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IN THE HIGH COURT OF PUNJAB AND HARYANA
S.J. Vazifdar, J.
Reliance Infrastructure Ltd. – Petitioner
Vs.
Haryana Power Generation Corporation Ltd. – Respondent
Arbitration Case No. 166 of 2016 (O&M)
Decided On : 27-10-2016
Arbitration and Conciliation Act - Appointment of Sole Arbitrator - Sections 11, 12 - Summary of Acts and Sections
Fact of the Case:
The petitioner sought the appointment of a sole arbitrator under section 11(5) of the Arbitration and Conciliation Act, 1996, for disputes arising from an engineering, procurement, and construction contract for a thermal power plant. The respondent appointed a former Chief Secretary of Haryana as the sole arbitrator, leading to a challenge by the petitioner.
Finding of the Court:
The court analyzed the provisions of the Act, particularly sections 11 and 12, and the appointment of the former Chief Secretary as the sole arbitrator. The court found that the appointment was not void and dismissed the petition, allowing the petitioner to challenge the appointment if the arbitrator was found to be disqualified later.
Issues: The issues involved the interpretation of sections 11 and 12 of the Arbitration and Conciliation Act, 1996, and the eligibility of the former Chief Secretary as the sole arbitrator.
Ratio Decidendi: The court held that the mere past employment or engagement as a consultant or advisor does not render a person ineligible to be appointed as an arbitrator. The court also clarified the timing and necessity of disclosures by the arbitrator and the consequences of a failure to disclose.
Final Decision: The court dismissed the petition, allowing the petitioner to challenge the arbitrator's appointment if found disqualified later.
S.J. Vazifdar, J.
This is an application under section 11(5) of the Arbitration and Conciliation Act, 1996, for the appointment of a sole arbitrator.
2. This petition raises important questions of law relating to the provisions of the Act as amended by the Arbitration and Conciliation (Amendment) Act, 2015, and, in particular, sections 11 and 12 thereof.
3. The respondent accepted the petitioner's bid in respect of an engineering, procurement and construction contract in respect of a thermal power plant. Pursuant thereto, the parties entered into a contract dated 30.10.2007 Article 6.1 whereof reads as under:-
"6.1 It is specifically agreed by and between the parties that all the differences or disputes arising out of the Agreement or touching the subject matter of the of the (sic) agreement shall be decided by process of Settlement of Disputes and Arbitration as referred in Clause No.2.26.0 (2.26.1 to 2.26.5) of General Conditions of Contract to specification."
Clause 2.26.5 reads as under :-
"2.26.0 SETTLEMENT OF DISPUTES/ARBITRATION
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2.26.5 If amicable settlement cannot be arrived at, the dispute shall be settled by the arbitration of a Sole Arbitrators, to be appointed by the Government of Haryana. The arbitration shall be in accordance with the Arbitration & Reconciliation Act 1996 or any subsequent amendment there of. The venue of arbitration shall be Panchkula and the language of arbitration shall be English. The arbitration shall be subject to jurisdiction of District Court at Panchkula only."
4. Disputes and differences have arisen between the parties which admittedly fall within the ambit of the arbitration agreement. It is not necessary, for the purpose of this application, to refer to the same.
In the course of the correspondence, the petitioner raised certain demands which the respondent rejected. By a letter dated 01.07.2016, the petitioner, inter alia, referred to the contract, the fact that the disputes had arisen between the parties and invoked the arbitration agreement by requesting the respondent to appoint a sole Arbitrator. Mr. Bhan, the learned senior counsel appearing on behalf of the petitioner, relied upon paragraphs 7, 8 and 9 of the letter in which the petitioner expressly invited the respondent's attention to the provisions of the Act and in particular sections 12(3) and (5) and the fifth and seventh Schedules thereto.
5. The Government of Haryana, by an order dated 29.07.2016, appointed one Smt. Promilla Issar, IAS (retired), a former Chief Secretary of Haryana, as a sole Arbitrator on the terms and conditions contained in the various contract documents. A copy of this order was forwarded to the petitioner and the respondent. The order expressly stated that the said Smt. Promilla Issar, IAS (Retd.) was an "Ex-Chief Secretary, Haryana".
The learned Arbitrator, by a communication dated 08.08.2016, informed the parties of her appointment by the said letter dated 29.07.2016 and fixed the first meeting on 19.08.2016.
6. The petitioner contends that the appointment is non-est being contrary to the Act as amended by the Arbitration and Conciliation (Amendment) Act, 2015. Admittedly, the learned Arbitrator was the Chief Secretary of the State of Haryana from 31.08.2007 to 29.02.2008. It is during this period that the parties entered into the contract dated 30.08.2007. Mr. Markanda, the learned counsel appearing on behalf of the respondent, however, pointed out that the Ex-Chief Secretary was appointed on 31.08.2007, whereas, the work had been awarded in favour of the petitioner seven months prior thereto on 29.01.2007. The formal contract was signed on 30.10.2007.
7. It would be convenient to set out here the provisions of the Act relied upon by both the learned counsel. They read as under:-
"11. Appointment of arbitrators.-
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(6) Where, under an appointment procedure agreed upon by the parties,--
(a) a party fails to act
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