Point of Law: Once person who was required to arbitrate upon disputes arisen under terms and conditions of contract becomes ineligible by operation of law, he would not be eligible to nominate a person as an arbitrator and second, a plea that pertains to statutory disqualification of nominated arbitrator can be raised before court in application preferred under Section 11(6) of Act, for such an application is not incompetent.

JUDGMENT :

RAJAN ROY, J.

1. Heard.

2. This is an application under Section 11 of the Arbitration and Conciliation Act 1996 (hereinafter referred as ‘Act 1996’) for appointment of an Arbitrator.

3. Learned counsel for the applicant has invited attention of the court to the Arbitration Clause contained in Clause 32-C of the Agreement, a copy of which is annexed as Annexure-2 to the application.

4. The fact of the matter is that prior to filing of this application the Housing Commissioner has appointed a retired District Judge as Arbitrator to resolve the dispute.

5. Contention of the applicants counsel in this regard is that the Housing Commissioner being ineligible to himself act as Arbitrator in the matter is also ineligible to appoint any Arbitrator in view of the law laid down by Hon'ble the Supreme Court in the case of Perkins Eastman Architects DPC vs. HSCC (India) Ltd. AIR 2020 SC 59. In this regard he contends that the arbitration clause in this case is similar to the arbitration clause in the said case and based on this he relies upon Paras 15 and 16 of the said judgment. He also relies upon a Three Judge Bench decision of the Supreme Court in case of TRF Ltd. vs. Energo Engineering Projects Ltd. AIR 2017 SC 3889, which has also been considered in case of Perkins Eastman Architects DPC (supra). He also relies on Paras 1, 53, 56 and 57 of the said report in support of his contention.

6. On the other hand, Sri. Ratnesh Chandra, learned counsel for the opposite party says that the provisions contained in Section 11(2), 11(6), 12, 13 and 14 of the Act 1996 have not been taken into consideration by Hon'ble the Supreme Court in the said decisions, therefore, in his opinion, as per the Arbitration Clause, the Housing Commissioner was well within his jurisdiction to appoint an impartial Administrator in the form of a retired District Judge and the same cannot be faulted. He in this regard refers to Paras 17, 18 and 19 of his objections.

7. This court has perused the paragraphs 17 to 19 of the objections filed by the opposite party as also the decisions relied upon by the petitioner's counsel. Arbitration clause [Clause 32(c)] in the case at hand reads as under:

“Except where otherwise provided in the contract every dispute, difference or question which may at any time arise between the parties hereto or any Person claiming under them, touching or arising out or in respect of this deed or the subject matter thereof shall be referred to the sold arbitration of the person appointed by the Housing Commissioner of the Parishad. It will be no objection to any such appointment that the arbitrator so appointed is a servent of the parishad, that he had to deal with the matters to which the contract relates and that in the course of his duties as a servent of the parishad he had expressed views on all or any of the matters in dispute or difference in the event of the arbitrator to whom the matter is originally referred being transferred or vacting his officer or being unable to act for any reason he said Housing Commissioner shall appoint another person to act as arbitrator. Such person shall be entitled to proceed with the reference for the stage it was life be his predecessor. It is also a term of this contract that no person other than a person appointed as aforesaid should act as arbitrator and if for any reason that is not possible the matter is not to be referred to the arbitration at all. In all cases where the amount of the claim in dispute is Rs. 50,000/- (Rupees fifty thousand) and above the arbitrator shall give reasons for the award.

It is a term of the contract that the parties invoking the arbitration shall specify the dispute or disputes to be referred to arbitration together with the amount or amounts claimed in respect of each such dispute.

Subject as aforesaid, the provisions of the Arbitration Act 1940, or any statutory modification or re-enactment thereof and the rules made thereunder and for the time being in-force shall apply