Point of Law : S.13(2) provides that a party who intends to challenge appointment of an arbitrator shall, within fifteen days after becoming aware of the constitution of the arbitral tribunal or after becoming aware of any circumstances referred to in sub-section(3) of section 12 shall send a written statement of the reasons for the challenge to the arbitral tribunal.

ORDER :

Since common questions of law and facts are involved in both the petitions, same were heard together and are being disposed of by this common order.

2. By way of instant petitions, filed under sub-section (6) of S.11 of the Arbitration and Conciliation Act 1996, (hereinafter, ‘Act’), prayer has been made on behalf of petitioner for appointment of an arbitrator to adjudicate the dispute in respect of Pre-Implementation Agreement (hereinafter, ‘PIA’) dated 26.5.2011 entered into between the respondent and the petitioner.

3. For having bird’s eye view, certain undisputed facts, as emerge from the record, are that on 26.5.2011, a PIA (Annexure P-1) was signed between the petitioner and the respondent for execution of Malana-III Hydro Electric Project(30 MW) in Kullu District, Himachal Pradesh. Respondent deposited upfront premium of Rs. 6.00 Crore with the petitioner in terms of the PIA (Annexure P-1). Respondent, vide letter dated 26.8.2013, submitted a Detailed Project Report (hereinafter, ‘DPR’) with the petitioner as per terms of the PIA within the stipulated period but since the project was found technically and financially unviable, respondent in terms of Clause 12 of the PIA sought refund of upfront premium paid by it vide communication dated 21.1.2019, however, the petitioner on 3.10.2019 (Annexure P-2) i.e. nine months after the date of request for refund made by petitioner, terminated and cancelled the PIA, as a consequence of which upfront premium of Rs. 6.00 Crore deposited by respondent came to be forfeited.

4. Vide legal notice dated 30.10.2019 (Annexure P-3), respondent, while requesting the respondent for refund of upfront premium alongwith interest clearly stated that in case amount is not refunded within 15 days, notice be treated as invocation of Clause 53 of PIA. Aforesaid legal notice was duly served upon the petitioner on 5.11.2019, as is evident from Annexure R-2 annexed with the reply filed by the respondent. Since no reply/objection ever came to be given/raised by the petitioner to the aforesaid legal notice served by respondent, respondent sent a request to Justice S.N. Jha, retired Chief Justice, High Courts of Rajasthan and Jammu & Kashmir, to proceed with arbitration (Annexure P-4).

5. On 13.12.2019, petitioner sent communication to respondent, annexure P-5, raising objection to constitution of arbitral tribunal. In the aforesaid communication, petitioner apprised the respondent that neither Directorate of Energy has given its consent for the name of Justice S.N. Jha, former Chief Justice, Rajasthan and Jammu and Kashmir as sole arbitrator nor it should be taken as an implied consent on its behalf and also advised petitioner to act in accordance with provisions of Arbitration and Conciliation Act, 1996, as amended from time to time.

6. Vide notice dated 19.12.2019(Annexure P-6), above named arbitrator gave notice to both the parties in arbitration proceedings, calling upon them to cause their presence for preliminary hearing to be held on 21.1.2021 at 2.00 pm at his office, C/43, Lower Ground Jangpura Extension, New Delhi.

7. As has been taken note herein above, on 19.12.2019, Justice S.N. Jha had already taken cognizance of matter after being nominated as an Arbitrator by respondent in terms of Clause 53 of PIA and had issued notice to both the parties on 19.12.2019, calling upon them to appear before on 21.1.2020, however, vide communication dated 30.12.2019, annexure P-7, petitioner while admitting receipt of notice issued by the arbitrator, Justice S.N. Jha (retired), apprised the respondent that it has no other option but to approach this court against unilateral appointment of arbitrator by the respondent and also for appointment of independent and an impartial arbitrator by this court in exercise of power under S.11 (6) of the Act.

8. On 8.1.2020, though, the petitioner filed petition at hand under Section 11(6) praying therein for appointment of an arbitrator and notice in the instant petition