The appointment of an arbitrator with potential bias due to their governmental role violates Section 12(5) of the Arbitration and Conciliation Act, necessitating an independent arbitrator.

ORDER :

Tashi Rabstan, C.J.

1. The present petition has been filed by the petitioner under Section 11(6) of the Arbitration and Conciliation Act, 1996 for the appointment of an independent Arbitrator.

2. Brief facts, which lead to the filing of the present petition, are that on 03.10.2005, as per perpetual lease deed, lease hold rights of shop bearing No. GS- 119 measuring 12’ x 15’ situated at Sector G, Sainik Colony, Jammu was allotted in favour of Smt. Vaishno Devi and as per clause (4) of the Lease Deed, arbitration clause has been incorporated, in the event of existence of any dispute. On 10.07.2007, the premium for regularization of excess land of 225 sqft. appurtenant to the shop was received by the respondent No. 1 Society from the lessee. On 19.07.2007, as per Release Deed, the lease hold rights of the shop was transferred in faovur of Ajay Kumar Choudhary and possession of excess land for which premium was received was also given. As per release deed, the aforesaid shop along with excess land and its possession was obtained by the petitioner on 12.09.2017. On 17.10.2019, the petitioner applied for construction of shop on the shop site and the excess land which came to be sanctioned in favour of the petitioner. On 05.06.2023, the respondents no. 1 and 3 without having any authority unilaterally cancelled the allotment of excess land appurtenant to the shop, as was allotted in favour of the petitioner resulting existence of dispute to be decided by an arbitration as per terms of the Perpetual Lease Deed, Release Deed read with Rule 49 of the Bye Laws of the respondent no.1 Society. Finally, on 27.09.2023, the petitioner issued notice for appointment of an independent Arbitrator, as the Registrar Cooperative being the controlling Head of all the Cooperative Societies under the Cooperative Societies Act is debarred from acting as an Arbitrator as per Section 12(5) of the Arbitration and Conciliation Act but no Arbitrator has been appointed. Hence the present petition.

3. It is averred in the petition that an independent arbitrator is required to be appointed in this case because in the present case, the Registrar of Cooperative Societies is nominated as arbitrator in terms of the Clause (IV) of Perpetual Lease executed between the parties which is against prohibition contained in Section 12(5) of Arbitration and Conciliation Act, 1996 read with Schedule 7 thereof.

4. In support of his contentions, learned counsel for the petitioner has relied upon judgment of the Supreme Court in the case of Haryana Space Application Centre & Anr. v. M/s Pan India Consultants Pvt. Ltd., 2021 AIR (Supreme Court) 653; M/s Voestalpine Schienen Gmbh v. Delhi Metro Rail Corporation Ltd. , 2017(4) SCC 665 ; TRF Ltd. v. Energo Engineering Projects Ltd. , 2017(8) SCC 377 ; Ellora Paper Mills Limited v. The State of Madhya Pradesh , passed in Civil Appeal No. 7697 of 2021 on 04.01.2022; Bharat Broadband Network Limited v. United Telecoms Limited in Civil Appeal No. 3972 of 2019 on 16.04.2019; M/s Glock Asia Pacific Ltd. v. Union of India , 2023 (8) SCC 226 ; Ratnam Sudesh Iyer v. Jackie Kabubhai Shroff , 2022 (4) SCC 206 and also relied upon judgments passed by this court in the cases of Messrs. Rama Rice and General Mills v. General Manager, J&K Cooperative Supply & Marketing Federation Ltd. reported at 1984 KashLJ 143; Arb P No.75/2023 titled Avtar Krishan Suri v. The Estate Manager, J&K Small Scale Industries Development Corporation Ltd. on 11.12.2024; Arb P No. 68/2024 titled ‘ M/s Mir Associates Construction Company v. S