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REPORTABLE

IN THE SUPREME COURT OF INDIA ORIGINAL CIVIL JURISDICTION

ARBITRATION PETITION NO. 20 OF 2011

ANTRIX CORP. LTD. ...PETITIONER   Vs.

DEVAS MULTIMEDIA P. LTD.  ...RESPONDENT

J U D G M E N T

ALTAMAS KABIR, CJI.

1. An application under Section 11(4) read with  

Section 11(10) of the Arbitration and Conciliation  

Act,  1996,  hereinafter  referred  to  as  "the  1996  

Act", has given rise to an important question of  

law relating to the scope and ambit of the powers

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of the Chief Justice under Section 11(6) of the  

said  Act.   In  view  of  the  importance  of  the  

question, which has arisen, the matter which was  

being heard by the delegatee of the Chief Justice,  

has  been  referred  to  a  larger  Bench  for  

determination thereof.

2. M/s. Antrix Corporation Limited, the Petitioner  

herein, a Government Company incorporated under the  

Companies Act, 1956, and engaged in the marketing  

and sale of products and services of the Indian  

Space Research Organization (ISRO), entered into an  

Agreement with the Respondent, Devas Multimedia P.  

Ltd., hereinafter referred to as "Devas" on 28th  

January,  2005,  for  the  lease  of  Space  Segment  

Capacity  on  ISRO/  Antrix  S-Band  Spacecraft.  

Article  19  of  the  Agreement  empowered  the  

Petitioner to terminate the Agreement in certain  

contingencies.  It also provided that the Agreement

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and the rights and responsibilities of the parties  

thereunder  would  be  subject  to  and  construed  in  

accordance with the laws of India.  In other words,  

the domestic law would be the governing law of the  

Agreement.

3. Article  20  of  the  Agreement  deals  specially  

with arbitration and provides that in the event any  

dispute or difference arises between the parties as  

to any clause or provision of the Agreement, or as  

to the interpretation thereof, or as to any account  

or  valuation,  or  as  to  rights  and  liabilities,  

acts, omissions of any party, such disputes would  

be referred to the senior management of both the  

parties to resolve the same within 3 weeks, failing  

which  the  matter  would  be  referred  to  an  

Arbitral Tribunal comprising of three Arbitrators.  

It was provided that the seat of arbitration would  

be New Delhi in India.  It was also provided that

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the  arbitration  proceedings  would  be  held  in  

accordance  with  the  rules  and  procedures  of  the  

International  Chamber  of  Commerce  (ICC)  or  

UNCITRAL.

4. On 25th February, 2011, the Petitioner Company  

terminated the Agreement with immediate effect in  

terms of Article 7(c) read with Article 11(b) of  

the Agreement in keeping with the directives of the  

Government,  which  it  was  bound  to  follow  under  

Article 103 of its Articles of Association.  By its  

letter dated 28th February, 2011, the Respondent  

objected to the termination.  On 15th April, 2011,  

the  Petitioner  Company  sent  to  the  Respondent  

Company a cheque for Rs. 58.37 crores refunding the  

Upfront  Capacity  Reservation  Fee  received  from  

Devas.  The said cheque was, however, returned by  

Devas  on  18th  April,  2011,  insisting  that  the  

Agreement was still subsisting.  

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5. In keeping with the provisions of Article 20 of  

the Arbitration Agreement, the Petitioner wrote to  

the  Respondent  Company  on  15th  June,  2011,  

nominating  its  senior  management  to  discuss  the  

matter and to try and resolve the dispute between  

the  parties.   However,  without  exhausting  the  

mediation  process,  as  contemplated  under  Article  

20(a)  of  the  Agreement,  Devas  unilaterally  and  

without prior notice to the Petitioner, addressed a  

Request for Arbitration to the ICC International  

Court of Arbitration on 29th June, 2011, seeking  

resolution  of  the  dispute  arising  under  the  

Agreement.   Through  the  unilateral  Request  for  

Arbitration, Devas sought the constitution of an  

Arbitral Tribunal in accordance with the ICC Rules  

of Arbitration, hereinafter referred to as "the ICC  

Rules", and nominated one Mr. V.V. Veedar, Queen's  

Counsel, as its nominee Arbitrator, in accordance  

with the ICC Rules.

