Delhi High Court
West Haryana Highways Projects ... vs National Highways Authority Of ... on 15 May, 2017
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment Reserved on: 20.04.2017
Judgment Pronounced on: 15.05.2017
+ O.M.P. (T) (COMM.) 28/2017 & IA No.4598/2017 (stay)
WEST HARYANA HIGHWAYS PROJECTS PVT.LTD.....Petitioner
Through Mr.Manoj Singh, Mr.Nilava
Bandopadhyay, Mr.Puneet Sharma and
Mr.Anshuman Ray, Advs.
versus
NATIONAL HIGHWAYS AUTHORITY OF INDIA..... Respondent
Through Mr.Varun K.Chopra and
Mr.Sandeepan Pathak, Advs.
CORAM:
HON'BLE MR. JUSTICE JAYANT NATH
JAYANT NATH, J.
1. The present petition is filed under Section 14 of the Arbitration and
Conciliation Act, 1996 (hereinafter referred to as „the Act‟) with a prayer to
terminate the mandate of Sh.R.K. Jain, Former Chief Engineer, PWD
Haryana to act as Co-Arbitrator and consequently, terminate the mandate of
Justice N.Kumar (Retd.) to act as the Presiding Arbitrator.
2. The issue raised in the present petition is as to whether a party to an
arbitration proceeding can approach the court under Section 14 of the Act to
seek termination of the appointment of an arbitrator on the ground that he is
ineligible to be appointed as an arbitrator under Section 12(5) read with the
Seventh Schedule of the Act.
3. The case of the respondent is that in case the petitioner had a doubt
regarding the eligibility of the Arbitrator nominated by the respondent, the
petitioner had to challenge his appointment under Section 13 of the Act
before the Arbitral Tribunal and in case the Arbitral Tribunal does not agree
with the challenge raised by the petitioner, the petitioner had to await the
award and thereafter raise the issue under Section 34 of the Act.
4. The brief facts leading to the present petition are that the petitioner
Company entered into a Concession Agreement dated 06.11.2007 with the
respondent for design, engineering, finance, operation and maintenance of
Delhi Haryana Border to Rohtak Section of NH-10 from KM 29.70 to KM
87.00 including construction of Bahadurgarh and Rohtak by-passes in the
State of Haryana under NHDP Phase-III A on build, operate and transfer
(BOT) basis. The project was to be completed within a period of 24 months
from the appointed date i.e. 02.05.2008. However, it is urged that on account
of various delays and breaches committed by the respondent and for reasons
beyond the control of the petitioner, the agreed date of completion could not
be achieved and the provisional certificate of completion was issued by the
respondent only on 26.11.2015 i.e. after a delay of five years and 7 months.
5. The petitioner further submits that while executing the project under
the Concession Agreement, various disputes and differences have arisen
between the parties. Hence, the petitioner sought to initiate arbitration
proceedings in terms of Clause 44.3 of the Concession Agreement. The said
Clause provides that in case of disputes, the matter would be decided by
reference to a Board of three Arbitrators, each party to select one arbitrator
and the two arbitrators so appointed to select the third arbitrator. In the event
of disagreement on appointment of the third arbitrator, the appointment was
to be made in accordance with the rules of the International Centre for
Alternate Disputes Resolution (ICADR), New Delhi (hereinafter referred to
as the Rules). The Clause also provides that the arbitration shall be held in
accordance with the above Rules of ICADR.
6. Accordingly, the petitioner is said to have nominated Justice Anil
Kumar, (Retd.) as the Arbitrator. It is the case of the petitioner that as the
respondent failed to nominate his arbitrator, the petitioner filed a petition
under Section 11(6) of the Act being Arbitration Petition No. 114/2017 titled
as "West Haryana Highways Projects Pvt. Ltd. vs. National Highway
Authority of India". This court in that case by its order dated 06.02.2017
noting that the respondent have nominated Sh.R.K. Jain, former Chief
Engineer, PWD, Haryana as an Arbitrator disposed of the petition. As there
was no agreement between the learned Arbitrators with regard to the
appointment of the third arbitrator, ICADR was approached by the
respondent who appointed Justice N. Kumar (Retd.) as the Presiding
Arbitrator on 20.03.2017.
