High Court of Delhi was dealing with the petition under Sections 14 and 15 of the Arbitration and Conciliation Act, 1996 praying that the mandate of the learned Arbitrator be terminated and another Arbitrator be appointed in his place.
Brief Facts:
The respondent had issued a Notice Inviting Tender (NIT) for executing the work of Construction of Halfway/Long Stay Home for Social Welfare Department. The Contract value of the said work was fixed and, it was stipulated that the work would be completed within a period of sixteen months. It was stipulated that the work would be executed on or before 15.12.2013. It is stated that the execution of the work was inordinately delayed. The petitioner claims that the work was completed on 30.03.2015. Certain disputes have arisen between the parties in connection with the Contract in question and the petitioner invoked the Arbitration Clause by a notice dated 17.01.2020. On 19.02.2020, the Chief Engineer, DSIIDC appointed a Sole Arbitrator to adjudicate the disputes between the parties. The Arbitral Tribunal held its first hearing on 13.03.2020. It is stated that several hearings have been held before the Arbitral Tribunal thereafter. DSIIDC states that the petitioner had participated in the arbitral proceedings without any reservation. However, the petitioner has now filed the present petition on 21.01.2022 seeking termination of the mandate of the learned Arbitrator on the ground that he is ineligible to act as an Arbitrator.
Respondent’s Contention:
Learned Counsel for the respondent drew the attention of the Court to the petitioner’s notice under Section 21 of the A&C Act. He pointed out that the petitioner had called upon the Chief Engineer of DSIIDC to appoint an Arbitrator in terms of Clause 25 of the General Conditions of Contract (GCC). He contended that the Arbitrator was appointed by the Chief Engineer, DSIIDC at the instance of the petitioner and it is not open for the petitioner to now question the same because the petitioner had participated in the arbitral proceedings for almost two years.
HC’s Observations:
After hearing both the sides Court stated that the contention that the learned Arbitrator was appointed at the instance and consent of the petitioner, is not persuasive. A plain reading of the letter, whereby the Chief Engineer, DSIIDC had appointed the learned Arbitrator, indicates that he had done so in exercise of his powers conferred under Clause 25 of the GCC and not by consent, as is contended by the learned counsel on behalf of DSIIDC. However, it is not disputed that the petitioner had requested the concerned authority to act in terms of the said Clause.
HC relied upon the case of TRF Ltd. v. Energo Engineering Projects Ltd., where SC held that a person who is ineligible to act as an arbitrator would also be ineligible to appoint an arbitrator. HC stated that the Chief Engineer, DSIIDC was not empowered to appoint an Arbitrator in terms of Clause 25 of the GCC. The contention that the petitioner is precluded from raising any objections on this ground as the petitioner had participated in the arbitral proceedings, is also unmerited. Section 12(5) of the A&C Act clearly provides that waiver of any right under Section 12(5) of the A&C Act is required to be by an Agreement in writing, entered into after the disputes had arisen.
HC stated that in view of the authoritative pronouncement of the Supreme Court regarding the proviso to Section 12(5) of the A&C Act, there is no scope for entertaining the submission that the petitioner had, by his conduct, impliedly waived its right under Section 12(5) of the A&C Act. The waiver under Section 12(5) of the A&C Act has to be by an express agreement in writing.
HC Held:
After evaluating submissions made by both the parties the Court held that “the contention that the Arbitrator was appointed by the Chief Engineer, DSIIDC pursuant to the request of the petitioner to appoint an arbitrator is of little relevance when one considers the case of Bharat Broadband Network Limited v. United Telecoms Limited. In that case the arbitrator was, in fact, appointed by the appellant who had then sought to challenge the same as being in violation of Section 12(5) of the A&C Act. A petition under Section 14 of the A&C Act, on the ground that an Arbitrator is ineligible under Section 12(5) of the A&C Act to act as an arbitrator, is maintainable.”
HC allowed the present petition.
Bench: Hon'ble Mr. Justice Vibhu Bakhru
Case Title: AK Builders v. Delhi State Industrial Infrastructure Development Corporation Ltd.
Case Details: O.M.P. (T) (COMM.) 12/2022 and IA No. 1395/2022
Read Judgment @Latestlaws.com
Picture Source :