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6. According to the Petitioner, it is only on 5th  

July, 2011, that it came to learn that Devas had  

approached  the  ICC  and  had  nominated  Mr.  V.V.  

Veedar, as its nominee Arbitrator, upon receipt of  

a copy of the Respondent's Request for Arbitration  

forwarded  by  the  ICC.  By  the  said  letter,  the  

Petitioner was also invited to nominate its nominee  

Arbitrator.

7. Instead  of  nominating  its  Arbitrator,  the  

Petitioner, by its letter dated 11th July, 2011,  

once again requested Devas to convene the Senior  

Management Team meet on 27th July, 2011, in terms  

of  the  Agreement.   Pursuant  to  such  request,  a  

meeting of the Senior Management Team was held, but  

Devas insisted that the parties should proceed to  

arbitration  and  did  not  discuss  the  issues  in  

accordance  with  Article  20(a)  of  the  Agreement.  

Despite the attempt to resolve the dispute through

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the  Senior  Management  Team  and  despite  the  fact  

that  Devas  had  already  invoked  the  Arbitration  

Agreement by making a Request for Arbitration to  

the  ICC  and  had  also  appointed  its  nominee  

Arbitrator  under  the  ICC  Rules,  the  Petitioner  

appointed Mrs. Justice Sujata V. Manohar, as its  

Arbitrator  and  called  upon  Devas  to  appoint  its  

nominee Arbitrator within 30 days of receipt of the  

notice.  Consequently, while Devas had invoked the  

jurisdiction of the ICC on 29th June, 2011, the  

Petitioner  subsequently  invoked  the  Arbitration  

Agreement in accordance with the UNCITRAL Rules on  

the  ground  that  Devas  had  invoked  ICC  Rules  

unilaterally,  without  allowing  the  Petitioner  to  

exercise  its  choice.   Having  invoked  the  

Arbitration Agreement under the UNCITRAL Rules, the  

Petitioner called upon the Respondent to appoint  

its Arbitrator within 30 days of receipt of the  

notice.

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8. On 5th August, 2011, the Petitioner wrote to  

the Secretariat of the ICC Court stating that it  

had appointed its Arbitrator, in accordance with  

the Agreement between the parties, asserting that  

in  view  of  Article  20  of  the  Agreement,  the  

arbitral  proceedings  would  be  governed  by  the  

Indian law, viz., the Arbitration and Conciliation  

Act, 1996.

9. The  Respondent  did  not  reply  to  the  

Petitioner's  letter  dated  30th  July,  2011.  

However, the International Chamber of Commerce, by  

its letter dated 3rd August, 2011, responded to the  

Petitioner's  letter  dated  30th  July,  2011,  and  

indicated as follows :

"We refer to our letter dated 18  July,  2011,  and  remind  the  parties  that  the  issues  raised  regarding  the  arbitration  clause  would shortly be submitted to the  Court  for  consideration.   All  comments submitted by the parties

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will  be  brought  to  the  Court's  attention.  In this regard, any  final  comments  from  the  parties  may  be  submitted  to  us  by  5  August, 2011.  

Should the Court decide that this  arbitration  shall  proceed  pursuant to Article 6(2) of the  Rules,  any  decision  as  to  the  jurisdiction  of  the  Arbitral  Tribunal  shall  be  taken  by  the  Arbitral Tribunal itself."

10. It  is  in  such  circumstances  that  the  

application under Section 11(4) read with Section  

11(10) of the 1996 Act, being Arbitration Petition  

No. 20 of 2011, came to be filed by the Petitioner,  

inter alia, for a direction upon Devas to nominate  

its  Arbitrator  in  accordance  with  the  Agreement  

dated 28th January, 2005, and the UNCITRAL Rules,  

to adjudicate upon the disputes, which had arisen  

between the parties and to constitute the Arbitral  

Tribunal and to proceed with the Arbitration.