7. The petitioner claims that on receipt of the notice from ICADR about
constitution of the Arbitral Tribunal, the petitioner wrote a letter dated
29.03.2017to Sh. R.K.Jain, the learned Arbitrator nominated by the
respondent requesting him to provide disclosure as per Section 12 of the Act,
as the disclosure provided by him earlier was not proper. Sh. R.K. Jain, the
learned Arbitrator by letter dated 08.04.2017 has now sent a communication
in the format as per Sixth Schedule of the Act.
8. It is the case of the petitioner that the learned Arbitrator- Sh. R.K. Jain
has admitted in his communication/disclosure that he is rendering help to
two Project Directors of NHAI in the capacity of adviser and hence, is
disqualified under Seventh Schedule of the Act from acting as an Arbitrator
and that his appointment is barred under Section 12(5) of the Act read with
Seventh Schedule.
9. I have heard learned counsel for the parties.
10. Learned counsel appearing for the petitioner reiterates that as per the
disclosure made by the Arbitrator-Sh. R.K. Jain, he is clearly an adviser of
the respondent and was ineligible to be appointed as an a Arbitrator in terms
of the Seventh Schedule read with Section 12(5) of the Act. It is reiterated
that there is no bar in approaching this court under Section 14 of the Act.
Reliance was placed on the judgment of the Division Bench of this court in
Progressive Career Academy Pvt. Ltd. vs. FIIT JEE Ltd., ILR (2011) IV
Delhi 286 to contend that in terms of the said judgment once a challenge
under Section 13 does not succeed, the only remedy of the aggrieved party is
to await the Award and raise the objections under Section 34 of the Act.
Hence, he submits that the remedy under Section 13 of the Act is not the
appropriate remedy to challenge the invalidity of the appointment of the said
Arbitrator nominated by the respondent. He relies upon judgment of the
learned Single Judge of this court in the case of Dream Valley Farms Pvt.
Ltd. & Ors. vs. Religare Finvest Ltd. & Ors., MANU/DE/2898/2016 to
contend that in similar circumstances this court had terminated the mandate
of an arbitrator who was so ineligible. He also relies upon the judgment of
the Supreme Court in the case of Voestalpine Schienen GmbH vs. Delhi
Metro Rail Corporation Ltd., MANU/SC/0162/2017 in support of his
contentions.
11. Learned counsel for the respondent has on instructions not disputed
the fact that the said nominated Arbitrator, namely, Sh. R.K. Jain is on the
panel of Advisers of the respondent. His submission however is that the
appointment could be challenged by the petitioner under Section 13(3) of the
Act. In case the challenge was not accepted by the Arbitral Tribunal, the
petitioner had to await the decision of the Tribunal and thereafter take steps
under Section 34 of the Act. He relies upon the judgments of the learned
Single Judges of this court in the case of Gangotri Enterprises Ltd. vs.
NTPC Tamil Nadu Entergy Company in OMP (T) (COMM.) 47/2016 dated
16.01.2017, Steel Authority of India Ltd. vs. British Marine PLC., 234
(2016) DLT 99 and MBL Infrastructures Ltd. vs. Telecommunication
Consultants India Ltd., MANU/DE/0105/2015 to support his contentions.
12. We may first see the disclosure made by the learned Arbitrator-
Sh.R.K.Jain under Section 12 of the Act. The earlier communication made
by the learned Arbitrator on 16.02.2017 is not very relevant. The second
communication dated 8.04.2017 which is relevant makes a disclosure in the
format as prescribed under the Sixth Schedule, relevant part of which reads
as follows:-
"I, Help other two Project Directors of NHAI, l.EPE-1 and
2.EPE-2 [EPE: Eastern Periphery Expressway) based on my
expertise in concrete road construction, which is totally
opposed of dispute in question and/ or before this Hon'ble
Tribunal."
