The unilateral appointment of an arbitrator in violation of the A&C Act renders the arbitral proceedings invalid, necessitating the setting aside of the award.

JUDGMENT

SACHIN DATTA, J.

1. The present appeal has been filed under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter ‘the A&C Act’) read with Section 13 of the Commercial Courts Act, 2015 , assailing the order dated 19.12.2020 passed by the District Judge (Commercial Court), North West District, Rohini Courts, Delhi whereby the application filed by the appellant under Section 34 of the A&C Act, 1996, was dismissed.

2. The arbitral award dated 17.08.2017 (published on 08.06.2018) [hereinafter referred as ‘the arbitral award’] was rendered in the context of an Agreement between the parties for the construction of a boundary wall in Vishal Bagh, Sector G-2 and G-6 at Narela. The disputes between the parties were on account of the alleged monetary entitlement of the appellant/claimant, which has been disputed by the respondent (DDA).

3. In terms of the stipulation in the arbitration agreement between the parties, an arbitrator came to be appointed on 07.05.2014 by the engineer member/DDA. This was itself pursuant to directions in Arb. P. 401/2013 filed by the appellant/claimant, which was disposed of on 17.12.2013, directing that the appointment be made in terms of the procedure set out in the arbitration agreement between the parties. Thereafter, a substituted arbitrator was appointed on 10.03.2015.

4. On coming into force of the Amendment Act of 2015 (3 of 2016) [hereinafter referred as ‘the Amendment Act’], a letter dated 06.12.2016 was sent by the appellant/claimant, seeking that an independent arbitrator be appointed as per the Amendment Act. Pursuant to the receipt of the said letter, a communication dated 03.01.2017 was issued by the Engineer Member/DDA. The said communication reads as under:-

“Whereas Sh. D.V.Raghav, SE (Arbn), DDA was appointed as Sole Arbitrator vide letter No. EM 2 (7)96/Arbn./Vol.VIII/DDA/Pt.34/374 dated 10.03.2015 in the above matter and now M/s. Dharamvir& Co. has submitted consent letter No Nil dt. 23.12.2016 addressed to the Engineer Member, DDA and similar request has been forwarded to E.E. ND-9 dt. 06.12.2016 vide which M/s. Dharamvir & Co. has requested to switch their case pending with Sh. D.V.Raghav, Sole Arbitrator to independent Arbitrator as per Arbitration and Conciliation Act 1996 as amended by The Arbitration and Conciliation (Amendment) Act, 2015 (3 of 2016).

Therefore, I, D.P.Singh, Engineer Member, DDA by powers conferred on me under Clause 25 of works Agreement, hereby appoint Shri. S.P. Banwait (Retd.), ADG, CPWD to decide as per Arbitration and Conciliation Act 1996 as amended by The Arbitration and Conciliation (Amendment) Act, 2015 (3 of 2016) and make his award regarding claims/disputes raised by the contractor, as shown in the Statement of Claims and further counter claims of the Department to follow, however, subject always to their admissibility under Clause 25 of works agreement. The Arbitrator shall give the reasons for the award. The list of claims/counter claims shall remain same.

This reference is without prejudice to the defense that may be raised by the respondent regarding the tenability of the claims, on all necessary and available grounds, including those of limitations.”

5. The arbitrator, appointed in terms of the aforesaid communication, proceeded to make the impugned award dated 17.08.2017; however, a lien was purported to be exercised on the arbitral award on account of ‘unpaid costs of arbitration’. The same was referred to in the communication dated 16.08.2017, issued by the arbitrator, which records as under:

“The