Unilateral appointment of an arbitrator in disputes is impermissible; the court affirmed the need for a neutral arbitrator.

ORDER

Spoke. The following order is passed:

2. The petitioner was awarded a contract by the 3rd respondent for construction of a Hostel for Kannur University. An integrity agreement was executed on 17.06.2019. A copy of the agreement has been produced as Annexure A1. Deductions were made by the 3rd respondent from the total amount claimed in the invoices submitted by the petitioner as pointed out in paragraph 2 of the memorandum of arbitration request. Aggrieved by the deductions made by the 3rd respondent, the petitioner submitted a statement of claims before the Dispute Redressal Committee. A copy of the statement of claims has been produced as Annexure A2. The Committee found in favour of the petitioner with respect to first two claims. However, the third claim was rejected. Minutes of the meeting of the Dispute Redressal Committee held on 25.02.2025 is produced as Annexure A3.

3. The remaining dispute is with regard to escalation in the wages of unskilled mazdoors. According to the petitioner, there is a deficit of Rs.51,64,269/- to the petitioner under the claim regarding actual wages paid to the unskilled mazdoors. Invoking the arbitration clause in the general clauses of contract, the petitioner issued Annexure A5 notice dated 15.05.2025. On receipt of the same, the 2^nd respondent issued a letter dated 19.05.2025 produced as Annexure A6 proposing the names of five persons empanelled as arbitrators requiring the petitioner to choose one among them to appoint as the sole arbitrator. The petitioner replied vide letter dated 21.05.2025, produced as Annexure A7, that appointment of an arbitrator from a curated panel maintained by the respondents is not acceptable. However, the Superintending Engineer in the office of the 2^nd respondent insisted by letter dated 28.05.2025 produced as Annexure A8 that the petitioner could choose an arbitrator from the names mentioned in the previous communication. Aggrieved by the same, the petitioner approached this Court in this arbitration request seeking nomination of an arbitrator to adjudicate the disputes between the petitioner and the respondents.

4. The respondents entered appearance through the learned Deputy Solicitor General of India. Counter affidavit has been filed by the respondents. The respondents have denied the claims of the petitioner. According to them the claim raised by the petitioner is untenable. It is pointed out in the counter affidavit that the sole arbitrator is to be appointed by the Additional Director General and such arbitrator must be a Graduate Engineer with experience in the execution of public engineering contracts and must have held a post not below the level of Chief Engineer.

5. Heard the learned counsel for the petitioner and the learned Deputy Solicitor General of India appearing for the respondents. 6. The learned counsel for the petitioner submitted that though the arbitration clause authorize the Chief Engineer to nominate an arbitrator, such a course cannot be accepted in the light of the law laid down by the Hon’ble Supreme Court in various judgments. He submitted that unilateral appointment of arbitrator is impermissible. He, therefore, submitted that compelling the petitioner to choose an arbitrator from the curated panel maintained by the respondents is illegal and untenable. The learned counsel for the petitioner relied on the order dated 26.07.2023 in A.R.No.20 of 2023 and pointed out that this Court in the said case accepted the contention that no party to a dispute can be allowed to make nomination of the arbitrator. The learned counsel relied on the judgment of the Hon’ble Supreme Court in Perkins Eastman Architects DPC & Another v. HSCC (