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11. The said application came to be listed before  

one of us, Surinder Singh Nijjar, J., the Designate  

of the Chief Justice, who was of the view that the  

questions involved in the application were required  

to be heard by a larger Bench.  The parties were  

requested to propose the questions of law to be  

considered by the Larger Bench and the same are as  

follows:

"i) Where  the  arbitration  clause  contemplates the application of  either  ICC  Rules  or  UNCITRAL  Rules after the constitution of  the  Tribunal,  could  a  party  unilaterally  proceed  to  invoke  ICC  to  constitute  the  Tribunal  and proceed thereafter?

ii) Whether  the  judgment  of  this  Hon'ble  Court  in  TDM  Infrastructure v. UE Development  reported  in  (2008)  14  SCC  271  lays down the correct law with  reference  to  the  definition  of  International  Commercial  Arbitration?

iii) Whether the jurisdiction of the  Court  under  Section  11  extends

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to  declaring  as  invalid  the  constitution  of  an  arbitral  tribunal  purportedly  under  an  arbitration  agreement,  especi- ally,  where  the  tribunal  has  been  constituted  by  an  Institution  purportedly  acting  under the Arbitration agreement?

iv) Whether  the  jurisdiction  of  an  arbitral tribunal constituted by  an  institution  purportedly  acting  under  an  arbitration  agreement  can  be  assailed  only  before  the  Tribunal  and  in  proceedings  arising  from  the  decision  or  award  of  such  Tribunal  and  not  before  the  Court  under  Section  11  of  the  Act?

v) Whether,  once  an  arbitral  tribunal  has  been  constituted,  the Court has jurisdiction under  Section  11  of  the  Act  to  interfere and constitute another  Tribunal?

vi) Whether  an  arbitration  between  two Indian companies could be an  international  commercial  arbi- tration  within  the  meaning  of  Section  2(1)(f)  of  the  Act  if  the  management  and  control  of  one  of  the  said  companies  is  exercised  in  any  country  other  than India?

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vii) Whether  the  petition  is  maintainable  in  light  of  the  reliefs claimed and whether the  conditions  precedent  for  the  exercise  of  jurisdiction  under  Section  11  of  the  Act  are  satisfied or not?"

12. While the matter was pending, most of the seven  

questions raised were resolved.  However, the most  

important issue as to whether Section 11 of the  

1996 Act could be invoked when the ICC Rules had  

already been invoked by one of the parties, remains  

to be decided.

13. On  behalf  of  the  Petitioner,  reliance  was  

sought to be placed on the decision of this Court  

in  Sumitomo Heavy Industries Ltd. Vs. ONGC Ltd. &  

Ors. [(1998)  1  SCC  305],  wherein  different  laws  

that could apply to an arbitral relationship had  

been explained, namely :

(i) The proper law of the underlying contract  

is the law governing the contract which

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creates  the  substantive  rights  and  

obligations of the parties with regard to  

the contract.

(ii) The proper law of the arbitration agreement  

is  the  law  governing  the  rights  and  

obligations of the parties arising from  

the arbitration agreement.

(iii) The proper law of the reference is the  

law  governing  the  contract  which  

regulates  the  individual  reference  to  

arbitration.

(iv) The curial law is the law governing the  

arbitration proceedings and the manner in  

which the reference has to be conducted.  

It  governs  the  procedural  powers  and  

duties of the arbitrators, questions of

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evidence  and  the  determination  of  the  

proper law of the contract.

14. It was submitted that in the instant case, the  

proper law of the contract is the Indian law and  

the proper law of the Arbitration Agreement is the  

Arbitration  and  Conciliation  Act,  1996.  

Accordingly, matters relating to the constitution  

of  the  Arbitral  Tribunal  would  be  governed  by  

Sections 10 to 15 of the 1996 Act.  It was pointed  

out by learned counsel that the parties had agreed  

that the arbitration proceedings could be conducted  

either in accordance with the rules and procedures  

of the ICC or UNCITRAL. The choice of the procedure  

to  be  adopted  by  the  Arbitral  Tribunal  in  

conducting  the  arbitration  was  left  to  the  

determination of the parties under Section 19(2) of  

the 1996 Act.  It was submitted that the choice of  

the applicable procedural law could be exercised

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only  after  the  constitution  of  the  Arbitral  

Tribunal and not at any stage prior thereto.

