Right to nominate Committee of Arbitrators is forfeited if no action is taken

Arbitrator – Appointment –  Constitution of Committee under Section 327 of the Cantonments Act, 2006, to resolve dispute by arbitration – Respondent did not respond to the notice of the petitioner for constitution of such Committee – Petitioner filed section 11 application for appointment of Arbitrator – Right of respondents to insist on constitution of Committee of Arbitrators in such section 11 application is forfeited – 

The petitioner was engaged for construction of bus shelters by the Pune Cantonment Board.   There was arbitration clause in the Agreement that the disputes between the parties shall be resolved by arbitration before a Committee constituted as per section 327 of the Cantonments Act, 2006.

Since the disputes arose between the parties, the petitioner had given a notice raising certain claims and same were denied by the respondent.   By the notice dated 18.7.2018, the petitioner invoked arbitration clause and called upon the respondents to constitute a Committee under Section 327 of the Cantonments Act, 2006.  There was no response.  As a result, the petitioner filed section 11 application.

HELD – Following the decisions of the Supreme Court in Datar Switchgears Ltd (2000)(8) SCC 151, Punj Lloyd Ltd (2006)(2) SCC 638 and M/s. Deep Trading (2013)(4) SCC 45, it was held that since the respondents failed to respond to the notice for constitution of Committee, it has forfeited right to insist on constitution of Committee of Arbitrator(s) in section 11 application.

The Arbitration Petition was allowed and the learned former Judge of the High Court was appointed as Arbitrator. 

Arbitration Petition No. 38 of 2019 – M/s. Sun Publicity Vs. The President, Pune Cantonment Board and another