UNION OF INDIA versus M/S. BHARAT BATTERY MANUFACTURING CO. (P) LTD.

Citation: [2007] 8 S.C.R. 993 · Decided: 13-08-2007 · Supreme Court of India · Bench: H.K. SEMA · Disposal: Dismissed
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Judgment (excerpt)

j 
UNION OF INDIA 
A 
"' 
v. 
MIS. BHARAT BATTERY MANUFACTURING CO. (P) LTD. 
AUGUST 13, 2007 
[H.K. SEMA ANDLOKESHWARSINGH PANTA,JJ.] 
B 
Arbitration and Conciliation Act, 1996: 
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ss. 11 (6) and (BJ-Petition u!s 1 I (6) for appointment of arbitrator- c 
Arbitrator appointed-Plea that procedure prescribed u/s 11 (8) not followed 
as arbitrator was not appointed in consonance with arbitration clause in the 
agreement-Held: Once s. 11 (6) petition is filed seeking appointment of 
arbitrator, power to appoint arbitrator in terms of arbitration clause of 
agreement ceases. 
A contract for supply of battery secondary lead acid was entered into D 
between appellant-Union of India and the respondent-company. Clause 24 of 
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the agreement provided for reference of the dispute to sole arbitrator to be 
appointed by the Department from Officers in Ministry of Law. According to 
the respondent as a dispute arose between the parties with respect to price 
variation clause, it gave a notice u/s 11 of the Arbitration and Conciliation E 
Act, 1996 demanding the appellant either to issue necessary amendments on 
account of price variation or appoint an arbitrator within 30 days. This was 
followed by another notice dated 2.1.2006 issued by the respondent invoking 
agreement clause and seeking appointment of arbitrator. The appellant failed 
to appoint an arbitrator within 30 days from receipt of the notice. Ultimately, p 
the respondent filed a petition u/s 11(6) on 30.3.2006 for appointment of an 
y 
arbitrator. By order dated 26.5.2006, a retired Judge of the High Court was 
appointed as the sole arbitrator. Aggrieved, the Union oflndia filed the instant 
appeal. 
It was contended for the appellant that it had appointed the sole arbitrator 
on 15.5.2006 in terms of clause 24 of the agreement; that while appointing d 
arbitrator u/s 11(6) the procedure prescribed u/s 11(8) of the Act was not 
followed and the appointment made of the sole arbitrator u/s 11(6) was not in 
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consonance with clause 24 of the agreement. 
993 
};I 
994 
SUPREME COURT REPORTS 
[2007} 8 S.C.R. 
A 
Dismissing the appeal, the Court 
HELD: The appeUants are stopped from making appointment of arbitrator 
in terms of Clause 24 of the agreement after the petition u/s 11(6) of the 
Arbitration and Reconciliation Act, 1996 is filed by the respondent. Once 
Section 11(6) petition is filed before the Court, seeking appointment of an 
B arbitrator, the power to appoint an arbitrator in terms of arbitration clause of 
the agreement ceases. Section 11(8) of the Act could have come to the aid of 
the appellants, had they appointed an arbitrator within 30 days from the date 
of receipt of request to do so from the respondent or the extended time as the 
case may be. Once a party files an application under Section 11(6) of the Act, 
the other party extinguishes its right to appoint an arbitrator in terms of the 
C clause of the agreement thereafter. The order of appointment of arbitrator 
passed by the appellants on 15.5.2006 was without jurisdiction. 
(Para 9, 15 and 16) (997-D-F; 999-B-C) 
Punj Lloyd Ltd. v. Petronet MHB Ltd., (2006) 2 SCC 638 and Datar 
0 
Switcngears Ltd. v. Tata Finance Ltd. and Anr., (2000) 8 SCC 151, relied on. 
E 
.F 
Union of India And Anr., v. M.P. Gupta, (2004) IO SCC 504; and S. Rajan 
v. State of Kera/a and A nr., ( 1992) 3 SCC 608, distinguished. 
-'., 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3692 of2007. 
From the Judgment dated 26.5.2006 of the High Court of Delhi at New 
Delhi in A.P. No. 213 of2006. 
P .P. Malhotra, ASG., G. Prakash, H.K. Puri, V .K. Verma for the Appellant. 
Rajesh Banati, Shailendra Bhardwaj, Hari Mohan for the Respondent. 
: 
The Judgment of the Court was delivered by 
H.K. SEMA, J. I. Leave granted. 
2. This appeal preferred by the Union of India is directed against the 
G judgmen~ and order dated 26.5.2006 of the High Court of Delhi in Arbitration 
Petition No: 213 of 2006. By the aforesaid order the High Court appointed 
an arbitrator on a petition filed by the respondent under Section 11(6) of the 
Arbitration and Conciliation Act,. 1996 (in short 'the Act'). 
3. To answer the question involved in this appeal, it may not be necessary 
H to delv~ the entire facts leading to the filing of the present appeal. .Suffice 
. ,. 
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y 
U.0.1. v. BHARAT BATTERY MANUFACTURING CO. (P) LTD. [H.K. SEMA, J .] 995 
it say that in response to an invitation to tender inquiry No. A.M-5/RC- A ·· 
14100
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