15. It was also submitted that in addition to the  

clear provision of Section 2(2) of the 1996 Act and  

the Agreement between the parties that the place of  

arbitration would be New Delhi, the Agreement would  

be expressly governed by Indian law under Article  

19 of the Agreement.  Accordingly, as was held in  

National  Thermal  Power  Corporation Vs.  Singer  

Company [(1992) 3 SCC 551], the proper law of the  

contract would be the Indian law which would govern  

the arbitration Agreement.  It was submitted that  

the cardinal test, as suggested by Dicey in his  

"Conflict of Laws", stood fully satisfied and that  

the governing law of the arbitration would be the  

law chosen by the parties, or in the absence of any  

agreement,  the  law  of  the  country  in  which  the  

arbitration  is  held.   Learned  counsel  submitted

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that  according  to  Dicey,  the  proper  law  of  the  

arbitration is normally the same as the proper law  

of the contract.  It is only in exceptional cases  

that it is not so, even where the proper law of the  

contract is expressly chosen by the parties.     

16. However,  as  indicated  hereinbefore,  the  

question with which we are concerned is whether the  

Arbitration Agreement contemplates the application  

of Section 11 of the 1996 Act after the ICC Rules  

had been invoked by one of the parties which also  

appointed its nominee Arbitrator. Equally important  

is the question whether Section 11 of the 1996 Act  

empowers the Chief Justice to constitute a Tribunal  

in  supersession  of  the  Tribunal  already  in  the  

stage  of  constitution  under  the  ICC  Rules,  

notwithstanding the fact that one of the parties  

had proceeded unilaterally in the matter.  Learned  

counsel  for  the  Petitioner  urged  that  since  the

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Arbitration Agreement contemplates the constitution  

of an Arbitral Tribunal without any reference to  

the ICC Rules or the ICC Court, the recourse taken  

by Devas to approach the ICC Court was without any  

basis  and  was  contrary  to  the  express  agreement  

between the parties. Learned counsel also referred  

to the decision of this Court in  SBP & Co. vs.  

Patel Engineering Ltd. & Anr. [(2005) 8 SCC 618],  

in this regard.

17. Learned counsel further urged that the issue as  

to  whether  once  an  Arbitral  Tribunal  has  been  

constituted,  the  Chief  Justice  has  jurisdiction  

under  Section  11  of  the  1996  Act  to  constitute  

another  Tribunal,  presupposes  that  an  Arbitral  

Tribunal has been validly constituted and is not a  

Tribunal constituted by one party acting entirely  

in  contravention  of  the  Arbitration  Agreement  

between the parties.  It was contended that till

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such  time  as  the  question  of  jurisdiction  was  

considered  by  the  Court  under  Section  11,  the  

question of a separate Tribunal being constituted  

by the International Chamber of Commerce did not  

arise.  According to learned counsel, in fact, the  

constitution of the Arbitral Tribunal by the ICC  

Court  amounted  to  usurpation  of  the  exclusive  

jurisdiction of the Chief Justice under Section 11  

of the 1996 Act.   It was submitted that initially  

the Court would have to be moved under Section 11  

of  the  1996  Act  and  it  would  have  to  examine  

whether it would have the jurisdiction to entertain  

the request and whether the condition for exercise  

of its powers to take necessary measures to secure  

the appointment of the Arbitrator, at all existed.  

If  the  answer  to  both  the  issues  was  in  the  

affirmative, the Court was duty bound to appoint  

the Arbitrator.   

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18. On the other hand, on behalf of Devas it was  

submitted that the choice of an institution under  

whose  auspices  the  arbitration  was  to  be  held,  

would have to be made once the Arbitral Tribunal  

had been constituted.  It was contended that what  

was intended by the Arbitration Agreement  was the  

formation of an ad-hoc Tribunal which would have to  

follow one of the two procedures prescribed.

19. It was submitted that Devas had already invoked  

the  Arbitration  Agreement  and  had  sought  the  

constitution of an Arbitral Tribunal, after having  

chosen its nominee Arbitrator, in accordance with  

the  ICC  Rules  of  Arbitration.   It  was  further  

submitted that since the Arbitral Tribunal had been  

constituted under the ICC Rules, any objection as  

to whether or not the Tribunal had been properly  

constituted  would  have  to  be  raised  before  the  

Arbitral  Tribunal  itself.   It  is  only  in  such

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objection that the Arbitral Tribunal would have to  

decide as to whether a Tribunal was required to be  

constituted  before  application  of  the  ICC  or  

UNCITRAL  Rules,  inasmuch  as,  according  to  the  

Agreement, the Claimant in the arbitration has the  

right  to  choose  any  of  the  two  Rules  when  

commencing the arbitration.   

