delivered the award, even if both the award holder and the award debtor agree for an independent arbitrator.

However, the Bench observed that provisions of the Act would not become applicable, since both the petitioner and the respondent (parties) have chosen for independent arbitrator, Section 11 of the Arbitration and Conciliation Act in no manner would be triggered. That only if the parties fail to choose an arbitrator, would the court step in and appoint an arbitrator or fix the appointment procedure for both parties.

The court made literal interpretation of Section 34 (4), which clarifies that the Court can remand the matter to the arbitrator, who had delivered the award for giving an opportunity to the arbitrator, disregarding grounds for setting aside the arbitral award.

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“The word ‘resume’ used in Section 34(4) makes it clear that the arbitrator, who had decided the dispute in the first place, would simply take up the proceedings once again for the purpose of dealing with the grounds of challenge to the award. Since Section 34 (4) contemplates the resumption of proceedings by the same arbitrator who had passed the Award, this provision would not be relevant to the present application,”

-the court held.

The bench, while disposing of the petition noted,

“The basic premise is that the parties who have come to the Court, cannot be without a remedy, when they have agreed that the matter should go before a different Arbitrator. The Act does not curtail the power of a Court to mould the relief in fit cases, provided the relief is not repugnant to the law as existing on that date.”

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