13. From the above disclosure of Sh. R.K. Jain, it is manifest that he is
advising the respondent-NHAI on two of its projects. Learned counsel for
the respondent on instructions has confirmed that he is on the panel of
advisers of NHAI.
14. We may see the legal position in this regard. Section 12(5) of the Act
reads as follows:-
"Notwithstanding any prior agreement to the contrary, any
person whose relationship, with the parties or counsel or the
subject matter of the dispute, falls under any of the categories
specified in the Seventh Schedule shall be ineligible to be
appointed as an arbitrator:
Provided that parties may, subsequent to disputes having arisen
between them, waive the applicability of this sub-section by an
express agreement in writing."
15. The first entry of seventh Schedule of the Act reads as follows:-
"Arbitrator's relationship with the parties or counsel
1. The arbitrator is an employee, consultant, advisor, or has
other past or present business relationship with a party."
16. Hence a consultant/adviser of a party is ineligible from becoming an
arbitrator in a proceeding relating to the said party. In the light of the above
factual legal position, it is manifest that the learned arbitrator-Sh. R.K. Jain
on account of his being an adviser/consultant to the respondent Company
was ineligible for being appointed as an arbitrator.
17. The question that now arises is as to whether a petition under Section
14 of the Act would lie before this court to remove the said learned
Arbitrator or as contended by the learned counsel for the respondent, the
remedy of the petitioner was to approach the Arbitral Tribunal under Section
13 (3) of the Act and in the eventuality that the arbitral tribunal did not
accept the contention, the petitioner would have to await the award of the
Tribunal and thereafter, take steps under Section 34 of the Act, if so
required.
18. Section 12, 13 and 14 of the Act reads as follows:-
"12. Grounds for challenge.
(1) When a person is approached in connection with his
possible appointment as an arbitrator, he shall disclose in
writing any circumstances.-
(a) Such as the existence either direct or indirect, of any past or
present relationship with or interest in any of the parties or
in relation to the subject-matter in dispute, whether
financial, business, professional or other kind, which is
likely to give rise to justifiable doubts as to his
independence or impartiality; and
(b) Which are likely to affect his ability to devote sufficient
time to the arbitration and in particular his ability to
complete the entire arbitration within a period of twelve
months.
Explanation 1. The grounds stated in the Fifth Schedule
shall guide in determining whether circumstances exist
which give rise to justifiable doubts as to the independence
or impartiality of an arbitrator.
Explanation 2- The disclosure shall be made by such person
in the form specified in the Sixth Schedule
(2) An arbitrator, from the time of his appointment and
throughout the arbitral proceedings, shall, without delay,
disclose to the parties in writing any circumstances referred to
in sub-section (1) unless they have already been informed of
them by him.
(3) An arbitrator may be challenged only if-
a) Circumstances exist that give rise to justifiable doubts as
to his independence or impartiality, or
b) he does not possess the qualifications agreed to by the
parties,
(4) A party may challenge an arbitrator appointed by him, or in
whose appointment he has participated, only for reasons of
which he becomes aware after the appointment has been made.
(5)Notwithstanding any prior agreement to the contrary, any
person whose relationship, with the parties or counsel or the
subject-matter of the dispute, falls under any of the categories
specified in the Seventh Schedule shall be ineligible to be
appointed as an arbitrator.
Provided that parties may, subsequent to disputes having arisen
between them, waive the applicability of this sub-section by an
express agreement in writing.
13. Challenge procedure.--(1) Subject to sub-section (4), the
parties are free to agree on a procedure for challenging an
arbitrator.
(2) Failing any agreement referred to in sub-section (1), a party
who intends to challenge an arbitrator shall, within fifteen days
after becoming aware of the constitution of the arbitral tribunal
or after becoming aware of any circumstances referred to in
sub-section (3) of section 12, send a written statement of the
reasons for the challenge to the arbitral tribunal.
