IMPORTANT POINT
The court established that under the amended Arbitration and Conciliation Act, 1996, an arbitrator must be independent and impartial, and parties cannot appoint an arbitrator if the appointing authority has a vested interest in the dispute.

ORDER :

1. Heard Mr. C.P. Sarma, learned Senior Counsel assisted by Mr. A. Lal, learned counsel appearing for the petitioners. Also heard Mr. M.Z. Ahmed, learned Senior Counsel assisted by Mr. A.M. Dutta, learned counsel appearing for the respondent Nos. 2 to 4. Mr. K. Gogoi, learned counsel appears on behalf of the respondent No. 1.

2. The petitioners herein have prayed for appointment of an Arbitrator in terms of Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the ‘1996 Act’) keeping in view the amended Section 12 of the 1996 Act, as has been interpreted by the Hon’ble Supreme Court in the case of Perkins Eastman Architects DPC & Anr. Vs. HSCC (India) Ltd. (2020) 20 SCC 760, i.e., an independent and disinterested Arbitrator would have to be appointed by the Court and not in terms of the procedure provided in the arbitration clause, wherein the Arbitrator is an interested person.

3. On the other hand, the counsel for the respondent Nos. 2 to 4 submits that the appointment of an Arbitrator would have to be done under Section 11 of the 1996 Act in terms of the decision of the Hon’ble Supreme Court in the case of Union of India Vs. Parmar Construction Company, (2019) 15 SCC 682 and in the case of Union of India Vs. Pradeep Vinod Construction Company, (2020) 2 SCC 464, whereby the Arbitrator would have to be appointed in terms of the procedure laid down in the arbitration clause of the agreement, even if the Arbitrator is an interested person or if not an interested person, appointed by an interested person.

4. The brief facts of the case is that the petitioners were allotted a work order by the respondent No. 3 on 16.10.2019 for extraction of coal seams at Tikak OC, Tikak Colliery by open cast method for 5 years. The petitioners thereafter mobilized/deployed machinery and manpower on the site for extraction of coal seams. However, the forest officials from the Government of Assam stopped all works at the site on 05.11.2019. The petitioners were directed not to resume any mining activity on the ground that no permission had been taken from or given by the Forest Department for the mining activity. Thereafter, an alternative site was provided to the petitioner for their mining activities, in which they are still working. The petitioners are now claiming compensation for the loss incurred in having their mining activities stopped in the original site, due to the respondent No. 3 not having taken the prior permission of the Forest Department, Government of Assam.

5. The petitioners’ counsel submits that in terms of Clause 13(a) of the NIT, there is an in-house procedure for settlement of disputes between the parties. After exhausting the procedure in terms of Clause 13(a), there is a further procedure for settlement of disputes through arbitration under Clause 13(b), if the procedure under Clause 13(a) fails. The learned Senior Counsel submits that though in-house procedure for settlement of disputes under Clause 13(a) of the NIT had been availed of by the parties, no settlement could be arrived at between the parties. As such, the petitioners are now praying for settlement of the disputes through arbitration, in terms of Section 11 of the 1996 Act and the decision of the Hon’ble Supreme Court in Perkins Eastman (supra), wherein the Arbitrator would have to be appointed by this Court and not by the CMD of the respondent Company.

6. On the other hand, the stand of the respondents is that as the arbitration clause provided under 13(b) provides that the Arbitrator should be appointed by the CMD of the respondent Company, the Arbitrator should be appointed in that manner only, in terms of the law laid down by the Hon’ble Supreme Court in the case of Parmar Construction Company (supra) and Pradeep Vinod Construction Company (supra).

7. Clause 13(b) of the NIT which provides the procedure for settlement of disputes through arbitration, states as follows:

“b. Settlement of Disputes through Arbitration.

If the pa