The importance of following the prescribed procedure for challenging the appointment of an arbitrator and the applicability of amended provisions to arbitral proceedings initiated before the amendment.

JUDGMENT :

R.D. Dhanuka, J.

By this petition filed under section 34 of the Arbitration & Conciliation Act, 1996, the petitioner has impugned the award dated 8th October, 2018 thereby rejecting the claims made by the petitioner with costs quantified at Rs.3,01,147/- with interest at the rate of 12% p.a. from the date of passing of the award till realization.

2. The respondent was awarded the contract for the construction of a road by the Government of Gujarat at Gujarat Highway Package - GSHP - 6 Project of SH41 from Mahsana to Palanpur. The respondent in turn awarded the said contract in favour of the petitioner for part of the work by a work order dated 14th May, 2003. Dispute arose between the parties. The petitioner raised a demand for various amounts from the respondent. The respondent appointed an arbitrator under clause 17 of the contract entered into between the parties. The matter proceeded with before the learned arbitrator appointed by the respondent. In view of the allegations made by the petitioner against the first arbitrator, learned arbitrator resigned. The respondent thereafter appointed second arbitrator to adjudicate upon the dispute filed by the petitioner. Learned second arbitrator also resigned. The respondent thereafter appointed the third arbitrator on 3rd November, 2017. On 18th November, 2017, the petitioner through its advocate's letter to the learned arbitrator raised an objection that the respondent could not appoint the learned arbitrator unilaterally who might be associated with the respondent in the past or present as the dispute was required to be referred to an independent, unbiased and unassociated person. The petitioner refuses to give a consent to the appointment of the third arbitrator in. the said letter.

3. Learned third arbitrator thereafter held a meeting on 27th November, 2017. None appeared for the petitioner before the learned arbitrator. In the said meeting, the learned arbitrator gave directions and directed the petitioner to remain present in the next proposed meeting proposed to be held on 15th December, 2017. Learned arbitrator also in paragraph 4 of the minutes of meeting made disclosure under section 12 of the Arbitration & Conciliation Act 1996, that there were no circumstances likely to give rise to justifiable doubts as to his independence or impartiality. Learned arbitrator disclosed that in past three years, he was appointed as the sole arbitrator on one occasion by the respondent company.

4. The matter was adjourned from time to time by the learned arbitrator to enable the petitioner to remain present and to proceed with the matter. The petitioner however, did not remain present before the learned arbitrator. The respondent was present all through out before the learned arbitrator. Learned arbitrator accordingly considered the claim and rendered an award rejecting the claims made by the petitioner with costs.

5. Learned counsel appearing for the petitioner invited my attention to some of the correspondence exchanged between the petitioner and the learned arbitrator and would submit that the learned arbitrator was not appointed by the Managing Director and Chairman of the respondent and thus his appointment under the arbitration clause was not valid. It is submitted that no disclosure was made by the learned arbitrator under section 12 (1) of the Arbitration & Conciliation Act, 1996. In support of this submission, learned counsel invited my attention to the letter dated 18th November, 2017 addressed by the petitioner through its advocate to the learned arbitrator.

6. Learned counsel also placed reliance on section 12(5) of the Arbitration Act and would submit that since the learned arbitrator was not qualified to be appointed as an arbitrator in view of the case of the learned arbitrator falling under the Seventh Schedule, his appointment was illegal. It is submitted that since the appointment of the third arbitrator was on 3rd November, 2017, the provisions of section 12 duly a