High Court of KeralaSingle Judge2022-10-28Arbitration Request allowed; the 3rd arbitrator...

Fertilizers and Chemicals Travancore Ltd. (FACT) and FACT Engineering and Design Organization Travancore Ltd. v. M. P Khaitan, International Centre for Alternative Dispute Resolution (ICADR), and Dr Ashwinie Kumar Bansal

Case / Petition Number:AR No.142 OF 2022

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: N. Nagareesh
Judgment Date: 2022-10-28
Court Decision / Holding: The Arbitration Request is ordered: (i) Termination of the 3rd respondent’s appointment as arbitrator; (ii) Appointment of Mr. Justice Thottathil B. Radhakrishnan (Former Chief Justice of the Calcutta High Court) as the sole arbitrator to arbitrate the disputes arising under Annexure-A to Annexure-D; (iii) The arbitrator may rule on jurisdiction; (iv) The Registry to communicate the order to the arbitrator within ten days and obtain a Disclosure Statement under Section 11(8) read with Section 12(1); (v) The arbitrator’s fees to be governed by the Fourth Schedule and the manner of payment to be decided by the arbitrator; (vi) The parties to appear before the arbitrator on dates fixed by him; (vii) All contentions remain open for submission before the arbitrator.
Final Disposition: Arbitration Request allowed; the 3rd arbitrator’s appointment is terminated; a new sole arbitrator is appointed (Mr. Justice Thottathil B. Radhakrishnan) with directions on disclosure, fees, and conduct of proceedings; all contentions remain open for the arbitrator to resolve.

Parties to the Case

Appellants / Petitioners

Fertilizers and Chemicals Travancore Ltd. (FACT)
FACT Engineering and Design Organization Travancore Ltd. (FACT)

Respondents

M. P Khaitan
International Centre for Alternative Dispute Resolution (ICADR)
Dr Ashwinie Kumar Bansal

Legal Representation & Advocates

Counsels for Petitioners

• Asher Revi
• M. Gopikrishnan Nambiar
• K. John Mathai
• Joson Manavalalan Kuryan
• Thomas Paulose
• C. Abraham
• Raja Kannan
• Dominic Antony

Counsels for Respondents

• Nitish Sathesh Shenoy
• Sukumaran Nainan Oommen
• Sherry Samuel Oommen

Case Synopsis & Summary

This is an Arbitration and Conciliation Act petition before the Kerala High Court seeking intervention in the appointment of an arbitrator in a dispute arising from a contractual project for Phase-II expansion works at NIT, Nagaland. The petitioners, FACT and its engineering division FACT Engineering and Design Organization Travancore Ltd., allege that the 2nd respondent (a party to the contract) acted beyond its powers by appointing a new arbitrator, since the International Centre for Alternative Dispute Resolution had already appointed the 3rd respondent as sole arbitrator. The petitioners challenge the legality of appointing a substitute arbitrator and contend that the procedures under Section 15 of the Act requiring mutual consent were not observed. The respondents defend the appointment as valid under the contract and law. The court notes Annexures A to E and the clause in Annexure D (General Conditions of Contract) mandating arbitration and appointment by ICADR, and it also considers Delhi and Andhra Pradesh Allahabad decisions cited by the parties. Ultimately, the court holds that arbitration can be terminated by mutual consent and a new sole arbitrator can be appointed. Accordingly, it terminates the 3rd respondent’s appointment and designates Mr. Justice Thottathil B. Radhakrishnan as the sole arbitrator, with directions on disclosure, fees, and conduct of the proceedings, while keeping all contentions open for the arbitrator to resolve.

Provisions of Law Cited

Arbitration and Conciliation Act, 1996, Section 15(2)Arbitration and Conciliation Act, 1996, Section 11(8) read with Section 12(1)Arbitration and Conciliation Act, 1996, Fourth Schedule

Legal Doctrines & Maxims

Mutual consent is required for appointment of arbitrators under Section 15 of the Arbitration and Conciliation Act, 1996
Arbitration can be terminated and a new arbitrator appointed with mutual consent
Ex facie illegality (ex-facie illegal) as used in the context of appointment validity

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioners contend that the 2nd respondent had no power to appoint a fresh arbitrator in a matter already subject to arbitration, and that the appointment of the 3rd respondent as sole arbitrator is illegal. They rely on Section 15 of the Arbitration and Conciliation Act, 1996, and seek termination of the existing appointment in order to have a mutually agreed sole arbitrator appointed under the Act. They also point to Annexures A–E and the General Conditions of Contract to show the intended framework for arbitration and to argue that mutual consent is required for changes in arbitrator appointments.

