- (1.) Though how a petition has been instituted is of no ultimate relevance, it must be noticed at the outset that the petitioner herein has only invoked section 11 of the Arbitration and Conciliation Act, 1996 in carrying the present request to Court. The two principal prayers in the petition are as follows: (a) A fit and proper person be appointed as an arbitrator to adjudicate the disputes and differences as stated in the petition hereinbefore; (b) The respondent and/or its men, servants, agents and/or assigns be restrained from giving any effect to and/or further affect to the letter dated 5th July, 2006 issued by Mr. Amit Kumar Basu as the alleged arbitrator or from taking any steps and/or further steps to commence and/or proceed with the reference. There is no dispute that there is an arbitration agreement between the parties. The dispute is as to the manner in which the constitution of the arbitral is to be secured. The arbitration agreement is found in Clause 69 of the dealership agreement. Any dispute or difference of any nature whatsoever or regarding any right, liability, act omission or account of any of the parties hereto arising out of or in relation to this Agreement shall be referred to the sole arbitration of the Managing Director of the Corporation, or of some Officer of the Corporation who may be nominated by the Managing Director. The Dealer will not be entitled to raise any objection to any such arbitrator on the ground that the arbitrator is an officer of the Corporation or that he has to deal with the matters to which the contract relates or that in the course of his duties as an Officer of the Corporation he had expressed views on all or any of the matters in dispute or difference. In the event of the arbitrator to whom the matter is originally referred being transferred or vacating his office or being unable to act for any reason the Managing Director as aforesaid at the time of such transfer, vacation of office or inability to act, shall designate another person to act as arbitrator in accordance with the terms of the Agreement. Such person shall be entitled to proceed with the reference from the point at which it was left by his predecessor. It is also a term of this contract that no person other than the Managing Director or a person nominated by such Managing Director of the Corporation as aforesaid shall act as arbitrator hereunder. The award of the arbitrator so appointed shall be final, conclusive and binding on all parties to the Agreement, subject to the provision of the Arbitration Act, 1940, or any statutory modification or re-enactment thereof and the rules made thereunder and for the time being in force shall apply to the arbitration proceedings under this clause.
(2.) Following disputes and differences having arisen between the parties, the respondent corporation issued a letter on March 31, 2006 to the Director (Marketing) of the corporation for the constitution of an arbitral tribunal under Clause 69 of the dealership agreement. A copy of the letter was marked to the petitioner herein The Director (Marketing) appointed an arbitrator on June 9, 2006. The arbitrator issued a notice on July 5,2006 to the parties. The petitioner wrote to the arbitrator on July 14,2006, the substance whereof is captured in the following paragraph: I would like to inform you that your appointment as Arbitrator is invalid and not in terms of the Agreement dated 11th October, 1972 as Director (Marketing) of your Corporation has no power to appoint you as an Arbitrator. Therefore on behalf of my client I request you to cancel the meeting on 24th July, 2006 at 10:30 am.
(3.) It does not appear that the petitioner herein applied under any of the applicable provisions of the 1996 Act before the arbitrator. It is also not immediately comprehensible as to why the arbitrator did not treat the petitioner's letter of July 14, 2006 as an objection to the authority of the arbitrator to adjudicate upon the disputes covered by the arbitration agreement and make a pronouncement thereon after affording the petitioner an opportunity to amplify the challenge.;