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IN THE HIGH COURT OF DELHI AT NEW DELHI
Vibhu Bakhru, J.
Delhi Integrated Multi Modal Transit Systems Ltd - Petitioner
Versus
Delhi Jal Board - Respondent
O.M.P. (T) (COMM.) 16 of 2021 and IA No. 1482 of 2021
Decided On : 12-11-2021
Arbitration and Conciliation Act, 1996 - Sections 12(5), 12, 13 and 14(2) - Consumer Protection (Salary, Allowances and Conditions of Service of President and Member of the State Commission and District Commission) Model Rules, 2020 - Rule 11(3) - Contract - Arbitration Agreement - Appointment of Arbitration - Whether appointment of Dr RCM as an arbitrator was by concurrence of the petitioner or unilaterally by respondent as contended on behalf of petitioner - Petitioner and the respondent had entered into an agreement for purpose of Contract’ - Petitioner, once again, requested the respondent to expedite the release of the balance outstanding amount within fifteen days of receipt of the said letter. Further, petitioner also invoked agreement to refer disputes to arbitration in terms of Article XI of the Contract (the Arbitration Clause) and requested the respondent to appoint an arbitrator to adjudicate the disputes between the parties.
Finding of the court : There is no material on record to indicate that the respondent had recommended the name of Dr RCM to the petitioner and the petitioner had accepted the same. On the contrary, Office Order issued by the respondent indicates that the CEO of the respondent company had appointed the learned Arbitrator - Court is of the view that the appointment of the learned Arbitrator was made unilaterally by the respondent without reference to the petitioner - It is not necessary to address other contentions. It is not necessary to go into the question whether the conditions of service as applicable to the learned Arbitrator disabled him from taking any assignment as an arbitrator or continuing as such. This is for the reason that if acting as an arbitrator is in violation of the terms and conditions of his service as a member of the District Consumer Forum, the consequence for violating the said conditions of service would follow. However, that does not mean that the mandate of the learned Arbitrator stands automatically terminated.
Result : Petition allowed
JUDGMENT :
VIBHU BAKHRU, J.
1. The petitioner has filed the present petition under Section 14(2) of the Arbitration and Conciliation Act, 1996 (hereinafter the ‘A&C Act’) praying that the mandate of the learned Sole Arbitrator (hereinafter ‘Dr. RCM’) be terminated and an independent and impartial arbitrator be appointed in substitution of the learned Arbitrator.
2. The petitioner claims that the mandate of Dr. RCM, a former civil servant, is required to be terminated as he has been unilaterally appointed by the Chief Executive Office (CEO) of the respondent and is, thus, ineligible to act as an arbitrator by virtue of Section 12(5) of the A&C Act.
3. Briefly stated, the relevant facts that are necessary to address the controversy are as under: -
4. On 10.06.2011, the petitioner and the respondent had entered into an agreement for the purpose of “Design, Development, Implementation and Operation of WTDMS Project involving the development of Software, Supply, & Installation of System Software, Hardware Networks, establishment of WTDMS Service Centres and Operation & Maintenance of WTDMS Solution” (hereinafter ‘the Contract’).
5. Admittedly, disputes have arisen between the parties in respect of the said aforesaid Contract.
6. By a letter dated 22.01.2018, the petitioner called upon the respondent to pay a sum of Rs.25,90,46,662/- and claimed that the said amount was due and payable to the petitioner for the period, November 2013 to 15.01.2018, along with interest on delayed payment. The petitioner also claimed a sum of Rs.9,96,17,465/- on account of cost of equipment and a sum of Rs.87,79,000/- on account of refund of Performance Bank Guarantee, which was submitted by it.
7. On 28.02.2018, the petitioner, once again, requested the respondent to expedite the release of the balance outstanding amount of Rs.33,58,25,549/- within fifteen days of receipt of the said letter. Further, the petitioner also invoked the agreement to refer the disputes to arbitration in terms of Article XI of the Contract (the Arbitration Clause) and requested the respondent to appoint an arbitrator to adjudicate the disputes between the parties.
8. On 26.03.2018 and 15.06.2018, the petitioner issued letters reiterating its demand as made in the notice dated 28.02.2018.
9. In view of the aforesaid disputes, by a letter dated 03.12.2018, the CEO of the respondent appointed Dr. RCM as the Sole Arbitrator to adjudicate the disputes between the parties.
10. Thereafter, the learned Arbitrator entered upon reference and on 10.04.2019, the Arbitrator submitted its declaration as required under Section 12 of the A&C Act.
11. On 30.04.2019, the petitioner filed its Statement of Claims and on 12.07.2019, the respondent filed its Statement of Defence. The respondent also filed counter-claims.
12. It is averred in the petition that during the pendency of the proceedings, the petitioner became aware that Dr RCM had been appointed as a whole-time member of the District Consumer Forum for Central Delhi on 08.03.2019. Subsequently, the petitioner also became aware that Dr RCM was empanelled as an arbitrator on the panel maintained by the respondent.
13. Thereafter, on 13.08.2020, the petitioner filed an application before the Arbitral Tribunal under Sections 12 and 13 of the A&C Act seeking recusal of Dr RCM as an arbitrator on the sole ground that he was ineligible to act as such. Dr RCM rejected the said application by an order dated 12.01.2021.
14. Aggrieved by the impugned order, the petitioner has filed the present petition.
Submissions
15. Mr Bansal, learned counsel appearing for the petitioner has advanced contentions on, essentially, three fronts. First, he submits that in terms of the decisions of the Supreme Court in Perkins Eastman Architects DPC & Anr v HSCC (India) Ltd: 2019 SCC OnLine SC 1517, and Bharat Broadband Network Ltd. v. United Telecoms Ltd., (2019) 5 SCC 755, the learned Arbitrator is ineligible to act as an arbitrator as he was unilaterally appointed by the CEO of
Point of Law : It is not open for the petitioner to challenge the learned Arbitrator on the ground that there are justifiable doubts as to his independence and impartiality in terms of the Guidelines....
The court established that an arbitrator appointed by an ineligible individual cannot act, and waivers of objections regarding ineligibility must be expressed in writing, not inferred by conduct.
The main legal point established in the judgment is the application of Section 12(5) of the Arbitration and Conciliation Act, 1996, and the proviso allowing parties to waive disqualification through ....
The appointment of an arbitrator must comply with Section 12(5) of the Arbitration & Conciliation Act, ensuring independence and impartiality, regardless of when the arbitration proceedings were init....
Requirement of A&C Act is for an independent Arbitrator to be appointed, so that he/she would be in a position to decide matter impartially and as such, reducing possibility of a challenge to an arbi....
An appointment made by an ineligible person as an arbitrator is void, and waiver of objection under Section 12(5) of the A&C Act requires an express agreement in writing after the disputes have arise....
Point of law: As per the legal position settled by the Supreme Court in catena of judgments, the High Court has the jurisdiction under Section 11(6) of the said Act to nullify the appointments made b....
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