Contentions of Respondents

The respondents argue that the 3rd respondent has already been appointed as the sole arbitrator under the agreement and that the petition cannot seek a replacement without termination of the initial appointment. They invoke Section 15(2) and related provisions, arguing for a substitute arbitrator in line with the contract and that mutual consent is not strictly necessary if the contract contemplates a specified mechanism. They rely on decisions from Allahabad and Andhra Pradesh High Courts and on the authority given to ICADR under the contract.

Cited Precedents (3)

Case Name	Citation	Treatment	Explanation
Deepak Goel v. Avinash Chandra and others	Not specified	Mentioned Only	Cited by respondents to argue for appointment of a substitute arbitrator; the present judgment does not adopt that approach and instead relies on mutual consent under Section 15.
K. Narayana Raju v. Union of India and others	Not specified	Positive	Cited to support the principle that appointment of arbitrators should proceed by mutual consent under Section 15, a principle adopted by the court in terms of termination and reappointment by mutual consent.
Delhi High Court in Review Petition No. 196 of 2020 in W.P. (C) No. 2236 of 2019	Not specified	Mentioned Only	Cited to reflect the Delhi High Court’s observations about the competency and power to appoint an arbitrator; used to cast doubt on the 2nd respondent’s power in this matter.

Diagnostic Tool

Beta

Does this judgment govern your specific facts?

Don't risk relying on a distinguishable precedent. Enter your facts or proposition below. We will test it against Fertilizers and Chemicals Travancore Ltd. (FACT) and FACT Engineering and Design Organization Travancore Ltd. v. M. P Khaitan, International Centre for Alternative Dispute Resolution (ICADR), and Dr Ashwinie Kumar Bansal and instantly map out authorities that support, challenge, or govern your position.

Extracted Judgment Text

Exact text extracted from official judgment records.

