IMPORTANT POINT
Arbitral Tribunal consisting of officers of State have become ineligible to become Arbitrators and to continue as Arbitrators.

JUDGMENT :

M.R. SHAH, J.

1. Feeling aggrieved and dissatisfied with the impugned judgment and order dated 27.08.2021 passed by the High Court of Madhya Pradesh in A.C. No. 100/2019, by which the application preferred by the appellant under Section 14 read with Sections 11 and 15 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the ‘Arbitration Act, 1996’) seeking termination of the mandate of originally constituted Arbitral Tribunal and to appoint a new arbitrator has been dismissed, the original applicant before the High Court has preferred the present appeal.

2. That the respondent herein issued a tender for supply of the cream wove paper and duplicating paper for the year 1993-94. The appellant herein participated in the said tender process and was awarded the contract vide supply order dated 22.09.1993. A dispute arose between the appellant and the respondent. According to the appellant herein, though it supplied 420 MT of cream wove paper and 238 MT of duplicating paper to the respondent, the latter not only did not make the payment of 90% of the amount as per the terms of the contract, but also rejected some consignments without any justification, causing loss to it. The respondent herein vide letter dated 15.11.1993 informed the appellant that the paper supplied by it did not conform to the specification and therefore could not be utilized.

2.1 Thereafter, the appellant herein filed a civil suit in the year 1994 seeking the relief of permanent injunction against the respondent in the Civil Court at Bhopal seeking to restrain it from awarding the supply order to a third party. The respondent, in the meantime, awarded the contract to the third party for the remaining supply. Therefore, the aforesaid civil suit became infructuous.

2.2 The appellant thereafter filed another suit seeking recovery of an amount of Rs. 95,32,103/- bearing Civil Suit No. 2-B/1998 before the Civil Court at Bhopal. In the said suit, the respondent preferred an application under Section 8 of the Arbitration Act, 1996 seeking stay of the proceedings on the ground that there exists an arbitration clause in the agreement between the parties. The Civil Court rejected the said application vide order dated 27.02.1999. The respondent filed Revision Petition No. 1117/1999 before the High Court which came to be allowed by the High Court vide order dated 03.05.2000. The High Court referred the parties to arbitration by the Stationery Purchase Committee comprising of the officers of the respondent.

2.3 Against the order passed by the High Court allowing the revision petition and referring the parties to the arbitration, the appellant herein filed a special leave petition bearing S.L.P. (Civil) No. 13914/2000 before this Court. The same came to be dismissed as withdrawn vide order dated 28.09.2000.

2.4 The Arbitral Tribunal was constituted called as “Stationery Purchase Committee” comprising the officers of the respondent. The appellant filed its objections to the constitution of the Arbitral Tribunal/Stationery Purchase Committee on 12.09.2000. The appellant herein also challenged its jurisdiction by filing an application under Section 13 of the Arbitration Act, 1996. The Arbitral Tribunal vide order dated 2.2.2001 rejected the said application. Aggrieved thereby, the appellant herein filed a writ petition before the High Court being Writ Petition No. 1824/2001 which came to be dismissed vide order dated 24.01.2017 with liberty to the appellant to raise objections before the appropriate forum.

2.5 Subsequently, the appellant filed the present application before the High Court being AC No. 100/2019 under Section 14 read with Sections 11 and 15 of the Arbitration Act, 1996 seeking termination of the mandate of originally constituted Arbitral Tribunal-Stationery Purchase Committee comprising of officers of the respondent and for appointment of a new arbitrator. Before the High Court, the appellant herein heavily relied upon Section 12(5) of the