The court can appoint an independent arbitrator when the designated arbitrator has a conflict of interest, emphasizing the need for impartiality in arbitration proceedings.

1. These are three petitions under S.11 of the Arbitration and Conciliation Act, 1996 , (hereinafter referred to "the said Act"). Contractual arrangements were entered into inter se the parties whereby the petitioner was required to carry out electrical works in the respondent's development projects "KGS - VRUDHI" and "KGS - GREEN", at Chennai and Trivandrum, for which contracts were executed on 23.05.2011, 01.06.2011 and 31.05.2011. It is the case of the petitioner that progress of the work was slow, which was eating up the profits and since the position did not improve, a decision was taken by the petitioner to relieve itself from the projects in the month of January, 2012 and January 2013 respectively. The final running bills are said to have been executed on 25.02.2012, 30.01.2012 and 25.01.2012 for Rs.64,89,825.63, Rs.12,23,742.00 and 7,67,067.00 respectively and the respondents have not paid the amounts due. The amounts were not paid and thus the petitioner opted to invoke clause - 10 of the contract which provide for arbitration and which reads as under:
"Clause 10: Any claim or dispute relating to interpretation or execution of this contract that cannot be settled amicably at site shall be referred to the Director of KMCL, who shall be the final authority to decide upon any dispute pertaining to this Contract. The decision made by the Director shall be final and binding on both parties."

2. A legal notice is stated to have been sent on 17.03.2014, but no reply was forthcoming. The petitioner claims that the Arbitrator would be the Director of respondent and would thus definitely be interested in the outcome of the disputes being disqualified to act as an Arbitrator, in view of the Judgment of the Honourable Supreme Court in P.Dasaratharama Reddy Complex v. Government of Karnataka reported in 2014 (2) SCC 201 , and thus this Court should appoint an independent Arbitrator.

3. On the first date of listing of these petitions itself, it was disclosed by the learned counsel appearing for the petitioner that one of the Directors had been appointed as an Arbitrator, who had disclosed his financial interest, and this aspect was confirmed on the subsequent date, that the Arbitrator so appointed had 33.35% share holding. Such intimation had not been received till the filing of the petition on 22.09.2014. 

4.On the Court's query about the modes to be opted in such a situation, learned counsel for the petitioner relied upon the Judgment of the Honourable Supreme Court in Indian Oil Corporation Ltd., and Others v. M/s. Raja Transport (P) Ltd., 2009 (8) SCC 520 , to contend that the jurisdiction of this Court under S.11 of the said Act is not limited where a person is sought to be appointed as a Sole Arbitrator, who is an employee and has financial interest qua one of the parties especially when it is not a State or instrumentality of the State and in this behalf, direction No.(vii) in Paragraph - 537 of the Judgment was referred to and in view thereof, the petition was admitted and notice was issued to the respondent.

5. The respondent entered appearance and filed their reply - cum - common counter affidavit claiming as under:
"(i) Arbitrator had been appointed before filing of the petition.
(ii) The agreements containing the arbitration clause was unstamped.
(iii)On merits of the face, the respondent had good defence on account of sub-standard quality of work being abundant.
(iv) The Managing Director of the respondent without consent of the Board, awarded huge contracts to companies in which he had major controlling interest.
(v) If a Director of the respondent cannot act as an arbitrator, no one else can, as the contract cannot be re - written. The