IMPORTANT POINT
An arbitrator appointed by a party with vested interests is legally invalid under the Arbitration and Conciliation Act, 1996.

ORDER :

G.GIRISH, J.

This petition is filed under Section 14(2) read with Section 12(5) of the Arbitration and Conciliation Act, 1996 (for short ‘the Act’) with a prayer for the termination of the mandate of the 1st respondent, who is the sole Arbitrator appointed in the dispute between the petitioner and the 2nd respondent, and to substitute an independent and impartial Arbitrator in that place.

2. The petitioner is a company registered under the Companies Act, 2013. The 2nd respondent is a Government of Kerala undertaking and a company registered under the Companies Act, 1956. On 24.11.2014, an agreement was executed in between the petitioner and the 2nd respondent as per which the petitioner was to set up a Centre of Excellence In Security Sector (CEIS) and to commence its operation with an objective to provide employability skills to the personnel in the security sector. As per the above agreement, the petitioner is said to have commenced the work to establish the proposed CEIS. While so, differences of opinion arose between the petitioner and the 2nd respondent which eventually led in the issuance of a termination notice by the 2nd respondent to the petitioner on 03.05.2019 demanding an amount of Rs.55,57,475.36/- towards rent, maintenance and property tax. The petitioner denied the liability for the payment of the above amount and requested the 2nd respondent to relieve it from the project and contract and to compensate suitably for the investments made for CEIS and to return the bank guarantee. Thereupon, the 2nd respondent referred the dispute to Arbitration by invoking Clause 37(2) of the agreement. On 05.09.2022, the Government of Kerala issued a G.O appointing the 1st respondent as the sole Arbitrator to resolve the disputes between the petitioner and the 2nd respondent. As demanded by the Arbitrator, the petitioner and the 2nd respondent had filed preliminary statement of claim and defence before the 1st respondent. It is stated that the 2nd respondent had filed a statement of claim before the 1st respondent on 31.01.2023. It is further stated that before the petitioner could file a statement of defence, the 2nd respondent filed a modified statement of claim without obtaining approval from the 1st respondent. Thereafter, the petitioner is said to have filed statement of defence and counter claim on 03.03.2023. Though the petitioner was asked by the 1st respondent to file the modified statement of defence on or before 27.03.2023, the petitioner did not deem it necessary since the statement of defence and counter claim were filed pursuant to the modified statement of claim filed by the 2nd respondent. Thereupon, the 1st respondent is alleged to have behaved in a biased manner and declared the petitioner as a defaulter party under Section 25(d) of the Act for not filing the modified statement of defence and counter claim. The petitioner is said to have submitted a memo before the 1st respondent clarifying that there was no need to file a modified defence and counter claim, and also requesting the 1st respondent not to predetermine the petitioner as a defaulter. The petitioner would further allege that the 1st respondent asked the petitioner and the 2nd respondent to file written submissions without waiting for the service of those written submissions each other. The 1st respondent is said to have granted time to the 2nd respondent to file written submission till 20.06.2023 though the 2nd respondent did not seek such extension. The petitioner claims to have informed the 1st respondent that the petitioner should be permitted to file written submission after the service of written submission of the 2nd respondent to it. The 1st respondent is said to have denied opportunity to the petitioner to make oral submissions. The respondent No.1 is also alleged to have denied permission to the petitioner to address all issues. The petitioner would allege that the 1st respondent generously granted time for the 2nd respondent to file w