SECTION 14

Proddatur Cable TV Digi Services v. Siti Cable Network Limited1

Question of Law
The issue before the court, as framed by it, was determining the "eligibility of the "Company"
referred to in the Arbitration Clause between the parties, to unilaterally appoint a Sole Arbitrator
to adjudicate the disputes between the parties".
The Court reasoned that the arbitration clause “empowering the ‘Company’ to appoint the Sole
Arbitrator would be vitiated in the light of the law laid down by the Supreme Court”. Accordingly,
the arbitrator was declared ineligible and substituted.
Rule of Law ( Ratio Decidendi)
Avoiding of the appointment of a sole arbitrator by a person having an interest in the outcome of
the dispute.
Held
The Delhi High Court looked into the underlying basis of the decision of the SC in Perkins
Eastman and concluded that what was sought to be avoided was in fact the appointment of a
sole arbitrator by a person having an interest in the outcome of the dispute. On this basis, it
ruled that even SITI, acting through its Board of Directors, was not eligible to unilaterally appoint
a sole arbitrator as it was an interested party.

The High Court then referred to the decision of the SC in Bharat Broadband Network Limited v
United Telecoms Limited4, to decide what would happen to pending arbitrations in light of a
decision by the SC. In that case, it was held that as soon as a judgment clarifying matters is
pronounced, §14 of the A&C Act would come into play, automatically leading to the termination
of the mandate de jure.

Given this position of law, and while relying on Perkins Eastman, the Delhi High Court declared
that the mandate of the arbitrator had terminated de jure, and appointed another sole arbitrator
in her stead.

Jayesh H. Pandya vs Subhtex India Ltd2

Question of Law
The Supreme Court reasoned that the intent of the 1996 law is to guarantee an expeditious
settlement of disputes and that it is focused on the fulcrum of promptness, but at the same time
that ​the Arbitrator is expected to resolve disputes in the light of the negotiated terms of
the contract and the process​. The arbitration procedures are also to be governed by and
executed by the terms decided by the parties. The Arbitrator, therefore, cannot go beyond the
Clause of the arbitration agreement. A swift and suitable solution to the issue can not be
ignored, however, at the same time, proceedings must be regulated by the terms negotiated by

1
2020 (2) ARBLR 260 (Delhi)
2
2019 (11) SCALE 528
the parties to complete the arbitration proceedings, without which the authority of the object of
the Act in which the Parliament has been legislated to act on the agreed terms and conditions of
the agreement will be hampered.

Rule of Law(Ratio Decidendi)

There must be a voluntary and intentional relinquishment of a right and the voluntary choice is
the essence of waiver
Held
The Supreme Court, reading the terms of ACA 1996, ss 14 and 15, found that the arbitrator's
authority had been suspended if it had not acted without unreasonable delay. The evidence
established that, during the arbitral hearings, the appellants had objected to an extension of
time, and that, in the absence of any agreement, the court's mandate was immediately
terminated. The Supreme Court was of the opinion that the time limit laid down in the
Arrangement was well within the scope of ACA 1996 and that the arbitrator becomes a functus
officio after a four-month period. The Supreme Court permitted the appeal, putting aside the
ruling of Bombay HC.

SECTION 15

Frank Airways Pvt. Ltd. vs Airport Authority of India3

Question of Law
The issue that has been placed before the court is that whether Madhya Pradesh High Court
has the jurisdiction to rule on an appeal made by the appellant (Frank Airways) under Sections
14 & 15 of the Arbitration and Conciliation Act, 1996. The Court reasoned that on the issue of
termination of an arbitrator as per section 14(2) of the Act, the appellant was to approach a
court as per the provisions laid down by Section 2(e) of the Act and that in the following case
would fall under the jurisdiction of the Principal Civil Court.

Rule of Law(Ratio Decidendi)

The appellant was to approach the Principal Court of Original Jurisdiction in view the provision
of Section 2(e) of the A&C Act and as held in Nimet Resources Inc and another Vs. Essar
Steels Limited (MANU/SC/0603/2000)

Held
The court in its judgment held that in the above case in relation to the issue regarding the
termination of an arbitrator as per the provisions of Section 14(2), the applicant was to approach
a competent court under Section 2 1(e) and therefore the jurisdiction did not lie with this court.
In the case of Nimet Resources Inc.& Ors. v. Essar Steels Limited laid that the term “Court”
under the 1996 Act for an application under Section 14(2) would be maintainable under a

3
MANU/MP/2141/2019
Principal Civil Court which may include a High Court but not this court. It held that courts across
the country were consistent in ascertaining that cases of this nature were to be heard before a
civil court and that the bench had no say in matters under the ambit of Section 14 of the Act.

Fibroplast Marine Private Limited vs Ashok Leyland Limited4

Question of Law
The issue that has been placed before the court is whether the right of the other party to appoint
the Arbitrator in accordance with the A and C Act gets extinguished and it does not revive if the
arbitrator or one of the arbitrators is either unable to continue or when his mandate is
terminated. The court saw that there was no contestation in the application of Ramjee Power
Constructions Limited Vs. Damodar Valley Corporation reported in MANU/WB/1306/2009,
upheld the precedent of Hon’ble Calcutta High Court.

Rule of Law(Ratio Decidendi)

The court relied on the decision of Ramjee Power Constructions Limited Vs. Damodar Valley
Corporation (MANU/WB/1306/2009) and since there was no contestation between the parties, it
decided to appoint an arbitrator.

Held
It was held that Hon'ble Mrs Justice Chitra Venkataraman is appointed as Arbitrator who will
substitute Late Hon'ble Justice Mr N.V. Balasubramanian qua the Arbitral Tribunal.

4
MANU/TN/0152/2020