**AR NO. 142 OF 2022** # **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE N.NAGARESH** # **FRIDAY, THE 28[TH] DAY OF OCTOBER 2022 / 6TH KARTHIKA, 1944** ## **PETITIONERS:** - **1 FERTILIZERS AND CHEMICALS TRAVANCORE LTD., (FACT) UDYOGAMANDAL, ELOOR,ERNAKULAM, PIN - 683501** - **2 FACT ENGINEERING AND DESIGN ORGANIZATION TRAVANCORE LTD., (FACT), UDYOGAMANDAL, ELOOR,ERNAKULAM, PIN - 683501** **BY ADVS. ASHER REVI JOB M.GOPIKRISHNAN NAMBIAR K.JOHN MATHAI JOSON MANAVALAN KURYAN THOMAS PAULOSE C. ABRAHAM RAJA KANNAN DOMINIC ANTONY** ## **RESPONDENTS:** - **1 M/S M. P KHAITAN 15 GANESH CHANDRA AVENUE 7TH FLOOR, KOLKATA, PIN - 700013** - **2 INTERNATIONAL CENTRE FOR ALTERNATIVE DISPUTE RESOLUTION (ICADR) PLOT NO 6, VASANT KUNJ INSTITUTIONAL AREA, PHASE II, NEW DELHI, PIN - 110070** - **3 DR ASHWINIE KUMAR BANSAL T/3, SUPREME TOWERS, SECTOR -99, NOIDA, PIN - 201303 BY ADVS. Nitish Sathesh Shenoy NSS SUKUMAR NAINAN OOMMEN(K/5/2009) SHERRY SAMUEL OOMMEN(K/1143/2012)** **THIS ARBITRATION REQUEST HAVING COME UP FOR ADMISSION ON 28.10.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **AR No.142 OF 2022** **2** ## **ORDER** Dated this the 28[th] day of October, 2022 The 1[st] petitioner is a Government of India Enterprise and is engaged in manufacture and marketing of fertilizers and petrochemicals. The 2[nd] petitioner is a division of the 1[st] petitioner-Company providing engineering and consultancy services. An agreement was entered into by the petitioners with the 1[st] respondent, for construction of boys and girls hostels, dining hall for hostels, Type 3 and Type 4 quarters, external development works, roads, pathways, R.C.C/R.R retaining walls, external water supply, UG sumps etc. of the Phase-II expansion work of NIT, Nagaland. Disputes arose between the parties. 2. The petitioners submit that the 1[st] respondent invoked the arbitration clause and required the International Centre for Alternative Dispute Resolution for appointment of an Arbitrator. The International Centre appointed the 3[rd] respondent as **AR No.142 OF 2022** **3** Arbitrator. 3. The petitioners would submit that the 2[nd] respondent has no power to appoint an Arbitrator in a fresh matter in the light of Annexure-I order. The 2[nd] respondent has failed to consider the objections raised by the petitioners by appointing the 3[rd] respondent, as Sole Arbitrator. The petitioners would contend that the appointment of the Sole Arbitrator by the 2[nd] respondent, is ex-facie illegal and is liable to be set aside. 4. The counsel representing the 1[st] respondent entered appearance and resisted the writ petition. The counsel for the 1[st] respondent submitted that in terms of the agreement, already the 3[rd] respondent has been appointed as the Sole Arbitrator. The appointment of the Sole Arbitrator is legal and valid. Without terminating the Arbitrator already appointed, the petitioners cannot urge to appoint a new Arbitrator in the dispute. 5. The counsel for the 1[st] respondent relied on the judgment of the Hon’ble High Court of Allahabad in _**Deepak Goel**_ **AR No.142 OF 2022** **4** _**v. Avinash Chandra and others**_ and contended that it is a clear case of appointment of a substitute Arbitrator. In terms of subsection (2) of Section 15 of the Act, 1996, the parties would be required to first attempt appointment by mutuality and consent. Since the petitioners did not approach the respondents seeking their consent or even offered to suggest names calling upon the respondents to respond, it indicates that the petitioners have failed to comply with its responsibilities. The counsel further relied on the judgment of the Hon’ble High Court of Andra Pradesh in _**K.Narayana Raju v. Union of India and others**_ to urge the point. The counsel for the 1[st] respondent, however, submitted that the 1[st] respondent has no objection in appointing mutually agreeable Arbitrators in accordance with Section 15 of the Arbitration and Conciliation Act, 1996. 6. I have heard the learned counsel for the petitioners and the learned counsel representing the 1[st] respondent. **AR No.142 OF 2022** **5** 7. Annexure-A is the Memorandum of Understanding entered into between the petitioners and the 1[st] respondent. Annexure-B is the Letter of Intent. The General Conditions of Contract would apply to the agreement between the parties. 8. Clause 67.0 of Annexure-D General Conditions of Contract states that if any dispute(s) arises out of or in connection with the contract, or in respect of any defined legal relationship associated therewith or derived therefrom, the parties agree to submit the disputes to arbitration under the International Centre for Alternative Dispute Resolution Arbitration Rules, 1996. The authority to appoint the Arbitrator shall be the International Centre for Alternative Dispute Resolution. The number of Arbitrator shall be one and the language of the arbitration proceedings shall be English. The place of arbitration proceedings shall be Ernakulam in Kerala. 