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IN THE HIGH COURT OF MADHYA PRADESH AT JABALPUR BENCH
Subodh Abhyankar, J.
Pandit Dwarka Prasad Mishra, Indian Institute of Information Technology, Design & Manufacturing – Appellant
Versus
Director General (Works), CPWD and Ors. – Respondents
Writ Petition Nos. 12141, 10087, 10983, 12134, 12209, 12422, 12428 of 2019, 15264, 15771 of 2020
Decided On : 27-01-2021
Arbitrator Appointment - Challenge to Appointment - Arbitration and Conciliation Act, 1996 - Section 12
Fact of the Case:
The petitioner, an autonomous Technical Institute, challenged the appointment of an arbitrator by respondents No. 3 and 4 to adjudicate a dispute with respondent No. 5. The petitioner contended that the appointment was contrary to Section 12 of the Arbitration and Conciliation Act, 1996 (AC Act of 1996).
Finding of the Court:
The court found that the petitioner, not being a party to the arbitration agreement, lacked the locus standi to challenge the appointment of the arbitrator. The court also noted that the petitioner had agreed to terms in the Memorandum of Understanding (MoU) that bound it to the decisions of respondents No. 1 to 4 in arbitration matters.
Issues: The main issue was whether the petitioner, not being a party to the arbitration agreement, could challenge the appointment of an arbitrator by respondents No. 3 and 4.
Ratio Decidendi: The court held that under Section 12 of the AC Act of 1996, only a party to the arbitration agreement can challenge the appointment of an arbitrator. The court emphasized that the petitioner's agreement in the MoU bound it to the decisions of respondents No. 1 to 4 in arbitration matters.
Final Decision: The petition was dismissed as being devoid of merits.
ORDER :
Subodh Abhyankar, J.
1. This order shall also govern the disposal of this batch of petitions filed under Article 226 of the Constitution of India given the similarity of the issue involved. For the sake of convenience, the facts as narrated in Writ Petition No. 12141/2019 are being taken into consideration.
2. The sole question that arises for the consideration of this court is that whether a writ petition is maintainable to challenge the appointment of an arbitrator by the petitioner who is not a party to the arbitration agreement.
3. The Writ Petition has been filed against order dated 22.05.2018 (Annexure P/3) passed by the Chief Engineer (CZ), Central Public Works Department, Nirman Sadan, Bhopal MP (respondent No. 3) whereby to adjudicate a dispute between respondents No. 3 and 4 (on one side) and respondent No. 5 (on the other), respondent No. 6 has been appointed as an Arbitrator.
4. Petitioner's contention is that the appointment of respondent No. 6, as an Arbitrator, to adjudicate the dispute between respondents No. 3 & 4 and respondent No. 5 is contrary to Section 12 of Arbitration and Conciliation Act, 1996 (herein after referred to as "AC Act of 1996) read with Vth and VIIth Schedule.
5. In brief, the facts of the case are that the petitioner - Pandit Dwarka Prasad Mishra, Indian Institute of Information Technology, Design and Manufacturing (in short, IIITDM) is an autonomous Technical Institute of National importance fully funded by Ministry of Human Resources Development (MHRD). According to the petitioner, it had assigned construction activities of its campus to respondents No. 1 to 4, who are the Authorities of CPWD; and has also deposited more than 200 crores with respondents No. 1 to 4 during different financial years for construction of the projects. According to the petitioner, the work has still not been completed even after lapse of seven years; and on a complaint made by the petitioner, the matter has also been referred by the respondent No. 1 to the Central Vigilance Commissioner (CVC) and the entire work initiated by respondents No. 3 to 5 is to be evaluated by CVC.
6. It is further the case of the petitioner that for construction of the aforesaid work, a Memorandum of Understanding (MoU) between petitioner and respondent No. 3 has also executed on 20th November, 2009 (Annexure P/1) enumerating various conditions for construction of projects needed by the petitioner for running the Institution effectively. Pursuant to the aforesaid MoU, respondent No. 3 also issued a Notice Inviting Tender (NIT) for construction of projects; and respondent No. 5 was selected as the Contractor.
7. Admittedly a dispute has arisen between respondent No. 5 and respondent No. 3, pursuant to which, Shri Basab Majumdar, a Retired Director General, CPWD, New Delhi (Respondent No. 6) has been appointed as an Arbitrator by the respondent No. 3 to adjudicate the dispute between the parties.
8. It is also an admitted fact that the contract executed between respondents No. 3 & 4 with respondent No. 5 is governed by General Conditions of Contract of CPWD (Annexure P/2) in which Clause 25 provides for settlement of dispute through Arbitrator.
9. Grievance of the petitioner is that appointment of respondent No. 6, as an Arbitrator, to adjudicate the dispute between the parties is in contravention of Section 12 of the AC Act of 1996 read with Schedule Vth and VIIth appended therewith, as respondent No. 6 is a Retired Director General of CPWD and falls within the mischief of the said Section and cannot be appointed as an Arbitrator.
10. In support of his contention, Shri Ajay Pal Singh, counsel for the petitioner has also relied upon the decision rendered by Supreme Court in the case of TRF Limited v. Energo Engineering Projects Limited reported as (2017) 8 SCC 377 (Para 15), recent judgment of the Supreme Court in the case of M/s. Voestalpine Schienen GMBH v. Delhi Metro Rail Corporation Limited, Civil Appeal No. 2701/2020 dated 21st Augu
Only a party to the arbitration agreement can challenge the appointment of an arbitrator under Section 12 of the Arbitration and Conciliation Act, 1996.
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The main legal point established in the judgment is that the appointment of an arbitrator must be in accordance with the law, and if found to be invalid, the court has the jurisdiction to set it asid....
The main legal point established in the judgment is the application of Section 12(5) of the Arbitration and Conciliation Act, 1996, and the proviso allowing parties to waive disqualification through ....
The court emphasized the necessity for impartiality in arbitration, ruling that automatic appointments of arbitrators undermined the arbitration clause, rendering the award invalid.
Point of Law : It is not open for the petitioner to challenge the learned Arbitrator on the ground that there are justifiable doubts as to his independence and impartiality in terms of the Guidelines....
The appointment of the arbitrator must adhere to the terms of the arbitration agreement, and challenges to the appointment must fall within the exhaustive grounds enumerated in Section 34(2) of the 1....
The court established that an arbitrator appointed by an ineligible individual cannot act, and waivers of objections regarding ineligibility must be expressed in writing, not inferred by conduct.
Appointment of arbitrator by designation is permissible. Arbitration clauses in government contracts providing that an employee of the department will be the sole arbitrator are neither void nor unen....
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