DENEL (PROPRIETARY LIMITED) versus GOVT. OF INDIA, MINISTRY OF DEFENCE

Citation: [2012] 2 S.C.R. 897 · Decided: 09-01-2012 · Supreme Court of India · Bench: S.S. NIJJAR · Disposal: Case Allowed
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Judgment (excerpt)

[2012] 2 S.C.R. 897 
DENEL (PROPRIETARY LIMITED) 
v. 
GOVT. OF INDIA, MINISTRY OF DEFENCE 
(Arbitation Petition No. 11 of 2011) 
JANUARY 09, 2012 
[SURINDER SINGH NIJJAR, J.] 
Arbitration and Conciliation Act, 1996 - s. 11(4), (5), (6) 
and (8) -Application u/s. 11 (4) and (6) - Government contract 
A 
B 
- Disputes between parties - Director General, Ordnance C 
Factory (DGOF) appointed Additional General Manager of the 
Factory as an arbitrator as per the Arbitration clause -
Petitioner apprehending bias, issued Notification that 
mandate of arbitrator was terminated - However, the arbitrator 
continued with the arbitration proceedings - Thereafter, on an 
D 
application filed by the petitioner u/s. 14(2), mandate of 
arbitrator terminated observing that the arbitrator had been 
biased - Direction for appointment of DGOF as an arbitrator 
and in the alternative option given to DGOF to appoint 
Government servant as an arbitrator as per the Arbitration 
E 
clause -
Within 30 days, DGOF not commencing the 
arbitration proceedings nor did he appoint any Government 
Servant as arbitrator- Petition u/s. 11 (6) seeking appointment 
of an independent arbitrator by the petitioner - Two weeks 
later, 
appointment of 'S' as 
arbitrator by the 
F 
respondents(Government) - Maintainability of petition uls. 
11 (6) - Held: Is maintainable - Right to appointment of an 
arbitrator does not automatically get forfeited after expiry of 
30 days as prescribed uls. 11 (4) and 11 (5) but an 
appointment has to be made before the petitioner fifes 
G 
application u/s. 11 seeking appointment of an arbitrator - On 
facts, subsequent arbitrator was appointed after filing of the 
petition u/s. 11 (6) - Thus, respondents clearly forfeited their 
right to make the appointment of an arbitrator and 
897 
H 
898 
SUPREME COURT REPORTS 
[2012] 2 S.C.R. 
A 
appointment of 'S' as an arbitrator cannot be sustained -
Furthermore, material placed by the petitioner indicate that it 
would not be unreasonable to entertain the belidf that the 
arbitrator appointed by the respondent would not be 
independent - Thus, appointment of 'S' cannot pass the test 
B u/s. 11 (8) which is ensuring appointment of independent and : 
impartial arbitrator - Sole Arbitrator appointed to adjudicate · 
disputes that have arisen between the parties - Appointment 
of Arbitrators by the Chief Justice of India Scheme, 1996 -
Paragraph 2. 
c 
D 
Datar Switchgears Ltd. Vs. Tata Finance Ltd. & Anr. 2000 
(8) SCC 151; Punj Lloyd Ltd. Vs. Petronet MHB Ltd. 2006 
(2) SCC 638; Indian Oil Corporation Limited & Ors. Vs. Raja 
Transport Private Limited (2009) 8 SCC 520: 2009 (13) SCR 
510 - relied on. 
Yashwith Constructions (P) Ltd. Vs. Simplex Concrete 
Piles India Ltd. & Anr. 2006 (6) SCC 204: 2006 (3) Suppl. 
SCR 96; Bharat Sanchar Nigam Limited & Anr. Vs. Motorola 
India Private Limited 2009 (2) SCC 337: 2008 (13) SCR 445; 
E 
Dem~/ (Proprietary) Limited· Vs. Bharat Electronics Limited & 
Anr. 2010 (6) SCC 394: 2008 (13) SCR 445; Northern 
Railway Administration, Ministry of Railway, New Delhi Vs. 
Patel Engineering Company Limited 2008 (10) SCC 240: 
2008 (12) SCR 216; Ace Pipeline Contracts (P) Ltd. Vs. 
F Bharat Petroleum Corpn. Ltd. 2007 (5) SCC 304: 2007 (4) 
SCR 777 - referred to. 
G 
H 
Case Law Reference: 
2000 (8) sec 151 
~006 (2) sec 638 
2006 (3) Suppl. SCR 96 
2009 (13 ) SCR 510 
2008 (13) SCR 445 
Relied on. 
Para 7 
Relied on. 
Para 7 
Referred to. Para 7 
Relied on. 
Para 8 
Referred to. Para 11 
DENEL (PROPRIETARY LTD.) v. GOVT. OF INDIA, 
899 
MIN. OF DEFENCE 
2008 (12 ) SCR 216 
2007 (4) SCR 777 
Referred to. Para 12 
Referred to. Para 12 
CIVIL ORIGINAL JURISDICTION : Arbitration Petition No. 
11 of 2011. 
A 
Under Section 11 (6) of the Arbitration and Conciliation 
B 
Act-1996. 
Shekhar Naphade, Vikas Goel, Abhishek Kumar, Momota 
Devi Oinam for the Petitioner. 
H.P. Raval, ASG, Wasim A. Quadri, Sadhna Sandhu, 
C 
Harsh N. Parekh, Anirudh Sharma, Palash Kanwar, Anil 
Katityar for the Respondent. 
The order of the Court was delivered by 
ORDER 
SURINDER SINGH NIJJAR, J. 1. The petitioner has filed 
the present application under Sections 11 (4) and (6) of the 
Arbitration and Conciliation Act, 1996 (hereinafter referred to 
D 
as the 'Act') read with paragraph 2 of the appointment of the 
Arbitrators by the Chief Justice of India Scheme, 1996. It is 
E 
stated that a contract was entered into between the parties for 
the supply of Base Bleed Units. Initially the
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