IN THE HIGH COURT OF ALLAHABAD
ASHWANI KUMAR MISHRA, J.
M/s Bansal Construction Office – Appellant
Versus
Yamuna Expressway Industrial Development Authority – Respondent
Arbitration and Conciliation APPL. U/s 11(4) No. 142 of 2019
Decided On : 04-08-2023
Arbitration and Conciliation Act, 1996 – Section 11(6), 12(5) – Appointment of arbitrator – Arbitration – Neutrality of Arbitrators – Held, Judgment of this Court in Nandini Constructions, relied upon by YEIDA will thus not hold field in view of subsequent judgments of Supreme Court, referred to above, and objection, therefore, cannot be accepted – So far as objection that scope of work is not covered under agreement would also be an aspect open to be raised and examined during course of arbitration and no definite opinion in that regard is required to be expressed by this Court while deciding application under Section 11 of Act – Issue with regard to filing of alleged affidavit by applicant, for not raising any such claim, is also left open for adjudication by arbitrator after evidence, etc., is adduced in that regard – Application allowed.
JUDGMENT :
ASHWANI KUMAR MISHRA, J.
1. This petition has been filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the 'Act of 1996') for appointment of arbitrator, consequent upon accrual of dispute between the parties to the arbitration agreement. Clause 33 of the agreement, which contains the arbitration clause is reproduced hereinafter:
Except where otherwise provided in the contract, all questions and disputes relating to the meaning of the specifications, designs, drawings and instructions herein before mentioned and to the quality of workmanship or materials used on the work or as to any other question claim right or rates for extra items sanctioned and decided are not by the competent authority under the conditions of this contact, designs, drawings, specifications, estimates instructions or order on these conditions or otherwise concerning the work or the executive or failure to execute the same whether arising during the progress of the work or after the person or person appointed by the Chief Executive Officer, YEIDA. It will be no objection to any such appointment that the matter to which contract relates and that in the course of his duties as YEIDA servant, he had expressed views on all or any of the matters in dispute or differences. The arbitrator to whom the matter is originally or subsequently referred being incapacitated to act. The Chief Executive Officer of the YEIDA shall appoint another person to act as arbitrator in accordance with the term of contract. It is also a term of his contract that no person other than a person appointed by the Chief-Executed Officer of the YEIDA as aforesaid/shall act as arbitrator and if for any reason, that is not possible, the matter is not to be referred to the arbitration at all. The arbitrator(s) may from time to time with consent of the parties enlarge the time for making and publishing the award.
Subject as aforesaid the provisions of the Arbitration Act 1940 or any statutory modification or re-enactment thereafter and the rules made thereunder and for the time being in force shall apply to the arbitration proceeding under this clause.”
2. Records reveal that the applicant was awarded contract for construction of 12 meter and 24 meter roads in Sector-18 near village Usmanpur. The contracted work was completed on 30.6.2017. Payments were released by the authority against running bills from time to time. Fourth and final bill was paid in March, 2019 wherein various deductions were made. Dispute thus arose between the parties. The applicant requested for reference of dispute to the arbitrator vide his letter dated 26.6.2019. Reminders were also sent whereafter this application has been filed.
3. Request for reference of dispute to arbitration has since been declined on the ground that Chief Executive Officer of the Authority alone is competent to arbitrate in the matter as per Clause 33 and as he has now become ineligible by virtue of Section 12(5) of the Act of 1996, therefore, the arbitration clause itself would cease to exist.
4. A counter affidavit has been filed by the opposite party stating that the applicant has submitted an affidavit before the authority stating that additional works were conducted by it on the spot on account of various hindrances and demand of additional compensation and for such variation no claim would be raised before the authority. This notarial affidavit is on a Rs. 100/- stamp paper. This affidavit is on a printed proforma and details are filled by hand which contains no date. The affidavit is referred to in Para 16 of the counter affidavit. A rejoinder affidavit has been filed denying the averments made in Para 16 of the counter affidavit stating that the affidavit does not bear the signature of the proprietor of the firm or its authorised agent/signatory.
5. The respondents also contend that the arbitration clause specifically contemplates that arbitrator could either be the C
ACE Pipeline Contracts (P) Ltd. vs. Bharat Petroleum Corporation Ltd. (2007) 5 SCC 304
Bharat Broadband Network Ltd. vs. United Telecoms Ltd. (2019) 5 SCC 755 : (2019) 3 SCC (Civ) 1
Bipromasz Bipron Trading Sa vs. Bharat Electronics Ltd. (2012) 6 SCC 384 : (2012) 3 SCC (Civ) 702
Chloro Controls India (P) Ltd. vs. Severn Trent Water Purification Inc. (2013) 1 SCC 641
Denel (Pty) Ltd. vs. Ministry of Defence
Executive Engineer, Irrigation Division vs. Gangaram Chhapolia
Indian Drugs and Pharmaceuticals Ltd. vs. Indo Swiss Synthetics Gem Mfg. Co. Ltd. (1996) 1 SCC 54
Indian Oil Corporation Ltd. vs. Raja Transport (P) Ltd. (2009) 8 SCC 520 : (2009) 3 SCC (Civ) 460
International Airports Authority vs. K.D. Bali
TRF Ltd. vs. Energo Engg. Projects Ltd. (2017) 8 SCC 377 : (2017) 4 SCC (Civ) 72
United India Insurance Company Limited vs. Antique Art Exports Private Limited
Arbitral Tribunal consisting of officers of State have become ineligible to become Arbitrators and to continue as Arbitrators.
An arbitrator's mandate can be terminated when they fail to act without undue delay; new appointments must ensure impartiality as per updated legal standards.
The appointment of an arbitrator must comply with the Arbitration and Conciliation Act, particularly Section 12(5), which disqualifies certain individuals from serving as arbitrators.
The court emphasized the necessity for impartiality in arbitration, ruling that automatic appointments of arbitrators undermined the arbitration clause, rendering the award invalid.
Arbitrator independence is crucial; unilateral appointments violate neutrality, invalidating any waiver of ineligibility not expressly agreed post-constitution of the tribunal.
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