IN THE HIGH COURT OF DELHI AT NEW DELHI
PRATEEK JALAN, J.
Ms Bridge Building Construction Co Pvt Ltd - Appellant
Versus
Bharat Heavy Electricals Ltd. - Respondents
O.M.P. (COMM) 87 of 2022, O.M.P. (COMM) 377 of 2022 & I.As. 14553, 14555 of 2022
Decided on : 16-01-2023
Arbitration and Conciliation Act, 1996 – Section 12, 14, 16, 34 – Petitions under Section 34 of Arbitration and Conciliation Act, 1996 – Grounds for challenge – Failure impossibility to act – Application for setting aside arbitral award – Petitioner assails two arbitral awards between parties rendered by same arbitrator albeit different contract agreements impugned award was made – Held, Court present petitions are entirely covered by aforesaid judgments – Arbitrator had been unilaterally appointed has not been put in dispute – Award is therefore unsustainable contention that petitioner’s conduct is evidence of waiver of its rights also untenable in the light of these judgments – Petitions are allowed.
JUDGMENT :
PRATEEK JALAN, J.
1. By way of these petitions under Section 34 of the Arbitration and Conciliation Act, 1996 [“the Act”], the petitioner assails two arbitral awards between the parties rendered by the same arbitrator, albeit under different contract agreements. In O.M.P. (COMM) 87/2022, the impugned award was made on 23.01.2021 and arose out of a Contract Agreement dated 09.02.2016 (pursuant to Letter of Intent dated 27.11.2014 and Work Order dated 23.04.2015). In O.M.P. (COMM) 377/2022, the impugned award was made on 18.08.2021[At the foot of the award, the date mentioned is 20.08.2021.] and arose out of a Contract Agreement dated 09.02.2016 (pursuant to the Letter of Intent dated 27.11.2014 and Work Order dated 10.07.2015).
2. Both agreements contain identical arbitration clauses (Clause 26), which provide for resolution of disputes by sole arbitration of the Head of the Transmission Business Group (TBG) of the respondent or his appointee. The undisputed factual position is that the petitioner sought invocation of arbitration by communications addressed to the respondent, and the respondent appointed the arbitrator who has rendered the impugned awards.
3. The primary ground of challenge urged by Mr. Sanjay Kumar Shandilya, learned counsel for the petitioner, is that the arbitrator was unilaterally appointed by the respondent. He relies upon the judgments of the Supreme Court in TRF Ltd vs. Energo Engineering Projects Ltd., 2017 8 SCC 377. and Perkins Eastman Architects DPC & Anr. vs. HSCC (India) Ltd., (2020) 20 SCC 760, to submit that a unilaterally appointed arbitrator is ineligible to act under Section 12(5) of the Act and any award rendered by him is a nullity. It is also submitted that the arbitrator did not furnish any declaration, as required in Section 12 of the Act, to the petitioner.
4. Mr. Pallav Kumar, learned counsel for the respondent, on the other hand, submits that Section 12(5) of the Act itself contemplates that parties may waive the applicability of the provision by an express agreement in writing. He contends that the petitioner had sufficient opportunity, even after the aforesaid judgments in TRF[Supra (note 2).] and Perkins[Supra (note 3)] were rendered, to approach the arbitrator under Section 16 of the Act or the Court under Section 14 of the Act. Indeed, he submits that the petitioner itself made applications for extension of the mandate of the arbitrator under Section 29A of the Act, which resulted in orders dated 26.07.2019 in O.M.P. (Misc.) (Comm.) 297/2019 and O.M.P. (Misc.) (Comm.) 298/2019 and order dated 12.11.2020 in O.M.P. (Misc.) (Comm.) 252/2020. In these circumstances, Mr. Kumar submits that the petitioner itself submitted to the jurisdiction of the arbitrator and cannot assail the award on this ground at this stage.
5. It is also submitted by Mr. Kumar that in the present case, the arbitrator did make a disclosure as required under Section 12 of the Act, which was communicated to the respondent by an email dated 19.01.2017, which has been placed on record. There is, however, no assertion that the declaration was communicated to the petitioner at any stage.
6. Having heard learned counsel for the parties, I am of the view that the point in issue is no longer res integra. The judgments of the Supreme Court in TRF[Supra (note 2).] and Perkins[Supra (note 3).], as well as Bharat Broadband Network Limited vs. United Telecoms Limited, (2019) 5 SCC 755, have been considered by the Division Bench of this Court in two recent judgments, which squarely cover the present case as well.
7. In Ram Kumar and Anr. vs. Shriram Transport Finance Co. Ltd., 2022 SCC OnLine Del 4268, the challenge to the arbitral award was on the ground of ineligibility due to unilateral appointment, as also non furnishing of the declaration under Section 12 of the Act. Both grounds were accepted by the Division Bench with the following observations:
Bharat Broadband Network Limited vs. United Telecoms Limited
A unilateral appointment of an arbitrator by one party contravenes Section 12(5) of the Arbitration and Conciliation Act, rendering the arbitral award void ab initio and against public policy.
An award rendered by an ineligible arbitrator is void ab-initio, and the appointment of an arbitrator by an ineligible person goes to the root of the arbitrator's jurisdiction.
The main legal point established in the judgment is that the appointment of the sole arbitrator unilaterally by one of the parties was improper and impermissible, violating the provisions of Section ....
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