IN THE HIGH COURT OF DELHI AT NEW DELHI
NEENA BANSAL KRISHNA, J.
Progressive Infotech Private Limited – Appellant
Versus
IRCON International Ltd. – Respondent
O.M.P.(T)(COMM.) 19 of 2016
Decided on : 02-02-2023
Arbitration and Conciliation Act, 1996 - Section 14, 15, 11, 13, (3), 12, (1), (3), (5) - Company’s Act, 2013 - Section 166 - Removal of Ld. Arbitrator - Appointment of sole Arbitrator - Petition filed for removal of Ld. Arbitrator and appointment in lieu thereof – Held, It is on record that, matter was being listed according to petitioner for cross-examination of its witnesses but perusal of various orders sheets would show that nothing effective has transpired - It is quite apparent that even though some dates were fixed by Arbitrator herself or on request of petitioner but nothing effective has transpired over a period of three years till 2016 when present petition has been filed - In circumstances, it would not be incorrect to conclude de-facto incapability of learned sole Arbitrator to conduct this arbitration - Therefore, circumstances justify substitution of learned sole Arbitrator is hereby appointed as Sole Arbitrator to adjudicate disputes between parties - Petition allowed.
JUDGMENT :
NEENA BANSAL KRISHNA, J.
1. The present petition under Section 14 read with Section 15 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “A&C Act, 1996”) has been filed by the petitioner for removal of Ld. Arbitrator and appointment in lieu thereof.
2. Facts in brief are that the petitioner, engaged in the business of providing IT infrastructure services and systems integration, was awarded a Tender by the respondent vide Purchase Order no. IRCON/IT/PUR./SAKET/THIN CLIENT/92 dated 11.04.2007 for supply, installation, testing commissioning and maintenance of hardware and system software for 64 bit UNIX/64bit LINUX based thin client solution and its associated servers, storage and backup Solution at the Respondent’s Corporate Office at Saket, New Delhi. A Contract dated 15.05.2007 was accordingly executed between the petitioner and the respondent. The total value of the Purchase Order was 1,11,34,350/- out of which 10% of the amount was to be released on successful completion and commissioning of the project.
3. It is submitted that the Solution was accepted on 31.03.2008 vide the Petitioner’s Letter dated 25.03.2008 and Milestone-II payment linked to acceptance was released on 31.03.2008. Thereafter, 10% balance money became due after one year of the acceptance testing i.e. on 31.03.2009 as per the terms of the Purchase Order. However, the money was not released by the respondent on frivolous issues and by raising demands which were not within the purview of the Contract.
4. Disputes arose under the Contract. The petitioner sent a Legal Notice dated 16.09.2009 for making payments as admitted by the respondent. The respondent in its response dated 23.11.2009 denied all its liabilities. Further correspondence was exchanged but the disputes could not be resolved.
5. Clause 40 of the Contract provided for resolution of the disputes through arbitration. A Notice was given to the respondent for appointment of the Arbitrator in accordance with Clause 40 of the General Conditions of the Contract. A Letter dated 24.09.2010 was received from one Mr. Deepak Bansal (CSTE/Project/East/Northern Railway) informing that he has been nominated as the sole Arbitrator by the Managing Director of the respondent Company as an arbitrator. The petitioner objected to the appointment of Mr. Deepak Bansal as being illegal vide its letter dated 06.05.2011. Consequent thereto, the sole Arbitrator withdrew himself vide his Letter dated 13.05.2011.
6. A petition under Section 11 of the A& C Act, 1996 was filed in the Court which was disposed of vide Order dated 01.08.2011. Shri. N.K. Gupta was appointed as the sole Arbitrator. The respondent vide Letter dated 02/08.11.2011 appointed Ms. Manjusha Jain as the sole Arbitrator, which was accepted by Ms. Manjusha Jain vide her letter dated 15.02.2012. The petitioner submitted its claims to which reply and thereafter rejoinder was filed and the pleadings were completed. The affidavits along with the list of witnesses were also submitted. However, the learned Arbitrator thereafter, did not fix any date for cross-examination of the witnesses. From time to time the dates were fixed and many a times with long gaps but no cross-examination of the witnesses of the petitioner was conducted. It is also claimed that on many occasions, the learned Arbitrator did not inform/fix the adjourned date and it was on the letter of the petitioner that the date was fixed in the proceedings, but then too the purpose for which the matter was being fixed was never indicated. The affidavits and evidence of the petitioner was ready around in October, 2013 but till date, no cross-examination has been conducted. Hence, the present application has been filed with the request that another Arbitrator may be appointed in lieu of Ms. Manjusha Jain in the light of her conduct.
7. The respondent no.1 in its reply has taken a preliminary objection that the Letter dated 17.02.2016 by the petitioner addressed to respondent,
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Arbitrators must be impartial and capable of performing their duties; prolonged inaction in arbitration proceedings justifies termination of their mandate.
An arbitrator's mandate can be terminated when they fail to act without undue delay; new appointments must ensure impartiality as per updated legal standards.
Unilateral appointment of an Arbitrator without consent violates procedural fairness under the Arbitration and Conciliation Act, leading to the termination of the mandate.
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....
The petitioner must first seek termination of the existing Arbitrator's mandate through the appropriate civil court before requesting a new Arbitrator, as the existing proceedings had commenced.
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