Shiv Kumar Sharma, J. - (1.) The prayer of application company in the instant application filed under Sec. 11 of the Arbitration and Conciliation Act, 1996 (for short 'the Act') is as under: - (a) to declare that there is no concluded contract between the applicant (for short 'VIP') and the respondent No. 1 (for short 'Saboo') and there is no valid and binding arbitration agreement in existence. (b) if relief (a) is declined then to change the nominated arbitrator and appoint a sole arbitrator from the penal of retired Supreme Court/High Court Judges. (c) to restrain the respondent No. 2 (Mr. Ashok Sharma) from proceeding with the proposed arbitration. The VIP averred in the application that the Saboo wrote a letter dated June 11, 2007 to VIP stating therein that Saboo was interested in buying 10,000 pieces of Maxima 53 AL suitcases from VIP. Along with the said letter a cheque for Rs. 1,00,000 drawn on HDFC bank was forwarded to the Branch Area Sales Executive of the VIP. It is further stated by VIP that inadvertently its Branch Area Sales Executive made endorsement "accepted" on the said letter. The said acceptance was to be made by VIP's Regional Office as it varied from earlier quotation. The VIP's office studied the feasibility of the proposal put forth by Saboo's Purchase officer. Since the price offered by Saboo was too low it was not commercially viable to accept the proposal. The VIP in these circumstances instructed its Sales Executive to Communicate non acceptance of offer and further instructed as a good will gesture to supply 400 suitcases to Saboo. The VIP's Sales Executive Promptly sent reply to Saboo vide its communication dated June 15, 2007 stating that VIP was not in a position to supply 10,000 suitcases at the price proposed by Saboo. The VIP further submitted that by no stretch of imagination can it be said that there was a "concluded" contract between the VIP and Saboo, The VIP was shocked to receive letter dated July 5, 2007 from Saboo pressurizing VIP to deliver balance suitcases as mentioned in the proposal. The VIP sent legal notice demanding Rs. 4 crores as damages for alleged loss of business. The VIP replied the said legal notice vide letter dated July 25, 2007. The Saboo hastily invoked the arbitration clause and unilaterally nominated one Mr. Ashok Sharma as sole arbitrator vide letter dated July 25, 2007. The VIP responded to the above communication by its advocates letter dated August 9, 2007 and challenged the existence of concluded contract as well as the appointment of arbitrator. The VIP also separately wrote to the sole arbitrator that the being a friend of the Advocates of Saboo not acceptable as a sole arbitrator to them. But the sole arbitrator had gone ahead and fixed the hearing for arbitration on October 1, 2007. The VIP stated that the respondent has wrongly treated its proposal dated June 11, 2007 as a concluded contract between them. Instead of acting in good faith and adopting a fair approach in resolving the disputes the Saboo have gone ahead and appointed an arbitrator who is an associate of the Saboo's Advocate. The VIP in these circumstances stated that it has genuine apprehension about the impartiality of the Arbitrator nominated by the Saboo. The VIP stated that there is a real likelihood of bias and sufficient circumstances exist to raise reasonable doubts about the neutrality/impartiality of the Arbitrator. The VIP further stated that the address of Saboo's advocate Mr. D.R. Mudgal is the same as that of the nominated arbitrator Mr. Ashok Sharma. In these circumstances above stated prayer has been made.
(2.) In the reply to the application Saboo raised preliminary objections. The first objection was that arbitrator was appointed by Saboo as per terms of the contract. Pursuant to the terms of contract the right of appointment of arbitrator was exclusively reserved by Saboo. Pursuant to this right Saboo requested Ashok Sharma to be an Arbitrator vide letter dated July 25, 2007. According to Ss. 13 and 16 of the Act the question about independence and impartiality of the Arbitrator could be raised before the arbitrator, who would decide the same and this Court has no jurisdiction to decide the question of impartiality of the Arbitrator. Saboo further averred in the reply that there is no provision in the Act which empowers the Court to change the Arbitrator. VIP has miserably failed to make out a case within the purview of the Act for appointment of Arbitrator. It is further averred that validity of contract is to be decided by the Arbitrator. On these objections Saboo made a prayer to dismiss the application as not maintainable and wholly misconceived.
(3.) I have heard the learned counsel for the parties and perused the case law cited before me.;