(3) Unless the arbitrator challenged under sub-section (2)
withdraws from his office or the other party agrees to the
challenge, the arbitral tribunal shall decide on the challenge.
(4) If a challenge under any procedure agreed upon by the
parties or under the procedure under sub-section (2) is not
successful, the arbitral tribunal shall continue the arbitral
proceedings and make an arbitral award.
(5) Where an arbitral award is made under sub-section (4), the
party challenging the arbitrator may make an application for
setting aside such an arbitral award in accordance with section
34.
(6) Where an arbitral award is set aside on an application made
under sub-section (5), the Court may decide as to whether the
arbitrator who is challenged is entitled to any fees.
14. Failure or impossibility to act.--(1) [The mandate of an
arbitrator shall terminate and he shall be substituted by another
arbitrator, if]
(a) he becomes de jure or de facto unable to perform his
functions or for other reasons fails to act without undue delay;
and
(b) he withdraws from his office or the parties agree to the
termination of his mandate.
(2) If a controversy remains concerning any of the grounds
referred to in clause (a) of sub-section (1), a party may, unless
otherwise agreed by the parties, apply to the Court to decide on
the termination of the mandate.
(3) If, under this section or sub-section (3) of section 13, an
arbitrator withdraws from his office or a party agrees to the
termination of the mandate of an arbitrator, it shall not imply
acceptance of the validity of any ground referred to in this
section or sub-section (3) of section 12."
19. In Dream Valley Farms Pvt. Ltd. & Ors. vs. Religare Finvest Ltd. &
Ors.,(Supra) , the petitioner therein had filed a petition under Section 11(6)
and (8) of the Act for seeking appointment of an independent, impartial and
qualified arbitrator. The facts of the case were that the arbitrator appointed
was already acting as an arbitrator in 20 matters for the party who had
already appointed him. In the initial declaration, this aspect was hidden by
the arbitrator. This court noted that the arbitrator had made a misleading
declaration which defeats the purpose of Section 12 (1) and Fifth Schedule
of the Act. This court rejected the contention that the petitioner therein had
to challenge the appointment of the arbitrator under Section 13 of the Act
noting as follows:-
"20. While in the normal course, that would be one option, in
the present case not only are Clauses 22 and 24 of the Fifth
Schedule attracted giving rise to justifiable doubts as to the
independence and impartiality of the Arbitrator, but the conduct
of the Arbitrator in seeking to mislead the Petitioner and
suppress in the first instance the fact of his being a presiding
Arbitrator in 27 arbitration matters relating to the Respondent
smacks of dishonesty that is unbecoming of an Arbitrator.
21. The Court is satisfied that for the purposes of Section 14 (1)
(a) of the Act the Arbitrator becomes de jure disqualified from
continuing as an arbitrator. His mandate is accordingly
terminated."
20. Hence, the court came to a conclusion that the arbitrator was de jure
disqualified from continuing as an arbitrator. His mandate was terminated.
21. A learned Single Judge of this court has in somewhat identical
circumstances held that a petition under section 14 would lie to terminate the
mandate of an Arbitrator in case he is ineligible to be appointed as an
Arbitrator in terms of seventh Schedule of the Act. Reference in this context
may be had to a judgment of this Court being OMP(T) (Comm.) 22/2017
decided on 24.4.2017 titled H.R.D.Corporation (Marcus Oil and Chemical
Division) vs. Gail (India) Limited (Formerly Gas Authority of India Ltd.)
where it was held as follows:-
"32. The Seventh Schedule is essentially a subset of the Fifth
Schedule of the Act. The grounds indicated in the Fifth Schedule
would indicate circumstances giving rise to justifiable doubts as
to the independence or impartiality of an arbitrator; it is not
necessary that such grounds would render the arbitrator ineligible
to act. The Fifth Schedule is only to serve as a guide for the
disclosure to be made by an arbitrator. The schematic
interpretation of Section 12(1) read with Section 13 of the Act
indicates the legislative intent that in such cases, the challenge
must be considered by the arbitral tribunal and an unsuccessful
challenge before the arbitral tribunal must not be permitted to
interdict the arbitral proceedings.
