Delay In Appointment Of Arbitrators Defeats The Object And Purpose Of The Arbitration Act And Affects The Economy Of The Country.
- Nikhil Raghavan
- Jan 15, 2024
- 2 min read
Editor: Jhanvi Vashisht
Bench: JUSTICE M.R. SHAH
Case Facts:
On October 6, 2010, M/s Shree Vishnu Constructions (Applicant) and the Military Engineering Services (Respondents) signed a contract for the construction of two apartment buildings of Admin-cum-Technical accommodation with double storey. At the responders' request, several changes were made to the contract as the project was being completed. Disputes arose when the revised payments in accordance with the changes done by the Appellant were not released by Respondent. Thereafter the Appellant issued a notice for Appointment of Arbitrator to resolve the issues The dispute was unable to be solved and when the dispute was not unable to be settled amicably on 30th March 2013 towards which the Respondent failed supply any reply with.
The applicant filed an application under Section 11(5) of the Arbitration and Conciliation Act, 1996, as the respondents did not react to the notification. The application was denied by the High Court, on the grounds that the no Arbitral Dispute exists as satisfaction, which prompted the appellant to file an appeal regarding the same before the Hon'ble Supreme Court.
Issue Raised:
Whether the High Court had committed an error in disposing off the Application filed under Section 11(5) of the Act?
Decision of the High Court of Telangana
The High Court rejected the application on the grounds that satisfaction and concord had been shown, negating the need for an arbitral dispute under Section 11(5) of the Act.
Decision of Supreme Court
The appellant filed a Special leave Petition before the Supreme Court under Article 136 of the constitution. The Court noted the protracted hold-ups in arbitrator appointments under the Act's Sections 11(5) and 11(6). It underlined the Act's goal of quickly resolving business conflicts and the necessity of an efficient alternative dispute resolution process. The Court observed that these delays compromise the efficacy of the Act and undercut its goals. All High Courts were instructed by the Supreme Court to make sure that all applications under Sections 11(5) and 11(6) that have been pending for more than a year, as well as any related applications, must be decided within six months.
[1] THE ARBITRATION AND CONCILLATION ACT (AMENDMENT), 2015, §11(5)
[2] THE ARBITRATION AND CONCILLATION ACT (AMENDMENT), 2015, §11(6)
[3] INDIA CONST. art. 136
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