20. Reliance was placed on Section 16 of the 1996  

Act  which  incorporates  the  Kompetenz  Kompetenz  

principle within its scope.  Since the arbitration  

was to be governed by Part I of the 1996 Act, the  

Tribunal  would  have  complete  authority  over  all  

issues, including the validity of its constitution.  

21. Reference was also made to the decision of this  

Court  in  Gas  Authority  of  India  Ltd. vs.  Keti  

Construction  (I)  Ltd.  &  Ors.[(2007)  5  SCC  38],  

wherein  the  aforesaid  principle  contained  in  

Section 16 of the 1996 Act had been referred to.

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Learned counsel submitted that in arriving at the  

aforesaid decision, this Court had fully considered  

its decision in SBP & Co. (supra). It was submitted  

that  the  question  regarding  the  validity  of  the  

constitution  of  the  Arbitral  Tribunal,  upon  a  

proper construction of Article 20 of the Agreement  

would, therefore, have to be left for decision to  

the said Tribunal.

22. On the question as to whether the Chief Justice  

or his Designate would be entitled in exercise of  

their  jurisdiction  under  Section  11  of  the  1996  

Act, to question the validity of the appointment of  

an Arbitral Tribunal, both the parties were ad idem  

that they could not. It was urged that the decision  

in  SBP & Co. (supra) does not contemplate such a  

course of action.  In this regard, reference was  

also made by learned counsel for the Respondent to  

the decision of this Court in Sudarsan Trading Co.

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vs. Government of Kerala & Anr. [(1989) 2 SCC 38],  

wherein it was held that once there is no dispute  

as to the contract, the interpretation thereof is  

for  the  Arbitrator  and  not  the  Courts,  and  the  

Court cannot substitute its own decision for that  

taken by the learned Arbitrator.  It was urged that  

Section  5  of  the  1996  Act  also  supports  such  

construction  as  it  bars  any  interference  by  the  

Court,  except  as  provided  in  the  Act.   Learned  

counsel also submitted that as had been held by  

this Court in McDermott International Inc. vs. Burn  

Standard Co. Ltd. & Ors.[(2006) 11 SCC 181], after  

the 1996 Act came into force, it was for the party  

questioning  the  authority  of  the  Arbitrator  to  

raise such question at the earliest point of time  

after  the  commencement  of  the  Arbitration  

proceedings, under Section 16 of the 1996 Act, and  

a  decision  thereupon  could  be  challenged  under  

Section 34 of the said Act.

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23. On behalf of Devas, it was also contended that  

the  issue  raised  relating  to  jurisdiction  falls  

outside the first category of cases, on account of  

the  fact  that  the  Petitioner's  claim  that  the  

Tribunal  must  be  constituted  first  before  

application  of  either  of  the  ICC  Rules  or  the  

UNCITRAL Rules, essentially involves the question  

as to whether the Arbitration clause excludes the  

applicability  of  the  Rules  prior  to  the  

constitution  of  the  Tribunal  and  that  the  

constitution  of  the  Tribunal  is,  therefore,  

reserved for a decision under Section 11 of the  

1996  Act.   Learned  counsel  for  the  Respondent  

submitted that in the facts of the case, the Chief  

Justice,  in  exercise  of  his  power  under  Section  

11(6) of the 1996 Act, was not entitled to question  

the  validity  of  the  appointment  of  the  Arbitral  

Tribunal and the instant Arbitration Petition was  

liable to be dismissed.         

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24. As indicated hereinbefore, the question which  

we are called upon to decide is whether when one of  

the  parties  has  invoked  the  jurisdiction  of  the  

International  Chamber  of  Commerce  and  pursuant  

thereto an Arbitrator has already been appointed,  

the other party to the dispute would be entitled to  

proceed in terms of Section 11(6) of the 1996 Act.

