Court Is Not Bound To Agree On The Name Of The Arbitrator As Indicated In Arbitration Agreement: Rajasthan HC

The Rajasthan High Court has stated that the Court is not bound to agree on the name of the arbitrator, as indicated in the arbitration agreement.

The Bench of Justice Sudesh Bansal was hearing an application for the appointment of an arbitrator in a dispute involving the Rajasthan State Industrial Development and Investment Corporation (RIICO).

The Court relied on Apex Court's judgment in the  case of TRF Ltd. vs. Energo Engineering Projects Ltd. [(2017) 8 SCC 377], which was followed in the case of Perkins Eastman Architects DPC vs. HSCC (India) Ltd. [(2020) 20 SCC 760]. "In both the judgments, the Apex Court approved appointment of an independent and impartial Arbitrator other than named in the Arbitration Agreement," the Division Bench said. 

The Bench also reaffirmed that the doctrine of estoppel cannot be applied as an absolute rule to bar individuals from raising disputes, even if they have previously signed a no-claim or discharge certificate. Each case must be evaluated based on its unique facts and circumstances.

The dispute arose when an applicant who had been allotted a plot by RIICO alleged that despite fulfilling all the conditions for the allotment, the corporation canceled the allotment and returned the security deposit after making certain deductions. The applicant, aggrieved by the deductions and the cancellation, sought the appointment of an arbitrator to resolve the dispute.

RIICO opposed the application, arguing that the cancellation of the allotment was due to a breach of conditions by the applicant. The corporation contended that the refunded amount, returned after deducting the disputed sum, was accepted by the applicant without any protest. It also argued that this acceptance implied the applicant’s consent to the cancellation and the deductions, rendering the arbitration application an afterthought that should be dismissed.

Rejecting RIICO’s argument, the Court emphasized that the corporation had failed to provide any evidence showing that the applicant accepted the refunded amount as full and final settlement of the dispute. It noted that the mere acceptance of a refunded amount does not automatically preclude a party from later raising a dispute, especially when there is no clear evidence that the acceptance was intended as a final settlement.

"As far as contentions of learned counsel for the respondents that because the applicant has accepted the refunded amount by the RIICO without any protest and for this reason, the applicant is estopped to raise the dispute in respect of cancellation of his plot as well as against deductions made by RIICO is concerned, it may be observed that the respondent did not produce any document of applicant accepting the refunded amount by the applicant as full and final settlement, nor any other substantive material has been placed by the respondents, in support of such contention, thus, the contention is in aim and without support of any evidence," the Court said. 

The Court referred to the Apex Court’s ruling in the case of Union of India v. Parmar Construction Company, (2019) 15 SCC 682, where it was held that each case must be judged on its own facts and that there cannot be an absolute estoppel against raising a dispute, even if a no claim or discharge certificate has been signed. The Apex Court’s decision underscored the principle that signing such a certificate does not necessarily imply waiver of the right to contest or seek arbitration if a dispute arises later.

Applying this reasoning, the Court concluded that the applicant in the present case was not estopped from raising the dispute merely because they had received the refunded amount from RIICO. The Court emphasized that the absence of evidence showing a clear intent to settle all claims meant that the applicant retained the right to contest the deductions and cancellation.

"..the present Arbitration Application succeeds and same is hereby allowed. This Court constitutes the Arbitration Tribunal of sole Arbitrator of Mr. N.K. Purohit, Former District Judge, Address:- C-116, Savitry Path, Bapu Nagar, Jaipur; Mobile No. 9413301980, to adjudicate the dispute between parties in accordance with the provisions of the Arbitration and Conciliation Act, 1996," the Court said. 

Cause Title: M/s Shakti Foundation v. The Chairman, Rajasthan State Industrial Development And Investment Corporation & Anr. [Neutral Citation: 2024:RJ-JP:34878]

Appearance:-

Petitioner: Advocate Abhishek Bhardwaj

Respondent: Advocate Pooja Nuwal

Click here to read/download the Order