Court Finds Reasonable Time Elapsed for Arbitration Agreement Procedure; Appoints Retired Justice Ravindra Bhatt as Arbitrator
In a significant move, the Delhi High Court has appointed a sole arbitrator to adjudicate disputes arising within a family-owned business partnership. The decision, delivered by Justice Om Prakash Shukla, addresses the ongoing contention between Sugat Jain and Amit Jain, partners in M/s Aero Enterprises, concerning the interpretation and execution of their partnership deed.
The dispute centers around the appointment of an arbitrator as per Clause 14 of the partnership deed. The court was approached under Section 11(6) of the Arbitration and Conciliation Act, 1996, following failed mediation attempts and disagreements over the financial management of the partnership firm. The court found that a reasonable opportunity was given for mutual agreement on the arbitrator, which the parties could not achieve.
Despite the respondents' argument that the petition was premature due to the absence of an express refusal to appoint an arbitrator, the court concluded that the agreed procedure had effectively failed. The prolonged inability to agree upon an arbitrator, coupled with prior mediation efforts and ongoing disputes, led to this determination. Consequently, the court appointed Hon'ble Mr. Justice (Retd.) Ravindra Bhatt as the sole arbitrator.
Furthermore, the court's decision extends to interim measures sought under Section 9 of the Arbitration Act. The petition for interim reliefs regarding the status of collateral security and related bank instructions will now be considered under Section 17 by the newly appointed arbitrator.
The decision underscores the court's commitment to ensuring that arbitration processes are not unduly delayed by procedural technicalities, emphasizing that the failure to act within a reasonable time can warrant judicial intervention. The arbitration proceedings will be conducted under the auspices of the Delhi International Arbitration Centre.
This case highlights the challenges of arbitration in family-run businesses and the judiciary's role in facilitating dispute resolution through arbitration mechanisms.
Bottom Line :
Arbitration - Appointment of Sole Arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 - Petition not premature despite absence of express refusal by respondents to appoint arbitrator - Reasonable opportunity to act under the agreed procedure must be considered in light of prior proceedings and conduct of parties.
Statutory provision(s):
Arbitration and Conciliation Act, 1996 Section 11(6), Section 21, Section 9, Section 17, Section 12(2)
Sugat Jain v. Amit Jain, (Delhi) : Law Finder Doc id # 2968398