25. In order to answer the said question, we will  

have to refer back to the provisions relating to  

arbitration in the agreement entered into between  

the Petitioner and the Respondent on 28th January,  

2005.  Article 19 in clear terms provides that the  

rights and responsibilities of the parties under  

the Agreement would be subject to and construed in  

accordance  with  the  laws  in  India,  which,  in  

effect, means the Arbitration and Conciliation Act,  

1996.   Article  20  of  the  Agreement  specifically  

deals with arbitration and provides that disputes

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between the parties regarding the provisions of the  

Agreement or the interpretation thereof, would be  

referred  to  the  Senior  Management  of  both  the  

parties for resolution within three weeks, failing  

which the dispute would be referred to an Arbitral  

Tribunal comprising of three Arbitrators.  It was  

also provided that the seat of arbitration would be  

New Delhi in India and the arbitration would be  

conducted  in  accordance  with  the  rules  and  

procedures of the International Chamber of Commerce  

or UNCITRAL.   

26. The Respondent has invoked the provisions of  

Article 20 of the Agreement and has approached the  

ICC for the appointment of an Arbitral Tribunal in  

accordance  with  the  rules  of  arbitration  and,  

pursuant  thereto,  the  Respondent  appointed  its  

nominee Arbitrator. In fact, after the Respondent  

had invoked the arbitration clause, the Petitioner

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came  to  know  of  the  same  from  the  Respondent's  

request for arbitration which was forwarded by the  

ICC to the Petitioner on 5th July, 2011.  By the  

said letter, the Petitioner was also invited by the  

ICC  to  nominate  its  nominee  Arbitrator,  but,  as  

mentioned hereinbefore, instead of nominating its  

Arbitrator,  the  Petitioner  once  again  requested  

Devas to convene the Senior Management Meet on 27th  

July,  2011,  in  terms  of  the  Agreement.  

Simultaneously, the Petitioner appointed a former  

Judge of this Court, Mrs. Sujata V. Manohar, as its  

Arbitrator and informed the ICC Court accordingly.  

However,  disputes  were  also  raised  by  the  

Petitioner with the ICC that since the Agreement  

clearly intended that the arbitration proceedings  

would  be  governed  by  the  Indian  law,  which  was  

based on the UNCITRAL model, it was not available  

to the Respondent to unilaterally decide which of  

the  rules  were  to  be  followed.   It  was  only

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thereafter that the Petitioner took recourse to the  

provisions of Section 11(4) of the 1996 Act, giving  

rise  to  the  questions  which  have  been  set  out  

hereinbefore in paragraph 11, of which only one has  

survived for our consideration.        

27. Section 11 of the 1996 Act is very clear as to  

the circumstances in which parties to a dispute,  

and governed by an Arbitration Agreement, may apply  

for the appointment of an Arbitrator by the Chief  

Justice of the High Court or the Supreme Court.  

For the sake of reference, the relevant provisions  

of Section 11 are reproduced hereinbelow :-

"11. Appointment of arbitrators. (1) A person of any nationality may be an  arbitrator, unless otherwise agreed by the  parties. (2) Subject  to  sub-section  (6),  the  parties are free to agree on a procedure  for  appointing  the  arbitrator  or  arbitrators.

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(3) Failing any agreement referred to in  sub-section  (2),  in  an  arbitration  with  three arbitrators, each party shall appoint  one  arbitrator,  and  the  two  appointed  arbitrators  shall  appoint  the  third  arbitrator who shall act as the presiding  arbitrator. (4) If the appointment procedure in sub-  section (3) applies and-

(a) a  party  fails  to  appoint  an  arbitrator within thirty days from the  receipt of a request to do so from the  other party; or (b) the two appointed arbitrators fail  to  agree  on  the  third  arbitrator  within  thirty  days  from  the  date  of  their appointment,   

the appointment shall be made, upon request  of a party, by the Chief Justice or any  person or institution designated by him.

(5) Failing any agreement referred to in  sub-section (2), in an arbitration with a  sole  arbitrator,  if  the  parties  fail  to  agree on the arbitrator within thirty days  from receipt of a request by one party from  the other party to so agree the appointment  shall be made, upon request of a party, by  the  Chief  Justice  or  any  person  or  institution designated by him.

