This presentation provides an insight about DSC ventures case in arbitration.

1. DSC VENTURES PVT LTD
V.
MINISTRY OF ROAD TRANSPORT
AND HIGHWAYS, UNION OF INDIA
PRESENTED BY
MONISHA R

2. FACTS
• The petitioner and the respondent entered into a concession agreement where petitioner is responsible for converting 2
lane Highway in the state of Chhattisgarh into 4 lane Highway on 8th May, 2003.
• As per the agreement clause 19.2 (a), if any disputes arise both parties will resolve the dispute before three-member
arbitral tribunal after failure of any amicable settlement between them and as such disputes arose and steps for amicable
settlement utterly failed.
• As per the concession agreement the Petitioner appointed Mr. B.P. Battacharya as its arbitrator and the Respondent
appointed Mr. S.C. Sharma as its arbitrator and both appointed Mr. G. Sharan as the presiding arbitrator on May 2014 as
such the arbitral tribunal was constituted.
• Mr. B.P. Battacharya resigned and N.K.Mody was appointed. Prior to arbitral award, M.C.Sharma died.
• When section 15 (2) read with section 11 (4) respondent is to appoint arbitrator within 30 days’ time limit, while
respondent didn’t appoint the arbitrator within the time period and so the petitioner upon the expiry of 30 days invoking
section 11(6) filed the petition before the High Court to appoint the substitute arbitrator. Pending proceeding, the
respondent appointed Mr. Manoj Kumar as the substitute arbitrator on 8th June, 2020 in the place of Mr. M. C Sharma.

3. LEGAL PROVISIONS
1. Arbitration clause - Clause 19.2
2. Section 11(4) – Court to appoint arbitrator when parties fail
3. Section 11(6) – Party to request court to appoint arbitrator when procedure fails
4. Section 14 – Failure or impossibility to act
5. Section 15 – Termination of mandate and substitute of arbitrator

4. ISSUES
• Whether the petition filed for appointment of arbitrator under section 15 (2) read with section 11 (4) and
was premature?
• Whether the appointment of Mr. Manoj Kumar legally sustainable, which was made after the expiry of
thirty days, while the proceedings for appointment of arbitrator is pending and need to be dismissed?

5. PETITIONER CONTENTION
• As per section 14 (1) (a) whenever on an arbitrator becoming de jure or de facto unable to perform his functions his
mandate shall terminate and as such section 15 (2) provides that, where the mandate of an arbitrator terminates, a
substitute arbitrator shall be appointed “according to the rules applicable to the appointment of the arbitrator being
replaced.
• Section 11 (6) will apply which states that for the appointment of arbitrators the procedure as agreed between the
parties will prevail when a party fails to act accordingly the appointment will be made the court.
• In Union of India v Bharat Battery Manufacturing Co. (P) Ltd & Zion Promoters Developers Pvt Ltd., v Ferrous
Infrastructure Pvt Ltd., that the one who need to appoint the arbitrator had to appoint within thirty days from the date he
was requested to so or when made aware of the necessity to do so that too before the other party approaches the court
for the same.
• In the case of A.C.C Ltd v GLOBAL Cements Ltd., that the time period limit would also be applied in the case of
appointment of substitute arbitrator also.

6. RESPONDENT CONTENTION
• It was contended that Section 15 (2) did not neither expressly nor by necessary implication, made the provisions of Section
11, of the Arbitration and Conciliation Act, 1996 will also apply to the appointment of a substitute arbitrator, in place of the
arbitrator who has de facto become unable to perform his function.
• The term “Calls upon the other party” clearly indicates the mandatory notice by one party to the other party for the
appointment of arbitrator, and no such request was ever made by the petitioner to the respondent for the appointment of
substitute arbitrator.
• As section 11 (4), expressly, made applied only to situations wherein the appointment procedure in Section 11 (3) is
applicable, section 11 (3) in turn, applies to situations in which there is no agreement, relating to the procedure for appointing
the arbitrator, between the parties, and the arbitration is to be conducted by three arbitrators.
• the case A.C.C. Ltd v Global Cements Ltd will also be not relevant here that the Supreme Court had clearly held that the
section 11 (6) would apply only where there was a failure of the procedure stipulated in the agreement, between the parties,
relating to the appointment of the arbitrator and in the present case, no such failure had taken place. ibid

7. JUDGEMENT
• Thus, in the absence of any notice to appoint the substitute arbitrator within a specific period of time, in the least of all
thirty days of time, the petitioner cannot seek extinguishment of the respondent’s right.
• In Naval Shankar Ishwar Lal Dev v State of Gujarat, it was held, the term forthwith would be ‘as soon as may be, with
reasonable expedition and without any avoidable delay’. Thus, the appointment of M.C. Sharma, amid the pandemic COVID-
19 was to be regarded as within the reasonable time and cannot be held to be invalid and illegal.
• Therefore, the appointment of the substitute arbitrator Mr. M.C. Sharma was in accordance with the Concession Agreement
between the parties and valid, and the petition filed by the petitioner was premature.

8. ANALYSIS
• Applicability of section 15 failed to comply procedure
• Not followed as per concession agreement
• Limitation period and petition is premature
• Present dispute is not res integra
• Wrongful interpretation of provisions
• No time limit under section 11(6)

9. ANALYSIS
• A.C.C. Ltd v Global Cements Ltd was totally out of case – Gora v state of west Bengal
and Naval shankar ishwarlal dev v. state of gujarat
• Yashwith Constructions Pvt Ltd v Simplex Concrete Piles India Ltd & National
Highways Authority of India v Bhumihiway DDB Ltd (JV)
• Adoption of United Nations Commission on International Trade Law (UNCITRAL
Model)
• Default in drafting of agreements
• Principle of party autonomy