IMPORTANT POINTS
In case the arbitration clause was invoked, arbitrator appointed, parties appearing before arbitrator well before coming into force of amended Act; the controversy would be governed by unamended Act.
Appointment of a named arbitrator, in absence of justifiable apprehension about his independence or impartiality, will not be invalid or unreasonable.

Headnote:(a) Administration of justice – Judicial propriety – Arbitration clause invoked, arbitrator appointed, parties appearing before arbitrator well before coming into force of amended Act – Held, the controversy would be governed by unamended Act. (Para 14)
       (b) Arbitration and Conciliation Act, 1996 – Section 12 – Clause 56 of the GCC – Arbitration agreement providing for named arbitrator – Appointment of such named arbitrator held, in absence of justifiable apprehension about his independence or impartiality, not invalid or unreasonable. (Para 17, 19)
       (2009) 8 SCC 520 – Relied upon
       (c) Arbitration and Conciliation Act, 1996 – Section 11 and 12 – Absence of any apprehension about impartiality and independence of named arbitrator – Parties participating in arbitration – Section 11 cannot be invoked. (Para 22, 23)
       (2008) 10 SCC 240; (2009) 4 SCC 523; (2010) 6 SCC 394; (2012) 2 SCC 759; (2015) 2 SCC 52; (2017) 4 SCC 665 – Referred
       Facts of the case:
       Construction work of permanent township for Indira Gandhi Super Thermal Power Project at Jhajjar, Haryana was awarded to the Respondent-M/s Era Infra Engineering Ltd. on 20.05.2009 and contract dated 17.11.2009 signed thereafter broadly consisted of General Conditions of Contract (GCC) and Special Conditions of Contract (SCC).
       Scheduled date of completion of work was 19.05.2011 but the progress of work was quite slow which compelled the Appellant to cancel certain remaining works by its letters dated 18.07.2014, 24.10.2014, 30.06.2015 and 08.07.2015.
       Parties went to arbitration.
       For the first time on 12.01.2016, the Respondent sought to challenge the Arbitrator and raised objection regarding constitution of the arbitral tribunal.
       The arbitrator rejected the objection of the respondent.
       The Respondent approached the High Court by filing petition under Section 14 of the Arbitration and Conciliation Act, 1996 seeking termination of the mandate of the Arbitrator.
       On the same day, another petition being Arbitration Petition No.136 of 2016 was filed by the Respondent under Section 11(6) of 1996 Act for appointing an independent arbitrator for adjudicating disputes between the parties.
       The High Court set aside the appointment of the Arbitrator.
       Finding of the Court:
       Impugned judgment cannot be sustained.
       Result: Appeal allowed.

JUDGMENT :

Uday Umesh Lalit, J.

1. Leave granted. These appeals challenge the common judgment and order dated 29.07.2016 passed by the High Court of Delhi at New Delhi in O.M.P. (T) (Comm.) No.13/2016 and Arbitration Petition No.136/2016.

2. Construction work of permanent township for Indira Gandhi Super Thermal Power Project at Jhajjar, Haryana was awarded to the Respondent-M/s Era Infra Engineering Ltd. on 20.05.2009 and contract dated 17.11.2009 signed thereafter broadly consisted of General Conditions of Contract (GCC) and Special Conditions of Contract (SCC). Clause 56 of the GCC stipulated arbitration between the parties in following terms:-

“56. ARBITRATION:-

Except where otherwise provided for in the contract all questions and disputes relating to the meaning of the specifications, designs, drawings and instructions herein before mentioned and as to the quality of workmanship or materials used on the work or as to any other questions, claim, rights, matter or thing whatsoever in any way arising out of or relating to the contract, design, drawing, specifications, estimates, instructions, orders or these conditions of otherwise concerning the works, or the executions or failures to execute the same whether arising during the progress of the work or after the completion or abandonment thereof shall be referred to the Sole Arbitration of the Project In-charge of the Project concerned of the owner, and if the Project In-charge is unable or unwilling to act, to the sole arbitration of some other persons appointed by the Chairman and Managing Director, NTPC limited (Formerly National Thermal Power Corporation Ltd) willing to act as such Arbitrator. There will be no objections, if the Arbitrator so appointed is an employee of NTPC Limited (Formerly National Thermal Power Corporation Ltd), and that he had to deal with the matters to which the contract relates and that in the course of his duties as such he had expressed views on all or any of the matters in disputes or difference. The Arbitrator to whom the matter is originally referred being transferred or vacating his office or being unable to act for any reason as aforesaid at the time of such transfer, vacations of office or inability to act, Chairman and Managing Directors, NTPC limited (Formerly National Thermal Power Corporation Ltd.), shall appoint another person to act as Arbitrator in accordance with the terms of the contract……”

3. According to the Appellant-Aravali Power Company Pvt. Ltd., scheduled date of completion of work was 19.05.2011 but the progress of work was quite slow which compelled the Appellant to cancel certain remaining works by its letters dated 18.07.2014, 24.10.2014, 30.06.2015 and 08.07.2015. By its letter dated 29.07.2015 the Respondent alleged that the delays in the project were not attributable to the Respondent and after setting out certain grievances, the letter thereafter sought to invoke arbitration submitting further that arbitration be through a retired Judge of the High Court, the relevant portion of the letter being:-

“In view of the above circumstances and inaction of APCPL towards settlement of our claims/payments, we hereby invoke Arbitration Clause of the Contract Agreement request your good self to appoint Arbitrator for settlement of our claims according to Clause 56 of GCC of the Contract Agreement.

However, we want to draw your attention to the legal point that once the order of part cancellation has been passed at the Highest Level of the Owner/Employer, hence, any forum for resolution of dispute constituted by the said authority & particularly its subordinate is of no legal consequence. It is a well settled proposition of law that nobody can be judge in its own cause. Therefore, in light of the aforesaid settled position of law, we seek an independent arbitration, through a retired Hon’ble Judge of the Hon’ble High Court so as to seek vindication of our grievance as mentioned in foregoing paras. Since the matter is utmost important,

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2017 Supreme(SC) 923

Cases Referred (7)