(6) Where, under an appointment procedure  agreed upon by the parties,-

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(a) a party fails to act as required  under that procedure; or (b) the parties, or the two appointed  arbitrators,  fail  to  reach  an  agreement expected of them under that  procedure; or (c) a  person,  including  an  institution,  fails  to  perform  any  function entrusted to him or it under  that procedure,

a party may request the Chief Justice or  any person or institution designated by him  to take the necessary measure, unless the  agreement  on  the  appointment  procedure  provides  other  means  for  securing  the  appointment. (7) A  decision on  a matter  entrusted by  sub-section (4) or sub-section (5) or sub-  section  (6)  to  the  Chief  Justice  or  the  person or institution designated by him is  final."

28. As  will  be  evident  from  the  aforesaid  

provisions,  when  any  of  the  parties  to  an  

Arbitration  Agreement  fails  to  act  in  terms  

thereof, on the application of the other party, the  

Chief Justice of the High Courts and the Supreme

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Court,  in  different  situations,  may  appoint  an  

Arbitrator.  

29. In the instant case, Devas, without responding  

to  the  Petitioner's  letter  written  in  terms  of  

Article  20  of  the  Arbitration  Agreement,  

unilaterally addressed a Request for Arbitration to  

the  ICC  International  Court  of  Arbitration  for  

resolution  of  the  disputes  arising  under  the  

Agreement  and  also  appointed  its  nominee  

Arbitrator.  On  the  other  hand,  the  Petitioner  

appointed its nominee Arbitrator with the caveat  

that the arbitration would be governed by the 1996  

Act and called upon Devas to appoint its nominee  

Arbitrator under the said provisions.  As Devas did  

not respond to the Petitioner's letter dated 30th  

July, 2011, the Petitioner filed the application  

under Section 11(6) of the 1996 Act.

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30. In the instant case, the Arbitration Agreement  

provides that the arbitration proceedings would  be  

held in accordance with the rules and procedures of  

the International Chamber of Commerce or UNCITRAL.  

Rightly  or  wrongly,  Devas  made  a  request  for  

arbitration  to  the  ICC  International  Court  of  

Arbitration on 29th June, 2011, in accordance with  

the aforesaid Agreement and one Mr. V.V. Veedar was  

appointed by Devas as its nominee Arbitrator.  By  

the letter written by the International Chamber of  

Commerce  on  5th  July,  2011,  the  Petitioner  was  

required to appoint its nominee Arbitrator, but it  

chose not to do so and instead made an application  

under  Section  11(6)  of  the  1996  Act  and  also  

indicated that it had appointed Mrs. Justice Sujata  

V. Manohar, as its Arbitrator in terms of Article  

20(9) of the Agreement.   

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31. The matter is not as complex as it seems and in  

our view, once the Arbitration Agreement had been  

invoked by Devas and a nominee Arbitrator had also  

been  appointed  by  it,  the  Arbitration  Agreement  

could not have been invoked for a second time by  

the  Petitioner,  which  was  fully  aware  of  the  

appointment made by the Respondent.  It would lead  

to an anomalous state of affairs if the appointment  

of an Arbitrator once made, could be questioned in  

a  subsequent  proceeding  initiated  by  the  other  

party also for the appointment of an Arbitrator.  

In  our  view,  while  the  Petitioner  was  certainly  

entitled  to  challenge  the  appointment  of  the  

Arbitrator at the instance of Devas, it could not  

do so by way of an independent proceeding under  

Section 11(6) of the 1996 Act.  While power has  

been  vested  in  the  Chief  Justice  to  appoint  an  

Arbitrator  under  Section  11(6)  of  the  1996  Act,  

such appointment can be questioned under Section 13

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thereof.  In a proceeding under Section 11 of the  

1996  Act,  the  Chief  Justice  cannot  replace  one  

Arbitrator  already  appointed  in  exercise  of  the  

Arbitration Agreement.  It may be noted that in  

case of Gesellschaft Fur Biotechnologische Forschun  

GMBH Vs. Kopran Laboratories Ltd. & Anr. [(2004) 13  

SCC 630], a learned Single Judge of the Bombay High  

Court, while hearing an appeal under Section 8 of  

the 1996 Act, directed the claims/disputes of the  

parties to be referred to the sole arbitration of a  

retired  Chief  Justice  with  the  venue  at  Bombay,  

despite  the  fact  that  under  the  Arbitration  

Agreement it had been indicated that any disputes,  

controversy or claim arising out of or in relation  

to the Agreement, would be settled by arbitration  

in accordance with the Rules of Reconciliation of  

the International Chamber of Commerce, Paris, with  

the venue of arbitration in Bombay, Maharashtra,  

India.   This  Court  held  that  when  there  was  a

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deviation from the methodology for appointment of  

an Arbitrator, it was incumbent on the part of the  

Chief Justice to assign reasons for such departure.  

