Disqualified arbitrators cannot appoint successors; unilateral requests do not waive statutory disqualifications under the Arbitration and Conciliation Act.

JUDGMENT

Yashwant Varma, J. (Oral)--This petition has been preferred seeking to invoke the jurisdiction of the Court as conferred by Sections 14 and 15 of the Arbitration and Conciliation Act, 1996 [the Act] for termination of the mandate of the sole arbitrator appointed by the respondent and for consequential substitution.

2. For the purposes of disposal of the present petition, the following essential facts may be noticed. The petitioner is stated to have been awarded the work for construction of the Office-cum-Residential Complex for the Narcotics Control Bureau, Chandigarh, Punjab on 06 October 2016. On 24 October 2016, consequent to the aforesaid work being awarded to the petitioner, an agreement came to be drawn and executed between the parties. The agreement contemplated disputes that may arise being referred for resolution by way of arbitration. The arbitration clause which stands embodied in clause 5.30.2 of the agreement dated 24 October 2016 is reproduced hereinbelow:

"5.30.2 Arbitration Procedure - Save where expressly stated to contrary in the Contract, any Dispute shall be finally settled by binding arbitration under the Arbitration and Conciliation Act, 1996 by sole arbitrators appointed by CMD, WAPCOS"

3. Upon disputes having arisen between the parties, the petitioner here by way of its notice of 05 April 2022 communicated to the respondent the various claims which it proposed to raise and consequently sought reference of the disputes to arbitration. In order to appreciate the rival submissions which were advanced on this petition, it would be relevant to extract paragraphs 7 and 8 of that communication hereinbelow:

"7. That having left with no option, our client while conveying the intent to refer the disputes for arbitration in terms of Clause 25 read with Clause 5.30.2 of Agreement dated 24.10.2016 call upon you for appointment of an independent and impartial sole arbitrator within thirty (30) days from the receipt of this Notice and reference of dispute thereof in terms of provisions of Arbitration and Conciliation Act, 1996 read with THE FIFTH SCHEDULE [See Section 12 (1) (b)] to the Sole Arbitrator with the approval and consent of our client (as mandated by Section 12 of the Arbitration and Conciliation Act, 1996). In the event you fail to respond within the statutory period of thirty (30) days, our client shall be compelled to seek recourse to appropriate legal proceedings as they may be advised in this regard at your costs and expenses.

8. This notice is being sent to you without prejudice to our client's all rights, contentions and remedies in law. Our client reserves its right to add/alter and present its claims, additional claims and any such further reliefs under law before the Arbitral Tribunal, at the appropriate stage."

4. By a letter of 11 May 2022, the respondent proceeded to appoint Sh. N.P. Kaushik, a retired Additional District Judge belonging to the Delhi Judicial Services as the sole arbitrator. Immediately upon receipt of the aforesaid communication, the petitioner by way of a legal notice of 15 May 2022 apprised the respondent as well as the nominated arbitrator of its reservations with respect to participating in the proceedings likely to be drawn by the Tribunal. The objection was based on the assertion that since the CMD of the respondent would stand de jure disqualified in terms of Section 12(5) of the Act, any unilateral appointment made by that authority would suffer a similar disqualification. It was also submitted that the petitioner had not agreed to waive the de jure disqualification whic