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IN THE HIGH COURT OF DELHI AT NEW DELHI
Vibhu Bakhru, J.
Score Information Technologies Limited - Appellant
Versus
GR Infra Projects Limited - Respondent
Original Miscellaneous Petition (T)(Comm ) No. 59 of 2020
Decided On : 28-01-2021
Arbitration and Conciliation Act - Termination of Arbitrator's Mandate - Sections 14 and 15 - 23 of the Arbitration and Conciliation Act 1996
Fact of the Case:
The petitioner filed a petition seeking termination of the mandate of the learned Sole Arbitrator appointed by the respondent. The disputes arose from a contract for the execution of works related to optical fiber cable installation. The respondent terminated the work order, leading to disputes between the parties. The respondent unilaterally appointed the Arbitrator, which the petitioner objected to, citing legal precedents.
Finding of the Court:
The court found that the unilateral appointment of the Arbitrator by the respondent was impermissible, as per legal precedents and the Arbitration Clause. The court allowed the petition, terminated the mandate of the appointed Arbitrator, and appointed a new Sole Arbitrator to adjudicate the disputes.
Issues: The issues revolved around the unilateral appointment of the Arbitrator by the respondent, the objections raised by the petitioner, and the applicability of Section 12(5) of the A&C Act regarding the eligibility of the Arbitrator.
Ratio Decidendi: The court held that the unilateral appointment of the Arbitrator by the respondent was impermissible, as per legal precedents and the Arbitration Clause. The court also emphasized the ineligibility of the appointed Arbitrator under Section 12(5) of the A&C Act.
Final Decision: The court allowed the petition, terminated the mandate of the appointed Arbitrator, and appointed a new Sole Arbitrator to adjudicate the disputes.
JUDGMENT
Vibhu Bakhru, J. - The petitioner has filed the present petition under Sections 14 and 15 of the Arbitration and Conciliation Act, 1996 (hereinafter the 'A&C Act'), inter alia, seeking that the mandate of the learned Sole Arbitrator appointed by the respondent be terminated. According to the petitioner, the learned Arbitrator is de jure unable to act as an Arbitrator under the A&C Act.
2. The disputes between the parties arise out of a contract whereby the respondent had sub-contracted the work of "Trenching, Laying Installation, Testing of Optical Fiber Cable, PLB-Duct and accessories for construction of exclusive optical NLD backbone and optical access routes on turnkey basis for Defence Network for specified part of Package F totaling to 224 Km (approx.) in the State of West Bengal."
3. Bharat Sanchar Nigam Limited (hereinafter 'BSNL') had invited tenders (Tender No. CA/CNP/NFS OFC/T-441/2013) for procurement, supply, trenching, laying, installation, testing and maintenance of optical fiber cable, PLB duct and accessories for construction of exclusive optical National Long Distance ('NLD') backbone and optical access routes on turnkey basis for the defence network. The tender was for the Network For Spectrum (NFS) project of the Ministry of Defence, Government of India.
4. The aforesaid works was divided into seven packages Packages A to G. The implementation of the project was undertaken jointly by BSNL and Project Implementation Core Group (PICG). On 16.09.2014, a contract for executing Package F was awarded by BSNL to ITI Limited. The said Package consisted of 6021 Km of Optical Access Routes in the States of West Bengal, Orissa, Bihar, Jharkhand, Sikkim and Andaman and Nicobar Islands. The works were required to be completed within a period of eighteen months.
5. On 17.10.2014, ITI Limited sub-contracted the entire works to be executed under Package F to A2Z Infra Engineering Limited. It is averred that in the month of February, 2015, A2Z Infra Engineering Limited, further, sub-contracted the work to the respondent herein.
6. On 20.02.2015, the respondent issued a Letter of Intent (hereafter 'LOI') to the petitioner for executing the work relating to "obtaining ROW, survey, trenching, laying, installation, testing and commissioning of optical fiber cable, PLB duct & accessories for construction of exclusive optical NLD backbone and optical access route for defence network for a specified part of Package F of 224 km (approximately) in the State of West Bengal". In terms of the said LOI, the petitioner was called upon to issue a bank guarantee for an amount equivalent to 5% of the total work (that is, a bank guarantee in the sum of Rs. 25,20,000/-). The said LOI expressly stated that a detailed Work Order setting out the terms and conditions would be executed between the parties separately, if the petitioner fulfilled the condition under the LOI of providing the bank guarantee. On 22.02.2015, the petitioner furnished a performance bank guarantee in the sum of Rs. 25.20 lacs being 5% of the value of the total work as mentioned in the LOI.
7. The petitioner states that thereafter, on 17.03.2015, the petitioner commenced the work in accordance with the LOI, on a representation made by the respondent that it would be paid for the same notwithstanding that the Work Order was not issued.
8. On 11.08.2015, the respondent issued a Work Order for a total of 1056.85 Km "for obtaining Row, Survey, Trenching, Laying, Installation, Testing & Commissioning of Optical Fibre Cable, PLB Duct & Accessories for construction of Exclusive optical NLD Backbone & optical access route for Defense network for specified part of Package F totaling of 1056 Km (approx.) in the State of West Bengal and Sikkim". It is averred that subsequently, in the month of September 2015, BSNL accepted the appointment of the petitioner as a sub- contractor for execution of part of Package F.
9. The petitioner claims that the work awarded to it entailed providing th
Unilateral appointment of an Arbitrator by a party is impermissible, and the ineligibility of the Arbitrator under Section 12(5) of the A&C Act is a valid ground for challenging the appointment.
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 unilateral appointment of an arbitrator by one party without consent of the other violates the Arbitration and Conciliation Act, resulting in automatic termination of the arbitrator's mandate.
Unilateral appointment of an Arbitrator without consent violates procedural fairness under the Arbitration and Conciliation Act, leading to the termination of the mandate.
The unilateral appointment of an Arbitrator contravenes statutory requirements, leading to termination of the mandate if the appointment raises doubts about independence or impartiality.
The unilateral appointment of an arbitrator by one party, violating Section 12(5) of the Arbitration and Conciliation Act, 1996, renders the arbitrator ineligible, necessitating the appointment of a ....
The de jure disqualification of an Arbitrator under A&C Act, 1996, Section 14(1) leads to the termination of the mandate and the appointment of a substitute Arbitrator.
The main legal point established in the judgment is that the unilateral appointment of an Arbitrator by a party with an interest in the matter is impermissible, as it could compromise the impartialit....
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