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IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
Raj Mohan Singh, J.
M/s. V. K. Kapoor & Co. – Appellant
Versus
Bharat Sanchar Nigam Ltd & Anr. – Respondents
Arb No. 257 of 2017 (O&M)
Decided On : 29-10-2022
Arbitration - Appointment of Arbitrator - Section 11(6) of the Arbitration and Conciliation Act, 1996 - [Arbitration] - [Arbitration and Conciliation Act, 1996, Section 11(6)] - The court appointed an independent arbitrator to resolve the dispute between the parties, emphasizing the ineligibility of a departmental person as an arbitrator and citing relevant case laws to support the decision.
Fact of the Case:
The petitioner filed a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of an independent/change of Arbitrator. The dispute arose between the parties regarding the work done and the amount due, leading to objections, appeals, and remand orders.
Finding of the Court:
The court found that a bona fide dispute exists between the parties and emphasized the ineligibility of a departmental person as an arbitrator, ultimately appointing an independent arbitrator to resolve the dispute.
Issues: The issues revolved around the validity of the objections, the independence and impartiality of the arbitrator, and the extent of work done by the petitioner.
Ratio Decidendi: The court's decision was influenced by the ineligibility of a departmental person as an arbitrator, as per the amended Act of 2015, and cited relevant case laws to support the appointment of an independent arbitrator.
Final Decision: The court appointed an independent arbitrator, Sh. Surinder Kumar, to resolve the dispute between the parties, emphasizing the ineligibility of a departmental person as an arbitrator and specifying the proceedings and fee arrangements.
JUDGMENT
Raj Mohan Singh, J. (Oral) - The petitioner has filed the present petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter to be referred as 'the Act') for appointment of an independent/change of Arbitrator
2. A tender was floated by respondent No.1 and the petitioner applied for the same. Subsequent to the acceptance of the said tender, an agreement was entered into between the parties on 05.03.2004. Estimated cost of the total work to be carried out by the petitioner was Rs.68,50,000/-. The entire work was to be executed from 05.03.2004 to 04.03.2005 i.e. within a period of one year. The petitioner deposited an amount of Rs.1,71,250/- as security and thereafter proceeded to carry out the work assignment.
3. The petitioner started work in accordance with the work order and also received some part payment, but surprisingly, the respondent No.1 without assigning any reason and without issuing any notice rescinded the contract agreement and stopped issuing further orders to the petitioner. The dispute arose between the parties and the petitioner claimed the amount which was due on account of part of the work done. An Arbitrator was appointed to settle the dispute, who passed an award on 01.09.2008, dismissing the claim of the petitioner.
4. Feeling aggrieved against the award dated 01.09.2008, the petitioner filed objections under Section 34 of the Arbitration and Conciliation Act, 1996. The objections were dismissed by the District Judge, Rohtak vide order dated 18.11.2011. Against the said order, petitioner filed FAO No.4243 of 2012. The said appeal was allowed vide order dated 08.12.2015 and the matter was remitted back to the objecting Court to decide the objections afresh by examining record of the arbitration proceedings in accordance with law and decide the same preferably within a time bound manner.
5. On remand, the District Judge, Rohtak vide order dated 05.05.2016 set aside the award and the case was remanded back to the Arbitrator for deciding the case afresh in the light of observations made by the High Court as well by the District Judge under issue No.1. The Arbitrator was directed to pass well reasoned and speaking order within a specified period.
6. Thereafter, the respondent No.1 appointed the same Arbitrator, who had recorded the proceedings earlier. The sole Arbitrator invited the petitioner to submit its claim. The petitioner filed its statement of claim along with issues. The respondent instead of filing reply to the statement of claim of the petitioner, filed an application for striking off the claim petition. Owing to the nature of the proceedings conducted the sole Arbitrator, the petitioner raised justifiable doubts regarding independence and impartiality of the Arbitrator and moved an application under Section 12 of the Act on the ground that the Arbitrator, who was conducting the proceedings was the employee of the respondent-BSNL and was working as DGM (Vig.) Punjab. He was the same person, who had earlier unilaterally dismissed the claim petition on frivolous grounds. Reply to the application filed by the respondent was also filed by the petitioner. The sole Arbitrator allowed the application filed by the respondent No.1 and rejected the statement of claim filed by the petitioner in a very perfunctory manner vide order dated 23.03.2017.
7. Aggrieved of the order dated 23.03.2017 passed by the Sole Arbitrator, the petitioner preferred CR No.3847 of 2017 in the High Court. On 26.05.2017, this Court was pleased to issue notice of motion with interim relief of staying further proceedings before the Arbitrator. The aforesaid revision petition was ultimately got dismissed as withdrawn on 09.01.2019 with liberty to avail any other remedy in accordance with law. The present petition was pending at that time when the aforesaid revision petition was ordered to be dismissed with liberty to the petitioner to avail any other remedy in accordance with law.
8. Learned counsel for th
The unilateral appointment of a Sole Arbitrator by a party in conflict with statutory provisions and judicial judgments is impermissible. The waiver of the right to object and the criteria for impart....
A party with an interest in a dispute is ineligible to appoint an arbitrator, ensuring impartiality in arbitration proceedings.
The main legal point established in the judgment is the importance of impartiality and independence of the arbitrator, as well as the eligibility criteria for arbitrators under the A&C Act, 1996.
Unilateral appointment of an arbitrator by a party with an interest in disputes is invalid and conflicts with the impartiality requirement in arbitration law.
The court established that under the amended Arbitration and Conciliation Act, 1996, an arbitrator must be independent and impartial, and parties cannot appoint an arbitrator if the appointing author....
The right to appoint an arbitrator is not forfeited by serving notice for appointment; jurisdictional interventions can temporarily affect appointment rights, and the court's role is to ensure compli....
An award rendered by an ineligible arbitrator is void ab-initio, and the appointment of an arbitrator by an ineligible person goes to the root of the arbitrator's jurisdiction.
Previous judicial involvement does not disqualify an arbitrator under the Arbitration and Conciliation Act, as long as independence and impartiality are maintained.
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