JUDGMENT :

P. NAVEEN RAO, J.

1. The first appellant is a Government of India Enterprise engaged in executing Civil, Mechanical, Infrastructure Development etc. works. The 2nd appellant is its Managing Director. The 1st respondent is a Company dealing in construction of civil works.

2. First appellant was awarded contract by M/s. Singareni Collieries Company Limited (SCCL) to execute Part-I (RG-I Area) for construction of quarters with Civil, Electrical, Plumbing and all other required accessories on back to back basis and also works pertaining to RG-II Area on back to back basis as per designs and drawings provided by SCCL. Appellant appointed 1st respondent as subcontractor to execute the RG-I area work. The work was awarded on 15.02.2005 with a completion period of 18 months. Later it was also entrusted with RG-II works.

3. While appellants allege that 1st respondent delayed completion of work, the 1st respondent alleges that 1st appellant was responsible for delay in executing the work. According to 1st respondent, the work was completed in May, 2007 and the defect liability period expired in May, 2008. First respondent alleges that he was subjected to several impediments and delays due to lack of cooperation and coordination by the 1st appellant, illegally withheld amounts, due and payable to 1st respondent.

4. On refusal by the 1st appellant to release the payments, 1st respondent issued legal notice dated 12.09.2011 initiating dispute resolution process by invoking arbitration clause, clause-24 of the additional conditions of contract. The 1st respondent raised 17 claims.

5. The 2nd appellant appointed Mr. S. Rajiv, General Manager of 1st appellant as Sole Arbitrator. The proceedings commenced on 10.02.2012 and prolonged. Aggrieved by the conduct of the arbitrator, the 1st respondent lodged complaint before the 2nd appellant. At that stage, the Arbitrator resigned. Consequently, the 2nd appellant appointed 3rd respondent as an Arbitrator on 05.11.2015. First respondent also had grievance against 3rd respondent. First respondent protested before the 2nd appellant against continuation of 3rd respondent as Arbitrator.

6. As there was no response, 1st respondent filed Arb. Application No. 75 of 2018 under Section 14(1)(a) of the Arbitration and Conciliation Act, 1996 (for short ‘Act, 1996’) before this Court. After receiving notices, the 2nd appellant informed the 1st respondent that the 3rd respondent resigned as Arbitrator. During the hearing of Arb. Application No. 75 of 2018, issue of maintainability of the application under Section 14(1) of the Act before the High Court was raised. Having regard to legal position, the 1st respondent withdrew the application with liberty to go before appropriate Court.

7. Accordingly, the 1st respondent filed instant Arb. O.P. before the Commercial Court. It is the case of 1st respondent that given the consistent conduct of the nominee arbitrators appointed by the 2nd appellant, who were biased towards the 1st appellant, it has lost confidence in their impartiality. Having regard to their conduct and amendments carried out to the Act in the year 2015, it has prayed to declare the actions of Arbitrators appointed by the 2nd appellant would constitute willful failure to act without undue delay; that appointment of 2nd respondent as Arbitrator when Arb. Application No. 75 of 2018 was pending in the High Court is invalid and illegal; that appointment of sole Arbitrator by the 2nd appellant is violative of Section 12(5) of the Act, 1996 and consequently to terminate the mandate of 2nd respondent and substitute with another respondent in terms of Section 14 read with Section 15 of the Act, 1996.

8. On due consideration of respective submissions, scope of the various provisions of the Act and the precedent decisions, the Commercial Court recorded its conclusions as under:

“(i) The appointment of the arbitrators by the respondent no. 2 is not valid in view of the judgments of the Hon’ble Supreme Court in