The main legal point established in the judgment is the ab initio void nature of the arbitrator's appointment, as it was contrary to Section 12(5) of the 1996 Act. The court's decision was based on the clear and unequivocal interpretation of Section 12(5) as provided by the Supreme Court in Bharat Broadband (supra).

JUDGMENT

OMP (T) (Comm) 30/2022, IA 3465/2022 (Section 151 CPC for stay) and IA 3466/2022 (Section 151 CPC for exemption)

1. This petition, under Section 14 of the Arbitration and Conciliation Act, 1996 ("the 1996 Act"), seeks termination of the mandate of Mr. Jagmhan Lal, the arbitrator presently in seisin of the arbitral disputes between the Employee State Insurance Corporation (ESIC) and HLL Lifecare Limited (HLL), consequent to the ESIC having appointed him as a sole arbitrator by letter dated 3rd August, 2018.

2. The disputes between the parties arose out of a Turnkey Agreement Contract dated 21st January, 2010, between ESIC and HLL. Clause 20.6 of the agreement envisaged resolution of the disputes between the parties by arbitration and read thus:

"20.6 In case of any disputes or differences in connection with or arising out of this agreement the same shall be referred to the Sole Arbitrator to be appointed by the Director General, ESIC, New Delhi. The award of the sole Arbitrator shall be final and binding on both the parties."

3. Disputes having arisen between the parties, HLL wrote to ESIC on 29th May, 2018, invoking Clause 20.6 read with Clause 20.8 of the agreement and requesting ESIC to appoint a sole arbitrator, as per the said clause. ESIC proceeded to appoint Mr. Jagmohan Lal, former Additional Director General, CPWD, as the arbitrator, and addressed a communication to Mr. Jagmohan Lal on 3rd August, 2018, with a copy marked to HLL, which read thus:

"To,

Shri Jagmohan Lal,

Former Addl. Director General CPWD,

121, Ankur, apartment, 7,I.P. Extension,

New Delhi-110092

Mob. 09891426576

Subj:- In the matter off Arbitration between Employees' State Insurance Corporation and M/s HLL Lifecare Limited for the project Construction of ESIC Medical College & Hospital at Paripally Village, Kollam District, Kerala

Sir,

WHEREAS the above mentioned Contract Agreement was entered between the Employees' State Insurance Corporation, CIG Road, New Delhi-110002 and M/s HLL Lifecare Limited to execute the said work on turnkey basis.

AND WHEREAS the said contract includes an arbitration agreement vide Clause No. 20.6 of Particular Condition of Contract which, interalia, provide that all disputes between the parties of the contract shall, after written noticed by either party to the contract to the other of them, be referred to the Sole Arbitrator to be appointed by the Director General, Employees' State Insurance Corporation.

AND WHEREAS certain disputes had arisen between the above noted parties.

NOW THEREFORE, by virtue of the aforesaid, I hereby inform your appointment as Sole Arbitrator and request you to enter on the reference and publish your findings and award in respect of disputes so far as these are referable to arbitration in accordance with this said agreement, a copy of which is enclosed.

The Arbitration proceedings shall be conducted in accordance with the provision of the Indian Arbitration and Conciliation Act, 1996, or any statutory amendment thereof and such Arbitral proceedings shall be held at New Delhi. Please acknowledge.

Yours faithfully,

Sd.

(SUDIP DUTTA)

CHIEF ENGINEER

Copy to:

1) PPS to D.G., ESIC for kind information please.

2) PPS to I.C. (PMD) for kind information please.

3) M/s HLL Lifecare Limited, HLL Bhawan, Golden Jubilee Block, Poojappura P.O., Thiruvananthapuram-695012 for information and necessary action please.

4) Sh. D.N. Arya, Superintending Engineer-IV, ESIC Hqrs. Office for information please.

Sd.

CHIEF ENGINEER"

4. Having thus been appointed as an arbitrator, Mr. Jagmohan Lal entered on reference.

5. The record of the proceedings held by the learned arbitrator on 24th September, 2018, read thus:

"Minutes of the 1st Preliminary Hearing held on 24th September, 2018 at New Delhi

*****

1. Both Parties agree that 'The Arbitration and Conciliation Act, 1996' duly amended by 'The Arbitration and Conciliation (Amendment) Act, 2015', will apply in the instant case.

2. A copy of the declaration under Section 12 of the above mentioned