Back
IN THE HIGH COURT OF DELHI AT NEW DELHI
Dinesh Kumar Sharma, J.
Kalyan Toll Infrastructure Ltd - Appellant
Versus
Union Of India & Ors. - Respondents
ARB.P. No. 1243 of 2023, I.A. No. 24758 of 2023
Decided On : 05-03-2024
Arbitration - Appointment of Sole Arbitrator - Arbitration and Conciliation Act, 1996 (A&C Act) - Section 11(6) - Clause 60 of the GCC
Fact of the Case:
The petitioner seeks the appointment of an independent sole arbitrator to adjudicate the disputes arising from a contract with respondent no.2. The petitioner completed the works under the contract, submitted a final bill, and invoked arbitration after not receiving payment. The respondent opposed the appointment of an arbitrator and claimed that most claims were finalized and the undisputed portion of the final bill was in 'minus'.
Finding of the Court:
The court analyzed the arbitration clause, the respondent's objections, and the qualifications of the proposed arbitrators. The court found that the panel of arbitrators offered by the respondent was restrictive and not broad-based, impinging upon the validity of the appointment procedure. As a result, the court referred the disputes to an independent arbitral tribunal and nominated an arbitrator to adjudicate the disputes between the parties.
Issues: The issues revolved around the appointment of an independent sole arbitrator, the objections raised by the respondent, and the validity of the panel of arbitrators offered by the respondent.
Ratio Decidendi: The court's decision was influenced by the principles laid down in previous judgments, emphasizing the need for a broad-based panel of arbitrators and the importance of an independent and impartial arbitral tribunal. The court's analysis focused on the restrictive nature of the panel offered by the respondent and the lack of counter-balancing in the appointment procedure.
Final Decision: The court referred the disputes to an independent arbitral tribunal, nominated an arbitrator, and directed the parties to approach the arbitrator within two weeks.
JUDGMENT
Dinesh Kumar Sharma, J. - By way of the present petition filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 (the "A&C Act") the petitioner seeks the appointment of an independent sole arbitrator to adjudicate the disputes interse arising between the parties pertaining to the Contract dated 30.10.2015.
2. Briefly stated the facts of the case are that respondent no.2 awarded a contract bearing no. DGMAP/PHASE-II/MHOW/PKG-13(R&C) of 2015-16 to the petitioner to complete the balance construction works of the residential accommodation at Military Headquarters of War (hereinafter referred to as MHOW) valued at 1,63,03,53,010 for which petitioner also furnished a Performance Bank Guarantee to the tune of Rs. 8,15,18,000/- in favor of the respondent no.2.
3. Consequently, the petitioner informed about the various hindrances to respondent No. 5/Project Manager Married Accommodation Project (MAP) for carrying out the work of construction of the residential accommodation at MHOW through various letters.
4. Pursuant to which on 30.05.2019, the petitioner completed the works under the contract and the same was acknowledged to respondent No.2/ Director General (MAP) by way of its letter bearing no. PM/MAP/PH MHOW/PKG-13(R&C) dated 31.05.2019 and the petitioner thereafter submitted a final bill of Rs. 24,06,60,075/- to respondent no.2 on 29.02.2020. The petitioner also stated that various letters were sent to respondent No. 2 to seek payment but no response was received. Therefore, the petitioner invoked arbitration vide notices dated 12.04.2022, 03.05.2022, 23.01.2023, 03.03.2023.16.03.2023, 27.04.2023 and 04.07.2023, issued under Section 21 of the A&C Act.
5. Learned counsel for the petitioner submits that as per the work order dated 30.10.2015, the said Agreement contains an arbitration clause (clause 60 of GCC), which provides that all disputes, with respect to the said agreement, shall be settled by a sole arbitrator to be appointed by the Engineer-in-chief.
6. Learned Counsel for the petitioner further submits that upon failure of appointment of procedure, as provided under the arbitration clause, the petitioner has approached this Honble court seeking appointment of arbitrator under section 11. It has been also submitted that the three names proposed by the respondent for an arbitrator in their reply are from its own panel of arbitrators.
7. It has been further submitted that the proposed arbitrators were firstly nominated by the Respondent who is a party in interest, and secondly, since they are all persons admittedly, retired from the service of the Respondent and continue drawing pension from the Respondent, therefore they are ineligible for appointment as per section 12 read with the Vth and VIIth Schedule of the Act.
8. Learned Counsel for the petitioner has also submitted that the unilateral appointment of an arbitrator is barred by law. Reliance has been placed upon Perkins Eastman Architects DPC v. HSCC (India) Ltd, (2020) 20 SCC 760, Glock Asia-Pacific Ltd. v. Union of India, (2023) 8 SCC 226.
9. Learned Counsel for the respondents have vehemently opposed the contentions raised by the petitioner and has submitted that the respondent replied to the legal notice dated 04.07.2023, wherein it was intimated to the petitioner that most of their claims attached by way of deviation orders with their Final Bill dated 29.02.2020 were finalised by the Respondent and the amount of "undisputed portion" of Final Bill is in "minus".
10. Learned Counsel of the respondent has also submitted that the petitioner was called upon to review the final bill by taking into account finalised deviation orders and submitted the corrected final bill in two parts i.e "Undisputed Portion" and "Disputed Portion" in terms of Condition 55 and 56 of GCC so that payment of "undisputed portion" of the final bill could be processed and f
The main legal point established is that the appointment procedure for arbitrators must be broad-based and meet the requirement of counterbalancing as per the arbitration agreement.
The appointment procedure prescribed in clause 3.37 of the RFP was found to be restrictive and not broad-based, impinging upon the validity of the appointment procedure. The 'counter balancing' as co....
The court emphasized the importance of a broad-based panel of arbitrators, providing parties with a wider choice for nominating their arbitrator.
The court reinforced that impartiality and independence of arbitrators is essential, disqualifying those with vested interests under Section 12(5) of the Arbitration and Conciliation Act, 1996.
The main legal point established in the judgment is the requirement for a truly broadbased panel of arbitrators and the achievement of genuine counterbalancing of power in the appointment procedure f....
An employee of the respondent or even a retired employee would be ineligible to be appointed as an arbitrator. The panel of arbitrators should be broad-based and should include persons with diverse b....
The court determined an arbitrator's jurisdiction depends on claims being notified by the General Manager; failure to do so limits arbitration eligibility.
The main legal point established in the judgment is the importance of neutrality and impartiality of the Arbitrator in the appointment process, as well as the need for a broad-based panel of arbitrat....
Parties to arbitration agreements must nominate arbitrators from a broad-based panel, ensuring independence and neutrality, while upholding party autonomy as per the SAROD Rules.
The court ruled that the appointment of arbitrators from the respondent's panel was valid, maintaining that established legal precedent surrounding impartiality does not support the petitioner's clai....
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
