DSC Ventures (P) Ltd. v. Ministry of Road Transport & Highways, 2020 SCC OnLine Del 669

DSC VENTURES PVT LTD V. MINISTRY OF ROAD TRANSPORT AND HIGHWAYS

Whether a party can appoint an arbitrator after the expiry of 30 days from the date of demand to do so, in a case falling under Section 11(6) of the Arbitration and Conciliation Act 1996?

Section 11(6) of the Arbitration and Conciliation Act 1996 reads that when a party has failed to act as required by procedure, or when the parties fail to reach an amicable solution, they may request the Supreme Court or as the case may be, the High Court to take necessary steps or direct orders, unless the agreement between the disputing parties prescribes other means for the same.

The petitioner and respondent entered into a Concession Agreement, dated 8th May, 2003, whereunder the respondent was to convert an existing 2-lane highway, (NH-6) in the state of Chhattisgarh, into a 4-lane highway. Disputes arose between the two parties, and clause 19.2 (a) of the Concession Agreement provided for reference of disputes to a three member arbitral tribunal, if efforts at resolution, by amicable settlement, were to fail.
Attempts, at amicable settlement of the disputes between the petitioner and respondent, failed. On 23rd March, 2007, the petitioner appointed its nominee arbitrator and, on 18th April, 2007, the respondent did likewise.
On 24th February, 2020, before the award was announced, unfortunately, Mr. S.C. Sharma, the learned arbitrator appointed by the respondent, expired. From this unfortunate occurrence, emanates the present dispute.
On the ground that, reading Section 15 (2), along with Section 11 (4) of the 1996 Act, the time of thirty days, as available with the respondent, for appointing a substitute arbitrator in place of Mr. S.C. Sharma, had expired, the petitioner has moved the present petition, under Section 11 (6) of the 1996 Act, praying that this Court should appoint a substitute arbitrator, in place of Mr. S.C. Sharma.
During the pendency of these proceedings, on 8th June, 2020, the respondent appointed Mr. Manoj Kumar, as its substitute arbitrator, in place of Mr. S.C. Sharma.

The High Court of Delhi dismissed the petition and held that the Arbitration Clause in the present case clearly specified that issuance of a notice by the Petitioner to the Respondent was required for the appointment of an Arbitrator, and in the given case, no such notice was given by the Petitioner, thus the Petitioner could not press on the Respondents right to appoint a substitute arbitrator.
The Court also held that the action of the Respondent appointing a substitute arbitrator even after 30 days would not go unnoticed given the restrictions laid down due to COVID-19.