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2018 Supreme(Pat) 1611

IN THE HIGH COURT OF JUDICATURE AT PATNA
Amreshwar Pratap Sahi, J.
M/S SRC Company - Appellant
Versus
M/s Rites Ltd. – Respondent
Request Case No. 21 of 2018
Decided On : 14-12-2018

Advocates Appeared:
For the Appellant :Mr. Umesh Prasad Singh, Sr. Advocate Mr. Krishna Kant Singh, Mr. P.C. Jha and Mr. Neeraj Kumar, Advocates
For the Respondent:Mr. Anil Kumar Sinha and Mr. Akash Keshav, Advocates

Headnote:

Arbitration and Conciliation Act, 1996 – Section 12(5) (as amended by Act, 2015) r/w Seventh Schedule – Waiver of applicability of Section 12(5) in terms of proviso to Section 12(5) cannot be presumed in implied manner – Legislature has categorically indicated that waiver cannot be presumed in an implied manner inasmuch as said sub-section positively recites exercise of such right of waiver in writing in an express form – Waiver by implication is clearly excluded keeping in view unambiguous language of sub-section (5) of Section 12 – Appointment of respondent no. 3 who was an employee of respondent company as an Arbitrator set aside. (Paras 4, 12 and 13)

Cases referred:

TRF Limited vs. Energo Engineering Projects Limited, (2017) 8 SCC 377 – Followed

Durga Charan Rautray vs. State of Orissa, 2011 (4) BLJ 236 (SC) : (2012) 12 SCC 513; Anil s/o Jagannath Rana vs. Rajendra s/o Radhakishan Rana, (2015) 2 SCC 583; State of Punjab vs. Davinder Pal Singh Bhullar, (2011) 14 SCC 770; Sonell Clocks & Gifts Ltd. vs. New India Assurance Co. Ltd., (2018) 9 SCC 784 – Cited

ORDER :

Amreshwar Pratap Sahi, J.

Heard Shri Umesh Prasad Singh, learned senior counsel for the applicant and Shri Anil Kumar Sinha for the respondents.

2. This application prays for termination of the arbitration proceedings that has been initiated and is being continued by the third respondent acting as an Arbitrator in terms of the agreement between the parties dated 11th February, 2014.

3. There is no dispute about the fact that the applicant applied for arbitration under a legal advice tendered by the counsel of the applicant dated 15th December, 2016, copy whereof is Annexure-2 to this application. Acting thereon the third respondent was appointed as the sole Arbitrator by the Chief Executive Officer of Kanti Bijlee Utpadan Nigam Ltd. Respondent No. 2. The said appointment dated 31st January, 2017 is on record.

4. On being put to notice, the applicant responded by raising a clear objection to the effect that the appointment of the third respondent was invalid as he was ineligible to adjudicate the dispute keeping in view the provisions of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the "1996 Act") as amended under the Arbitration and Conciliation (Amendment) Act, 2015 (3 of 2016). It was pointed out that in view of the amendments as incorporated under the 2015 Act, particularly Section 12(5) of the 1996 Act, read with the Seventh Schedule thereof, the appointment of an employee of the Kanti Bijlee Utpadan Nigam Limited would be invalid. However, the Arbitrator entered upon the dispute and upon notice being issued the applicant vide letter dated 25.3.2017 raised his objection but also participated in the same wherein several dates were fixed and adjournments were sought on one ground or the other. The applicant registered his objection during the proceedings by filing a rejoinder affidavit on 11th of December, 2017 wherein in Paragraph 1 it was categorically stated that the constitution of the Arbitration Tribunal was bad in law in view of the provisions referred to hereinabove. In spite of this, the Arbitrator proceeded as a consequence whereof the applicant came to file this Request Case contending that the proceedings so initiated should be terminated.

5. Entertaining the application, this Court passed an order on 10th of January, 2018 staying further proceedings before the Arbitrator which interim order has continued.

6. A response has been filed on behalf of the respondents No. 2 and 3 and it is urged that firstly the applicant has already given his consent for appointing an Arbitrator and, therefore, he cannot resile back and secondly having participated in the proceedings, the same will clearly amount to a waiver as a result whereof no request can now be made for terminating the arbitration proceedings.

7. Learned counsel for the applicant has invited the attention of the Court to Clause 31 of the agreement as well as sub-section (5) of Section 12 of the 1996 Act along with the Seventh Schedule to urge that this issue is no longer res integra and now stands concluded by the pronouncement of the Apex Court in the case of TRF Limited vs. Energo Engineering Projects Limited, reported in (2017) 8 SCC 377, Paragraph 12 and 13 thereof.

8. On the other hand, learned counsel for the opposite party contends that the issue of waiver fails on the face of the facts of the present case keeping in view the participation of the applicant before the Arbitrator and to support the submissions, reliance has been placed on the decision in the case of Durga Charan Rautray vs. State of Orissa and another, reported in (2012) 12 SCC 513 and the judgment in the case of Anil, S/o Jagannath Rana and others vs. Rajendra, s/o Radhakishan Rana and others, reported in (2015) 2 SCC 583.

9. Responding to the said decisions cited on behalf of the respondents, learned counsel for the appellant has cited two decisions of the Supreme Court relating to estoppel, acquiescence and waiver, namely, State of Punjab vs. Davinder Pal Singh Bh











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