Jharkhand High Court: Under Section 11 Of A&C Act, Petition Needs Sole Existence Of Arbitration Clause

Jharkhand High Court: Under Section 11 Of A&C Act, Petition Needs Sole Existence Of Arbitration Clause

It outlines the procedure where parties are unable to agree on the selection of an arbitrator

The Jharkhand High Court has held that under Section 11 of the Arbitration and Conciliation (A&C) Act, 1996, it is not required to look beyond, except the existence of the arbitration clause.

The bench of Acting Chief Justice Shree Chandrashekhar stated that at that stage, it was 'no more, no less'.

Section 11 pertains to the appointment of arbitrators. It outlines the procedure in cases where parties to an arbitration agreement are unable to agree on the selection of an arbitrator.

The case:

Smart Chip Private Limited (petitioner) approached the court seeking the appointment of a sole arbitrator under Section 11(6) of the A&C Act to resolve disputes with the Jharkhand State Cooperative Bank Ltd (respondent).

On the other hand, the respondent argued that the petition was not maintainable, as the petitioner, an agent of the cooperative bank, fell under the purview of Section 48 of the Bihar Cooperative Societies Act, 1935. Therefore, a dispute involving an agent of a cooperative society must be initiated through the Registrar of Cooperative Societies.

The bank cited the decision of the Supreme Court in the Indu Builders v. State of Jharkhand (2003) case, referring to paragraph 9 of the judgment. It emphasized that disputes concerning the business of a cooperative society, including those involving agents, were within the jurisdiction of the Registrar of Cooperative Societies under Section 48(1) of the Bihar Act.

It argued that the involvement of an agent (petitioner), in constructing houses for the cooperative society members on their land, reinforced the applicability of cooperative laws rather than general arbitration laws.

The judge held that the objections raised by the respondent were not sustainable, as the Indu Builders case judgment was inapplicable to the matter.

The bench referred to the Supreme Cooperative Group Housing Society v. H.S. Nag & Associates Pvt Ltd (1996) 9 SCC 492 case, wherein the apex court clarified that disputes arising from agreements containing arbitration clauses were arbitrable. It emphasized the binding nature of such agreements under Section 2(a) of the A&C Act.

The court examined Clause 8 of the Request for Proposal for Supply, Installation, Commissioning and Management of Micro ATM and Allied Software case, which delineated arbitration as the method for resolving disputes arising from the contract between the petitioner and the respondent.

The bench ruled that it possessed the authority to appoint an arbitrator if the parties failed to agree to the procedure.

The court referred to the judgment in the N.N. Global Mercantile Pvt Ltd v. Indo Unique Flame Ltd (2023) 7 SCC 1 case, wherein the high court held that its role at the Section 11 stage was limited to confirming the existence of an arbitration clause.

Thus, the judge appointed Saibal Kumar Laik, a practicing advocate of the high court, as the sole arbitrator to adjudicate the dispute.