9. It is evident from the pleadings that on receipt of Annexure-E letter dated 11.04.2022 from the 1[st] respondent, the **AR No.142 OF 2022** **6** 2[nd] respondent issued e-mail dated 25.05.2022 suggesting a panel of three Arbitrators. 10. The 2[nd] respondent had filed W.P.(C) No.2236 of 2019 before the Hon’ble High Court of Delhi challenging the Ordinance for establishment and incorporation of International Arbitration Centre, New Delhi and for transfer of the undertakings of the 2[nd] respondent and to vest such undertaking in the International Arbitration Centre, New Delhi. The Hon’ble High Court of Delhi has vacated the interim order dated 07.03.2019, staying the operation of the International Arbitration Centre Ordinance, 2019 and permitting the 2[nd] respondent to carry on pending arbitration cases in the same manner as it was being done prior to the issuance of the impugned order. Therefore, the competency and power of the 2[nd] respondent to appoint an Arbitrator is doubtful. 11. Be that as it may, the counsel on either side submitted that the appointment of an Arbitrator can be named with mutual consent in view of Section 15 of the Arbitration and Conciliation **AR No.142 OF 2022** **7** Act. In that view of the matter, I am of the view that the appointment of the Arbitrator already made can be terminated and an Arbitrator can be appointed on mutual consent. 12. In view of the above, the appointment of the 3[rd] respondent as Arbitrator is terminated. The Arbitration Request is ordered as follows: (i) Mr. Justice Thottathil B. Radhakrishnan (Former Chief Justice of the Hon'ble High Court of Calcutta) is appointed as the sole Arbitrator, to arbitrate upon the disputes that have arisen between the applicant and the respondent arising out of Annexure-A to Annexure-D. (ii) The learned Arbitrator is at liberty to rule on his own jurisdiction, if the parties raise such a dispute. (iii) The Registry is directed to communicate a copy of this order to the learned Arbitrator within a period of ten days from today and to obtain a Statement of Disclosure from the learned Arbitrator as provided under Section 11(8) read with Section12(1) of the Act. (iv) Once the Disclosure Statement is obtained from the learned Arbitrator, the Registry shall issue the certified copy of this order to the **AR No.142 OF 2022** **8** learned Arbitrator, with a copy of the said statement appended to it, retaining the original of the same by this Court. (v) The fees of the learned Arbitrator shall be governed by the Fourth Schedule of the Act. (vi) The learned Arbitrator shall decide the manner in which the fees and expenses of the arbitration proceeding has to be paid by the parties. (vii) The parties will appear before the learned Arbitrator on such date and place as decided by the learned Arbitrator. (viii) All contentions of the parties are left open to be raised before the learned Arbitrator. **Sd/N.NAGARESH JUDGE** sss **AR No.142 OF 2022** **9** ## **APPENDIX OF AR 142/2022** ## **PETITIONERS' ANNEXURE** |**Annexure A**|**TRUE COPY OF THE MEMORANDUM OF**| |---|---| ||**UNDERSTANDING DATED 22.03.2014**| |**Annexure B**|**TRUE COPY OF THE LETTER OF INTENT DATED**| ||**12.09.2014 ISSUED BY THE 2ND PETITIONER**| ||**TO THE 1ST RESPONDENT**| |**Annexure C**|**TRUE COPY OF THE WORK ORDER DATED**| ||**16.09.2014 ISSUED BY THE PETITIONER TO**| ||**THE 1ST RESPONDENT**| |**Annexure D**|**THE GENERAL CONDITIONS OF CONTRACT**| ||**BETWEEN THE PETITIONERS AND THE 1ST**| ||**RESPONDENT**| |**Annexure E**|**TRUE COPY OF THE LETTER DATED 11.04.2022**| ||**ISSUED BY THE 1ST RESPONDENT TO THE 2ND**| ||**RESPONDENT**| |**Annexure F**|**A TRUE COPY OF THE E-MAIL DATED**| ||**25.05.2022 ALONG WITH THE LETTER DATED**| ||**25.05.2022 ISSUED BY THE 2ND RESPONDENT**| |**Annexure G**|**TRUE COPY OF THE EMAIL DATED 25.05.2022**| ||**ISSUED BY THE 1ST RESPONDENT TO THE 2ND**| ||**RESPONDENT**| |**Annexure H**|**TRUE COPY OF THE LETTER DATED 1.06.2022**| ||**ISSUED BY THE 1ST PETITIONER TO 2ND**| ||**RESPONDENT**| |**Annexure I**|**TRUE COPY OF THE ORDER DATED 16.05.2019**| ||**IN REVIEW PETITION NO. 196 OF 2020 IN**| ||**W.P. (C) NO. 2236 OF 2019 PASSED BY THE**| ||**HON'BLE HIGH COURT OF DELHI**| |**Annexure J**|**TRUE COPY OF THE LETTER DATED 18.06.2022**| ||**ISSUED BY THE 1ST PETITIONER TO 2ND**| ||**RESPONDENT**| |**Annexure K**|**TRUE COPIES OF THE REGISTERED POSTS**| ||**ISSUED BY THE 1ST PETITIONER TO THE 2ND**| ||**RESPONDENT WITH ENDORSEMENT "UNDELIVERED"**| **AR No.142 OF 2022** **10** |**Annexure L**|**TRUE COPY OF THE LETTER DATED 29.06.2022**| |---|---| ||**ISSUED BY THE 2ND RESPONDENT TO THE**| ||**PETITIONERS**| |**Annexure M**|**TRUE COPY OF THE EMAIL DATED 02.07.2022**| ||**ISSUED BY THE 3RD RESPONDENT TO THE**| ||**PETITIONERS AND THE 1ST RESPONDENT**|