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Purple India Holdings Ltd. v. Drilling & Offshore Pte. Ltd.

Arbitration Petition · Neutral citation not assigned (Arbitration Petition No. 23 of 2015)Decided 30 Mar 2016
Arbitration Petition No. 23 of 2015
Chief Justice T.S. Thakur · Justice R. Banumathi · Justice Uday Umesh Lalit

Background

An engagement letter between the parties contained an arbitration clause requiring disputes to be resolved by a three-member arbitral panel, with arbitration seated in Mumbai. After a dispute arose, the petitioner wrote to the respondent on 28 January 2015 asking it to nominate its arbitrator, but the respondent did not respond or appear even before the Supreme Court. Left with no alternative, the petitioner approached the Supreme Court under Section 11(6) of the Act seeking appointment of an arbitrator.

Decision Breakdown

Since the respondent did not contest the petition or file any counter-affidavit, the Court treated the petitioner's averments, supported by affidavit, as correct for the limited purpose of deciding whether to refer the matter to arbitration. Finding no reason to decline the request, the Court appointed Hon'ble Mr. Justice H.S. Bedi, a former Judge of the Supreme Court, as the sole arbitrator to adjudicate the dispute, leaving him free to fix his own fee and directing him to issue notice to the parties. The Court clarified that it expressed no opinion on the merits of the underlying commercial dispute itself, that is for the arbitrator to decide, but the specific relief sought in this petition (appointment of an arbitrator) was fully and finally granted.

Lesson Learnt

If a party ignores a valid request to appoint its arbitrator under an arbitration clause, the other side can approach the Supreme Court (or the relevant High Court, depending on the agreement) under Section 11 of the Arbitration Act to get an arbitrator appointed: silence or non-appearance does not block the process.

Official source (sci.gov.in)View Judgment (PDF)

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