A party cannot challenge an arbitration award if it has unilaterally appointed the arbitrator, as such appointments violate principles of impartiality, making the award unenforceable.

JUDGMENT

1. The present Petition under Section 34 of the Arbitration and Conciliation Act, 1996 has been filed by the Petitioner challenging the Award dated 28.02.2019, passed by the learned Sole Arbitrator.

2. The primary ground taken by the Petitioner is that the appointment of Arbitrator was unilateral in nature and, therefore, the award be set aside. The question which therefore, arose before this Court was as to whether a party which appoints the arbitrator can turn around and challenge the Award on the ground of unilateral appointment or not.

3. The facts, in brief, leading to the present Petitions, are that on 03.02.2017, the Petitioner herein invited tenders for grant of advertisement rights through vinyl wrapping on the exterior of Shatabdi trains running on the New Delhi–Amritsar (Train Nos. 12029/30) and New Delhi–Kalka (Train Nos. 12005/06) routes. It is stated that pursuant thereto, the Petitioner herein entered into two Licence Agreements dated 03.02.2017 with the Respondent herein, granting advertisement rights to the Respondent for a period of three years. It is stated that in terms of the said Agreements, the Respondent deposited security amounts of Rs. 4,50,000/- and Rs. 4,23,000/- respectively, and also paid licence fees for the first half year amounting to Rs. 22,50,000/- and Rs. 21,15,000/-, respectively along with applicable service tax. It is stated that after commencement of the contract, disputes arose between the parties regarding utilisation of the granted advertisement rights. It is stated that on 11.05.2017, the Respondent expressed its unwillingness to continue and requested surrender of the contract before completion of the agreed tenure. Clause 27 of the Agreements contain an Arbitration Clause which reads as under:

“27. Arbitration In the event of any dispute, claim or difference of opinion arising out of this Agreement or any special condition of contract or in connection with this agreement, the same shall be referred to the arbitration of a Gazetted Railway officer not below the rank of J.A grade appointed by the General Manager/Northern Railway. The Gazetted officer appointed as arbitrator however will not be one of those who had an opportunity to deal with the matter to which the contract relates or who, in the course of their duties as Railway servants, have expressed views on all or any of the aspects of the matter under dispute or differences. The award of the arbitrator shall be final and binding on the parties to the contract Subject to aforesaid, The Arbitration & Conciliation Act, 1996 and the rules made there under or any statutory modification thereof for the time being in force shall be deemed to apply to the arbitration proceeding under this clause. The venue of arbitration shall be the place from which the acceptance note is issued.

"Where the arbitral award is for the payment of money, no interest shall be payable on whole or any part of the money for any period till the date on which the award is passed.”

4. It is stated that the Respondent invoked arbitration and filed Claim Petition No. 7PUB/TN/VINYL WRAPPING/GROUP-D/2018, seeking refund of security deposit and other amounts. It is stated that vide letter dated 09.10.2017, the Petitioner herein appointed Shri Indra Ghosh, Retired GM/ECoR, as the Sole Arbitrator to adjudicate on the disputes between the parties. It is stated that the Petitioner herein filed its reply and also raised a counter-claim claiming outstanding licence fees, damages, and other charges.

5. By an award dated 28.02.2019, the learned Sole Arbitrator rejected the counter-claim of the Petitioner, and directed the Petitioner t