M/S. DEEP TRADING COMPANY versus M/S. INDIAN OIL CORPORATION AND ORS.

Citation: [2013] 2 S.C.R. 470 · Decided: 22-03-2013 · Supreme Court of India · Bench: RAJENDRA MAL LODHA · Disposal: Appeal(s) allowed

Cited by 5 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
B 
c 
[2013] 2 S.C.R. 470 
M/S. DEEP TRADING COMPANY 
v. 
M/S. INDIAN OIL CORPORATION AND ORS. 
(Civil Appeal No. 2673 of 2013) 
MARCH 22, 2013. 
[R.M. LODHA, J. CHELAMESWAR AND 
MADAN B. LOKUR, JJ.] 
ARBITRATION AND CONCILIATION ACT, 1996: 
ss. 11 (6) and 11 (8) - Appointment of arbitrator - Forfeiture 
of right of Corporation to appoint arbitrator as provided in 
arbitration clause of agreement - Held: Corporation has 
forfeited its right to appoint arbitrator - Matter referred to Chief 
D Justice of High Court for consideration of application of 
appellant-dealer u/ss 11(6) afresh. 
An agreement for kerosene/LOO dealership was 
entered into between respondent no. 1-Corporation and 
the appellant-dealer. There arose a dispute between the 
E parties and by a notice dated 9.8.2004 the dealer made a · 
demand to the Corporation to refer the dispute to the 
arbitrator. On 6.12.2004, the dealer filed an application u/ 
s 11(6) of the Arbitration and Conciliation Act, 1996 for 
appointment of an arbitrator. On 28.12.2004, the 
F Corporation appointed one of its senior Managers as the 
sole arbitrator. The Chief Justice of High Court by order 
dated 6.12.2007, dismissed the dealer's application u/s 
11 (6) of the Act holding that the arbitrator had already 
been appointed by the Corporation. 
G 
H 
Allowing the appeal, the Court 
HELD: 1. Sub-s. (6) of s.11 of Arbitration and 
Conciliation Act, 1996 makes provision for making an 
application to the Chief Justice for appointment of an 
470 
DEEP TRADING COMPANY v. INDIAN OIL 
471 
CORPORATION AND ORS. 
arbitrator in three circumstances, (a) a party fails to act A 
as required under the agreed procedure or (b) the parties 
or the two appointed arbitrators fail to reach an 
agreement expected of them under that procedure or (c) 
a person, including an institution, fails to perform any 
function entrusted to him or it under that procedure. If one 
B 
of the three circumstances is satisfied, the Chief Justice 
may exercise the jurisdiction vested in him uls 11(6) and 
appoint the arbitrator. In the instant case, the dealer 
moved the Chief Justice of the High Court uls 11(6)(a) for 
an appointment of the arbitrator as the Corporation failed c 
to act as required under Clause 29 of the agreement. 
[para 12] [478-B-D] 
Datar Switchgears Ltd. v. Tata Finance Ltd. and Another: 
(2000) 8 SCC 151; Punj Lloyd Ltd. v. Petronet MHB Ltd.: 
(2006) 2 SCC 638 - relied on. 
D 
1.2 Section 11 (8) provides that Chief Justice or the 
designated person or institution, in appointing an 
arbitrator, shall have due regard to two aspects, (a) 
qualifications required of the arbitrator by the agreement 
E 
of the parties; and (b) other considerations as are likely 
to secure the appointment of an independent and 
impartial arbitrator. Section 11 (8) does not help the 
Corporation at all in the fact situation. Firstly, there is no 
qualification for the arbitrator prescribed in the 
F 
agreement. Secondly, to secure the appointment of an 
independent and impartial arbitrator, it is rather necessary 
that someone other than an officer of the Corporation is 
appointed as arbitrator once the Corporation has forfeited 
its right to appoint the arbitrator under Clause 29 of the 
G 
agreement. [para 19 and 21] [480-D-E; 481-B-C] 
Northern Railway Administration, Ministry of Railway, New 
Delhi v. Patel Engineering Company Limited: 2008 (12) SCR 
216 = (2008) 10 sec 240 - referred to. 
H 
472 
SUPREME COURT REPORTS 
[2013) 2 S.C.R. 
A 
1.3 In the instant case, the Corporation has failed to 
act as required under the procedure agreed upon by the 
parties in Clause 29 and despite the demand by the 
appellant-dealer to appoint the arbitrator, the Corporation 
did not make appointment until the application was made 
B u/s 11(6). Thus, the Corporation has forfeited its right of 
appointment of an arbitrator. In this view of the matter, 
the Chief Justice ought to have exercised his jurisdiction 
u/s 11 (6) in the matter for appointment of an arbitrator 
appropriately. The appointment of the arbitrator by the 
c Corporation during the pendency of proceedings u/s 
11 (6) was of no consequence, and has not disentitled the 
dealer to seek appointment of the arbitrator by the Chief 
Justice u/s 11(6). [para 20 and 23] [481-A-B; 482-F-H] 
Mis. Newton Engineering and Chem. Ltd. v. Indian Oil 
D Corporation Ltd. & Ors. 2013 (4) SCC 44 - held inapplicable. 
1.4 Since the Corporation did not agree to any of the 
names 

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