IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JAIPUR
SUDESH BANSAL, J.
M/s Nice International Ltd. [Formerly Nice Diesel Engines Pvt. Ltd.] - Appellant
Versus
Bharat Sanchar Nigam Limited - Respondent
S.B. Arbitration Application No. 47 of 2023
Decided On : 21-02-2025
(A) Arbitration and Conciliation Act, 1996 - Sections 11(6), 12(5), 14, and 29-A - Appointment of Arbitrator - Petitioner sought to annul the appointment of Mr. Sanjeev Singhvi as Arbitrator, claiming he became ineligible due to delays and his status as a government employee - Court found that the petitioner had accepted the Arbitrator's appointment and participated in proceedings, thus the application for a new Arbitrator was not maintainable without first terminating the existing Arbitrator's mandate. (Paras 1, 14, 19)
(B) Jurisdiction - The High Court does not exercise original civil jurisdiction under the A&C Act, and the petitioner should approach the Principal Civil Court for termination of the Arbitrator's mandate. (Paras 14, 19)
Facts of the case:
The petitioner entered into Master Rate Contract Agreements with the respondent for maintenance and operation services. Disputes arose, leading to the appointment of Mr. Sanjeev Singhvi as Arbitrator, who conducted 11 hearings until proceedings stalled after August 2016. The petitioner claimed the Arbitrator lost his mandate due to inactivity and his government employment.
Findings of Court:
The court found that the petitioner had accepted the Arbitrator's appointment and participated in hearings, thus the application for a new Arbitrator was not maintainable without first terminating the existing Arbitrator's mandate.
Issues: Whether the appointment of Mr. Sanjeev Singhvi as Arbitrator could be annulled and if the petitioner could seek a new Arbitrator without first terminating the existing mandate.
Ratio Decidendi: The court ruled that the petitioner must first seek termination of the existing Arbitrator's mandate through the appropriate civil court before requesting a new Arbitrator, as the existing proceedings had commenced and the petitioner had accepted the Arbitrator's jurisdiction.
Result: Application dismissed.
ORDER :
1. Instant arbitration application under Section 11 (6) of the Arbitration and Conciliation Act, 1996 (for short "A&C Act") has been filed by the petitioner, praying to annul the appointment of sole Arbitrator Mr. Sanjeev Singhvi, appointed by the respondent and to appoint a neutral and impartial Arbitrator to adjudicate the claims of petitioner.
2. Heard learned counsel for both parties and perused the record.
3. It appears from the record that four Master Rate Contract Agreements (for short “the Master Agreements”) in the year 2009-10 were entered into and executed between the petitioner and respondent whereby and whereunder petitioner agreed with the respondent to provide comprehensive maintenance and operation under BSNL, Electrical Division Udaipur and Kota of Rajasthan Telecom Circle and on raising a dispute by the petitioner, sole Arbitrator Mr. Sanjeev Singhvi was appointed by the respondent, following the procedure of appointment of Arbitrator envisaged under Clause 25 of BSNL Master Rate Contract Agreements. The first hearing of arbitration proceedings before the sole Arbitrator of Mr. Sanjeev Singhvi took place on 03.12.2012 which has been placed on record by the respondent with reply to the arbitration application as Annexure-R/2. A perusal of proceedings dated 03.12.2012 goes to show that petitioner accepted the appointment of Mr. Sanjeev Singhvi as a sole Arbitrator and submitted to his jurisdiction by participating in the arbitration proceedings for adjudication of its claims.
4. It appears that during the ongoing proceedings of arbitration before the sole Arbitrator Mr. Sanjeev Singhvi, petitioner raised some additional dispute/ claim through letter dated 18.11.2014 and requested the respondent to appoint Arbitrator, whereupon the respondent proposed to appoint new Arbitrator but petitioner through its letter dated 20.02.2015, requested the respondent to refer the additional dispute/ claim to the erstwhile appointed Arbitrator Mr. Sanjeev Singhvi and prayed to publish award immediately. The copy of the letter dated 20.02.2015 written by and on behalf of petitioner to the Chief Engineer (E) BSNL Electrical Zone has been placed on record by the respondent with reply as Annexure-R/3.It is noteworthy that in furtherance to the request of petitioner vide letter dated 18.11.2014, for appointment of Arbitrator, respondent appointed Mr. Tulsi Kumar Parihar as sole Arbitrator but he resigned to act as Arbitrator and appointed Mr. Sanjeev Singhvi as sole Arbitrator exercising his jurisdiction as Chief Engineer (E) BSNL, Jaipur as per Clause 25 of the Master Agreement. Thus, for deciding the additional claim/ dispute of petitioner, Mr. Sanjeev Singhvi was appointed as sole Arbitrator under order dated 16.03.2015 with whom the original claim of petitioner was already subjudice. Respondent had also made counter claim.
5. It has further transpired from the record as also undisputed fact that as many as 11 hearings have taken place before the Arbitrator Mr. Sanjeev Singhvi and according to petitioner, last hearing took place on 24.08.2016, thereafter no proceedings have taken place. The last procedural order dated 24.08.2016 passed by the Arbitrator, concluding the 11th hearing of arbitration proceedings has been placed on record by the petitioner as Annexure-5 with the arbitration application.From bare perusal of the proceedings of arbitration, drawn in the 11th hearing dated 24.08.2016 (Ann.5), it appears that the deliberations took place on 10 issues indicated therein and the proceedings culminated with observation that “the next date of hearing will be fixed after confirmation of desired requirements as per these minutes”.
6. It is the case of petitioner that Arbitrator has not conducted any hearing after 24.08.2016 although petitioner itself has pleaded in para No.15 of the arbitration application that thereafter communication dated 12.01.2021 was received from the Arbitrator, asking both the parties to provide specifi
The petitioner must first seek termination of the existing Arbitrator's mandate through the appropriate civil court before requesting a new Arbitrator, as the existing proceedings had commenced.
Unilateral appointment of an Arbitrator without consent violates procedural fairness under the Arbitration and Conciliation Act, leading to the termination of the mandate.
Arbitrators must be impartial and capable of performing their duties; prolonged inaction in arbitration proceedings justifies termination of their mandate.
Point of law: As per the legal position settled by the Supreme Court in catena of judgments, the High Court has the jurisdiction under Section 11(6) of the said Act to nullify the appointments made b....
The unilateral appointment of an arbitrator by one party, violating Section 12(5) of the Arbitration and Conciliation Act, 1996, renders the arbitrator ineligible, necessitating the appointment of a ....
The court emphasized the necessity for impartiality in arbitration, ruling that automatic appointments of arbitrators undermined the arbitration clause, rendering the award invalid.
The court established that an arbitrator appointed by an ineligible individual cannot act, and waivers of objections regarding ineligibility must be expressed in writing, not inferred by conduct.
Point of Law : It is not open for the petitioner to challenge the learned Arbitrator on the ground that there are justifiable doubts as to his independence and impartiality in terms of the Guidelines....
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