Arbitration Appointment in Doordarshan Dispute: Supreme Court Intervenes

The case of M/S Shaf Broadcast Pvt. Ltd. vs. Doordarshan – A Constituent of Prasar Bharati & Anr. revolved around the appointment of an arbitrator in an international commercial arbitration dispute. The Supreme Court had to decide whether it could intervene in the arbitration process and appoint an arbitrator when one party failed to fulfill its obligation.

The judgment clarifies the legal framework under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the “Act of 1996”) regarding the appointment of arbitrators when one party fails to do so.

Background of the Case

The petitioner, M/S Shaf Broadcast Pvt. Ltd., entered into a contract with Doordarshan on March 8, 2010. The contract contained an arbitration clause stating that disputes would be resolved through arbitration under the Arbitration and Conciliation Act, 1996. The clause further provided for a three-member arbitral tribunal, where each party would appoint one arbitrator, and the two appointed arbitrators would select the presiding arbitrator. If the two arbitrators failed to agree on a third arbitrator, the appointment would be made by the Secretary of the Ministry of Information and Broadcasting, Government of India.

On January 14, 2019, disputes arose between the parties, leading the petitioner to invoke the arbitration clause. The petitioner nominated its arbitrator on February 28, 2019. However, Doordarshan failed to appoint its arbitrator within the stipulated time, prompting the petitioner to approach the Supreme Court under Section 11 of the Act of 1996 for the appointment of an arbitrator on behalf of Doordarshan.

Petitioner’s Arguments (M/S Shaf Broadcast Pvt. Ltd.)

The petitioner contended:

• The arbitration clause provided for a three-member tribunal, and Doordarshan’s failure to appoint its arbitrator prevented the tribunal from being constituted.
• Under Section 11 of the Act of 1996, the Supreme Court has the authority to appoint an arbitrator when one party defaults.
• The arbitration process should not be stalled due to the inaction of one party.
• To ensure a fair and speedy resolution, the Court should intervene and appoint an independent arbitrator.

Respondent’s Arguments (Doordarshan)

Doordarshan countered:

• While there was a delay in appointing an arbitrator, it did not amount to a complete refusal.
• The arbitration clause provided for the appointment of a presiding arbitrator by the Secretary of the Ministry of Information and Broadcasting, and the petitioner should have pursued that route.
• The matter could have been resolved through mutual negotiations instead of seeking court intervention.

Supreme Court’s Judgment

The Supreme Court ruled in favor of the petitioner, allowing the arbitration process to proceed. The key observations of the Court were:

• Section 11 of the Act of 1996 empowers the Court to appoint an arbitrator if a party fails to do so within the stipulated time.
• Given that Doordarshan failed to appoint an arbitrator despite sufficient time, the Court’s intervention was necessary.
• The parties agreed during the hearing that a sole arbitrator should be appointed instead of a three-member tribunal.
• With the consent of both parties, the Court appointed Justice (Retd.) A.M. Sapre, Former Judge of the Supreme Court, as the sole arbitrator.
• The arbitrator must complete the arbitration proceedings within the prescribed time limit under Section 29A of the Act of 1996.
• The arbitration would be conducted at New Delhi, as specified in the agreement.

The Court stated:

“Since Doordarshan failed to nominate an arbitrator, this Court, in exercise of powers under Section 11 of the Act, appoints Justice (Retd.) A.M. Sapre as the sole arbitrator with the consent of both parties.”

Key Takeaways

• Courts have the power to appoint arbitrators when one party defaults under Section 11 of the Act of 1996.
• Delays by one party cannot stall arbitration proceedings indefinitely.
• Parties can modify the arbitration clause by mutual agreement, such as opting for a sole arbitrator instead of a three-member tribunal.
• The Court ensures that arbitration proceedings are conducted efficiently and within the statutory time limit.
• This ruling reinforces the judiciary’s role in upholding the effectiveness of arbitration as an alternative dispute resolution mechanism.

This judgment provides clarity on the role of courts in facilitating arbitration and ensures that contractual obligations related to dispute resolution are honored.

Petitioner Name: M/S Shaf Broadcast Pvt. Ltd..
Respondent Name: Doordarshan – A Constituent of Prasar Bharati & Anr..
Judgment By: Justice Uday Umesh Lalit, Justice Indu Malhotra, Justice Sanjiv Khanna.
Place Of Incident: New Delhi.
Judgment Date: 07-11-2019.

Don’t miss out on the full details! Download the complete judgment in PDF format below and gain valuable insights instantly!

Download Judgment: MS Shaf Broadcast P vs Doordarshan – A Cons Supreme Court of India Judgment Dated 07-11-2019.pdf

Direct Downlaod Judgment: Direct downlaod this Judgment

See all petitions in Arbitration Awards
See all petitions in Institutional Arbitration
See all petitions in Dispute Resolution Mechanisms
See all petitions in Judgment by Uday Umesh Lalit
See all petitions in Judgment by Indu Malhotra
See all petitions in Judgment by Sanjiv Khanna
See all petitions in allowed
See all petitions in Modified
See all petitions in supreme court of India judgments November 2019
See all petitions in 2019 judgments

See all posts in Arbitration and Alternate Dispute Resolution Category
See all allowed petitions in Arbitration and Alternate Dispute Resolution Category
See all Dismissed petitions in Arbitration and Alternate Dispute Resolution Category
See all partially allowed petitions in Arbitration and Alternate Dispute Resolution Category