Through: Mr. Muneesh Malhotra, Advocate v. MR SURYNDER GUPTA & ORS. D+

1. This petition has been preferred under Section 11 of the Arbitration and Conciliation Act to seek the appointment of an arbitrator.

2. The case of the petitioner is that the petitioner entered into two agreements on Ol.06.200I with the respondent nos.I to 4, one in its own name and the other in the name of River Ridge Software P Ltd. and respondent nos.I to 4 (the petitioner Aarkay Compusoft Pvt. Ltd. have acquired 95% of the shareholding of River Ridge Software P. Ltd.). Both these agreements contain an arbitration agreement, which provides that the disputes between the parties shall be adjudicated by one Mr. Atul Kaistha, Chartered Accountant.

3. Disputes arose between the parties as one M/s. Supertech 2011:DHC:6922...L............... '. ~ __._ •.. j J.. I I ~Ll ~ JI _l l J, I &. Software and Hardware Pvt. Ltd. ("Supertech" for short) claimed ownership of the copyright in the computer software which was the subject matter of the aforesaid two agreements. The petitioner herein filed a civil suit against respondent nos.l to 4. The said respondents filed an application under Section 8 of the Arbitration and Conciliation Act by placing reliance on the arbitration agreements.

4. The Court allowed the said application under Section 8 of the Act. The Court also directed Supertech to be involved in the arbitration proceedings. However, before the arbitral tribunal respondent nos.l to 4 raised an objection to respondent no.6 being roped into the arbitration, as they were not a party to the arbitration agreement between the petitioner on the one hand and respondent nos.l to 4 on the other hand. That objection was allowed by the learned arbitrator on 31.05.2002.

5. Supertech thereafter preferred a civil suit against respondent nos. l to 4 which was initially registered as Suit No.1597/2002 in this Court. The petitioner herein was also impleaded as party defendant. The said suit was transferred to the District Court upon the rise in the pecuniary jurisdiction of this Court.

6. According to the petitioner, in the meantime, on 15.02.2005 Mr.Kaistha tendered his resignation on the ground that the parties had not come forward and were not taking interest in the matter. ()

7. Respondent no.6 acting through AnjaIi Roy Choudhary, who had filed the suit on behalf of Supertech moved an application under Order

23 Rule 1 CPC to withdraw the suit on the ground that the parties, namely, the petitioner, respondent nos.l to 4, and Supertech had agreed to the claims of the respondent no.6 also be adjudicated in the same arbitration being conducted by Mr. Kaistha.

8. When that application was taken up on 01.06.2005 by the learned ADJ for consideration, it was informed to the court that Mr. Kaistha had already expressed difficulty in continuing with the arbitration proceedings. However, the Court while allowing the application, directed the parties to appear before him. The parties, namely, the petitioner herein and Supertech appeared before Mr.Kaistha on 17.06.2005. On that date, Mr. Kaistha fixed his fees and also adjourned the proceedings to 05.08.2005.

9. I may note that the proceedings of 17.06.2005 and the fact that the further date has been fixed as 05.08.2005 by Mr. Kaistha was not specifically disclosed in the present petition by the petitioner and have been brought on record by respondent nos.l to 4 alongwith their reply.

10. In this background, the submission of the petitioner is that since Mr. Kaistha did not fix any further proceedings, this Court may appoint another arbitrator.

11. The submission of learned counsel for respondent nos. l to 4 is & J..I,..&___._ ' & 1....L L.L _JJ, _a.a_ __.i.. that the petitioner has not come to this Court with clean hands. The petitioner has suppressed the order passed by the learned arbitrator on I 7.06.2005. He submits it was for the petitioner to have paid the fees of the learned arbitrator, which was not paid. Consequently, the learned arbitrator did not proceed with the matter. The failure of the learned arbitrator to proceed with the proceedings was induced by the petitioner who did not pay the fees. It is further argued that the j present petition is not maintainable under Section II of the Act and the petitioner could have, if at all, invoked Section I[4] and 15 of the Act.

12. Since Superteh was not impleaded as a party in these proceedings, vide order dated I[9].0l.20II I had directed their impleadment as a party respondent. On I 7.08.20II, I heard the submissions of the parties as to whether or not Supertech are a necessary party. After hearing the learned counsels, I deleted Supertech from the array of the respondents and left Supertech free to proceed with its own suit against respondent nos.I to 4 and the petitioner. I[3]. The clear position is that there was no agreement between the three parties, i.e. the petitioner, respondent nos.I to t) and Supertech to refer all their inter se disputes to arbitration in a common proceeding. Therefore, Supertech could not have been roped into the arbitration proceedings between the petitioner and respondent nos.I L L to 4, which were agreed to be conducted before Mr. Kaistha. In fact, the learned arbitrator ruled on 31.05.2002 that Supertech could not be made a party in the proceedings before him. I[4]. According to the petitioner, the learned arbitrator sent a communication on I[5].02.2005 resigning from his position as arbitrator. A copy of the letter has been placed on record as Annexure P-8. On the other hand, the submission of learned counsel for the respondent nos.I to 4 is that the said respondents did not receive the said communication. However, it also appears from the record that the petitioner had brought to the notice of the learned ADJ the aforesaid position when the order dated 01.06.2005 came to be passed. Even on that date, it appears, the respondent nos.I to 4 herein did not take the stand that the learned arbitrator had not tendered his resignation. The learned ADJ, in any event, directed the parties to appear before the arbitrator, as the resignation had not been communicated to the Court. There was no requirement for the learned Arbitrator to so communicate his resignation to the learned A.D.J. or, for that matter, to any other court. Therefore, it cannot be said that the learned Arbitrator Mr. Kaistha did not tender his resignation on I[5].02.2005. I[5]. After the resignation of Mr. Kaistha on I[5].02.2005, in fact, there was neither any express agreement between the parties, i.e. the petitioner, respondent nos.I to 4, and Supertech to refer all their claims and disputes to Mr. Kaistha for arbitration, nor a fresh > appointment was made by the Chief Justice of this Court or his designate under Section 11 of the Act, which were the only two ways in which jurisdiction could have been vested in Mr. Kaistha to act as an arbitrator.

16. Even if it were to be assumed that Mr. Kaistha had jurisdiction to act as the arbitrator by virtue of the agreement recorded before the court of the learned A.D.J. on 01.06.2005, the submission of learned counsel for the respondent that it was only the petitioner who had to comply with the direction issued by Mr. Kaistha in the order dated 17.06.2005 does not appears to be correct. The direction to deposit advance fee was given to each of the three parties, which was to be shared equally between them. In any event, even if the parties did not deposit the advance fee, the arbitrator should have proceeded on 05.08.2005. No proceeding of the said date has been filed by either of the party. Learned counsel for the petitioner submits that, according to his instructions, the arbitrator Mr. Kaistha changed the date and did not communicate the new date. In any event of the matter, Mr. Kaistha did not conduct any further proceedings at all. If the parties were not appearing before him, he should have wound up the proceedings. He did not do even this much. Therefore, by not acting, Mr. Kaistha lost his mandate by virtue of Section 14(1)(a) as he failed to act without undue delay.

17. There may be some merit in the submission of learned counsel > for respondent nos. l to 4, that the present petition should have been preferred under Section 14 and 15 of the Act and not under Section 11, if it is accepted that Mr. Kaistha got jurisdiction to act as an arbitrator by virtue of the order dated 01.06.2005 of the learned A.D.J. as, in that eventuality, this would be a case of termination of mandate on account of failure of the arbitrator to act without undue delay.