32. Sub-Section (6) of Section 11 of the 1996 Act,  

quite categorically provides that where the parties  

fail to act in terms of a procedure agreed upon by  

them,  the  provisions  of  Sub-Section  (6)  may  be  

invoked by any of the parties.  Where in terms of  

the Agreement, the arbitration clause has already  

been invoked by one of the parties thereto under  

the I.C.C. Rules, the provisions of Sub-section (6)  

cannot be invoked again, and, in case the other  

party  is  dissatisfied  or  aggrieved  by  the  

appointment  of  an  Arbitrator  in  terms  of  the  

Agreement,  his/its  remedy  would  be  by  way  of  a  

petition under Section 13, and, thereafter, under  

Section 34 of the 1996 Act.  

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33. The  law  is  well  settled  that  where  an  

Arbitrator  had  already  been  appointed  and  

intimation thereof had been conveyed to the other  

party, a separate application for appointment of an  

Arbitrator is not maintainable.  Once the power has  

been  exercised  under  the  Arbitration  Agreement,  

there is no power left to, once again, refer the  

same disputes to arbitration under Section 11 of  

the  1996  Act,  unless  the  order  closing  the  

proceedings is subsequently set aside.  In Som Datt  

Builders Pvt. Ltd. Vs.  State of Punjab [2006 (3)  

RAJ 144 (P&H)], the Division Bench of the Punjab &  

Haryana  High  Court  held,  and  we  agree  with  the  

finding, that when the Arbitral Tribunal is already  

seized of the disputes between the parties to the  

Arbitration  Agreement,  constitution  of  another  

Arbitral Tribunal in respect of those same issues  

which  are  already  pending  before  the  Arbitral

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Tribunal  for  adjudication,  would  be  without  

jurisdiction.

34.  In view of the language of Article 20 of the  

Arbitration  Agreement  which  provided  that  the  

arbitration proceedings would be held in accordance  

with the rules and procedures of the International  

Chamber of Commerce or UNCITRAL, Devas was entitled  

to invoke the Rules of Arbitration of the ICC for  

the  conduct  of  the  arbitration  proceedings.  

Article  19  of  the  Agreement  provided  that  the  

rights  and  responsibilities  of  the  parties  

thereunder  would  be  subject  to  and  construed  in  

accordance  with  the  laws  of  India.   There  is,  

therefore,  a  clear  distinction  between  the  law  

which was to operate as the governing law of the  

Agreement and the law which was to govern  the  

arbitration proceedings. Once the provisions of the  

ICC Rules of Arbitration had been invoked by Devas,

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the proceedings initiated thereunder could not be  

interfered with in a proceeding under Section 11 of  

the  1996  Act.  The  invocation  of  the  ICC  Rules  

would,  of  course,  be  subject  to  challenge  in  

appropriate  proceedings  but  not  by  way  of  an  

application under Section 11(6) of the 1996 Act.  

Where the parties had agreed that the procedure for  

the arbitration would be governed by the ICC Rules,  

the same would necessarily include the appointment  

of an Arbitral Tribunal in terms of the Arbitration  

Agreement and the said Rules. Arbitration Petition  

No.20 of 2011 under Section 11(6) of the 1996 Act  

for  the  appointment  of  an  Arbitrator  must,  

therefore, fail and is rejected, but this will not  

prevent  the  Petitioner  from  taking  recourse  to  

other  provisions  of  the  aforesaid  Act  for  

appropriate relief.  

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35.  The  Arbitration  Petition  is,  therefore,  

dismissed.  

36. Having regard to the facts of the case, each  

party shall bear its own costs.  

...................CJI.    (ALTAMAS KABIR)

.....................J.  (SURINDER SINGH NIJJAR)

New Delhi Dated: May 10, 2013.