IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH Date of decision: 25.02.2025 M/S INSTRUMENTATION LTD. ….APPLICANT Vs.

UTTAR HARYANA BIJLI NIGAM LTD. ...RESPONDENT CORAM: HON'BLE MR. JUSTICE JAGMOHAN BANSAL Present: Ms. Dilmrig Nayani, Advocate for the applicant.

Mr. Raman Sharma, Addl. A.G., Haryana.

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JAGMOHAN BANSAL, J (ORAL)

1. The applicant through instant application under Section 11(6) of the Arbitration and Conciliation Act, 1996 (for short “1996 Act”) is seeking appointment of an Arbitrator to adjudicate the dispute between the parties.

2. The applicant-M/s Instrumentation Limited is a Government of India Undertaking. It is engaged in the business of manufacturing and supplying equipment on turnkey basis. The respondent is Government of Haryana Undertaking means applicant as well as respondent are Government Undertakings. The respondent floated a Tender in 2009 for supply of material for conversion of existing LT Lines to new 11 kV Lines. The applicant submitted its bid and respondent awarded the work. The applicant requested for grant of exemptions, however, respondent rejected its request on the ground that terms and conditions of the contract are sacrosanct. The respondent issued works order on 10.07.2009. A dispute erupted between the parties which led to termination of contract by respondent vide communication dated 22.07.2010 imposing liquidation damages to the tune of 5% of bid value. The applicant invoking arbitration clause, requested respondent to appoint an independent Arbitrator to resolve the dispute. The respondent appointed a Sole Arbitrator who vide notice dated 11.12.2013 informed the applicant about his appointment. The applicant submitted its claim and respondent submitted its defence. The process of filing claim and defence concluded by 22.05.2014. The proceedings continued before Arbitrator, however, could not be concluded due to change of Arbitrators. The applicant on 25.08.2020 filed an application under Section 13(2) of 1996 Act assailing appointment of the Arbitrator. The applicant contended before the Arbitrator that his appointment is in violation of law. It is an incurable defect. In view of amended Section 12(5) read with Seventh Schedule, the appointment has become de jure illegal, thus, Arbitrator is ineligible to proceed. The Arbitrator vide order dated 18.02.2021 rejected applicant’s application. The operative part of the order dated 18.02.2021 is reproduced as below:-

“ORDER Both the parties have been heard at length on the application of the Claimant dated 25.08.2020. I have gone through the provisions of the Act and the judgements relied upon by both the parties. I conclude that the judgments relied upon by the Claimant are not applicable in the present case, for the reason that the Arbitrator in the cited judgements was appointed after the Amended Act of 2015 had come into operation. Whereas in this case, the Arbitrator was appointed by designation in the year 2013 as per the Contract. The undersigned has only been substituted as Arbitrator by virtue of the designation.

Section 26 of the Amended Act of 2015 clearly excludes the applicability of provisions of said Act on appointments made prior to October, 2015. This position of law has also been stated in the judgments cited by the Respondent, i.e. Union of India v Parmar Construction 29 March 2019 SC and Galore Infratech Pvt. Ltd.

Mumbai V. Sew Krishnagar Bahrampore, hyd. (Arb. No. 110 of 2016). In my view, the provisions of Section 12 (5) and the Seventh Schedule of the Amended Act of 2015 is not applicable to the present case.

Hence, the application has no merit and is hereby dismissed.”

3. The applicant after rejection of its application assailing appointment of the Arbitrator, appeared before the Arbitrator and proceedings continued. The applicant through instant application is seeking substitution of the Arbitrator.

4. Counsel for the applicant submits that Arbitrator appointed by the respondent, in view of the amendment made in