In ARB.P. 683/2015- DEL HC- Intervention of Court under Section 11 of Arbitration & Conciliation Act arises only when parties are unable to agree on appointment of Arbitrator or procedure otherwise fails: Delhi HC 
Justice Prateek Jalan [15-11-2022]

Read Order: ANIL GOEL v. SATISH GOEL 

Mansimran Kaur

New Delhi, November 16, 2022: The Delhi High Court has clarified that as per section 11 of the Arbitration and Conciliation Act, 1996, the appointment of arbitrators is ordinarily to be made by the parties or in accordance with the procedure agreed by the parties.

 A Single bench of Justice Prateek Jalan disposed of the instant petition instituted  under Section 11 of the Arbitration and Conciliation Act, 1996, arising  out of a Memorandum of Understanding dated November 12, 2014. 

The Single Judge bench was of the view that only Satish and Anil can be referred to arbitration in the present proceedings. 

It appeared from a reading of the MoU that it was intended to settle issues between two brothers- the petitioner and the first respondent herein-and members of their family with regard to division of certain businesses and properties. Regrettably, that salutary objective was not fulfilled and parties were before this Court, with respect to the disputes having arisen at the stage of appointment of an arbitrator.

After considering the submissions of the parties, the Court at the outset noted that it is clear from a reading of Section 11 of the Act that the appointment of arbitrators is ordinarily to be made by the parties or in accordance with the procedure agreed by the parties. 

The intervention of the Court under Section 11 of the Act arises only when the parties are unable to agree on an appointment or the procedure otherwise fails. 

In addition to the aforesaid question of invocation of the arbitration clause for purposes of Section 11, an ancillary question arises as to whether an arbitral proceeding can at all be commenced against other family members without a notice addressed to them in terms of Section 21 of the Act, the Court stated. 

In the present case, the parties have, in the MoU, signified their intention to appoint a three-member tribunal, of which two arbitrators are to be appointed by the parties and a third arbitrator appointed by the nominated arbitrators. The plea with which Anil- the petitioner  had approached this Court was  that he called upon Satish-  the opposing party, to nominate an arbitrator which Satish has failed to do. 

For this reason, the relief sought was for the Court to appoint an arbitrator on behalf of Satish and for a consequent reference to the tribunal constituted in terms of the MoU.

It was further noted by the Court that Anil’s pleadings in this petition also proceed on the basis that only he and Satish were parties to the arbitration agreement. 

It is for this reason that the invocation letter was neither addressed to any other person, nor was any other person sought to be impleaded in this petition. Although Vinnu was impleaded at her own instance by the order dated May 25, 2022 she stated in the application that she wished to oppose the petition on the ground that she is not a party to the MoU at all and her personal properties could not be subjected to division,the Court noted. 

The arbitration petition was not amended to incorporate any pleadings against her. The other members of the family were issued notice to ascertain their stand on the question of reference in the hope that a composite adjudication of disputes between the parties may be possible. That hope had unfortunately remained unfulfilled. Be that as it may, it cannot be disputed that no letter of invocation of arbitration was addressed to any of them, the Court further noted.

For the aforesaid reasons, the Court was of the view that only Satish and Anil can be referred to arbitration in the present proceedings. In view of this conclusion, it is not necessary to examine any other contention of the parties. 

The petition was disposed of accordingly.