33. However, the most serious of such grounds are spelt out in
the Seventh Schedule and in such cases, the recourse to courts
under Section 14 is not precluded as closing a party‟s recourse to
courts in such cases would perhaps only delay the dispute
resolution. It is in this context that Section 14(1) of the Act has
also been amended by the Amendment Act to expressly provide
that the arbitrator whose mandate is terminated, would be
substituted by another arbitrator. As indicated above, a person
whose relationship with the parties, or counsel or the subject-
matter of the dispute falls within the categories stated in the
Seventh Schedule, would be ineligible to act as an arbitrator
notwithstanding prior agreement of the parties being to the
contrary. The introduction of Section 12(5) with amendment to
Section 14(1) by the Amendment Act while bringing no changes
in Section 13 of the Act plainly indicate the above legislative
scheme of culling out the cases falling under Seventh Schedule
from the discipline of Section 13 of the Act.
.....
36. In view of the above, the present petitions, insofar as they
seek termination of the mandate of the arbitrators on account of
Section 12(5) read with Seventh Schedule of the Act, cannot be
rejected at the threshold as falling outside the scope of Section 14
of the Act. However, a challenge to the appointment of the
arbitrators on grounds other than the existence of relationships
falling under the categories specified in the Seventh Schedule,
cannot be entertained in these proceedings."
22. Similarly, a Division Bench of the Andhra Pradesh High Court in
Gurcharan Singh Sahney and others vs. Harpreet Singh Chabbra and
Others, 2016 SCC Online Hyd 90 held as follows:-
"57. The distinction between Sections 12 and 13 on the one
hand and Section 14 on the other, in immediately invoking the
jurisdiction of the Court, is based on the ability or the capacity
of the arbitrator to continue arbitral proceedings. The challenge
to an arbitrator under Section 12(3)(a) of the Act, even if
unsuccessful, does not disable or incapacitate the arbitrator
from continuing arbitration proceedings. Section 14(1)(a) of the
Act, however, relates to the inability/incapacity of the arbitrator
to perform his functions, or where his performance is such as to
needlessly delay early completion of arbitration proceedings.
While the dejure or defacto inability of the arbitrator to perform
his functions results in bringing arbitral proceedings to a
grinding halt, needless delay in the early completion of arbitral
proceedings is also a reflection of the arbitrators inability to
complete arbitration proceedings expeditiously. It is for this
reason that, unlike Section 13, Section 14 of the Act provides
for the termination of the mandate of the arbitrator.
58. The incapacities, referred to in Section 14 (1) (a) of the Act,
are such as to have a direct nexus with the inability of the
arbitrator to perform his functions. This incapacity or disability
should occur to the arbitrator himself so that he becomes, as a
matter of law or fact, unable to perform his functions. (Priknit
Retails Ltd.: 2013(2) ARBLR 35 (Delhi)). The de jure
impossibility, referred to in Section 14(1)(a), is the
impossibility which occurs due to factors personal to the
arbitrator, and de facto inability occurs due to factors beyond
the control of the Arbitrator. (Shyam Telecom Ltd. v. ARM
Ltd.:2004 (3) ARBLR 146 Delhi; Priknit Retails Ltd. : 2013(2)
ARBLR 35 (Delhi)). Examples would be the death of the
arbitrator or his health problems etc. (Priknit Retails Ltd. :
2013(2) ARBLR 35 (Delhi)). Mere legal disability is not a
condition precedent for invocation of Section 14. The dejure
inability must relate to his ability to function. (Priknit Retails
Ltd.)
60. The mandate of an arbitrator automatically terminates on the
death of the arbitrator or his physical incapacity to proceed with
the mandate. Dejure incapacity refers to an arbitrator's legal
incapacity to perform his functions under the law, for instance,
bankruptcy, conviction for a criminal offence, etc. Defacto
incapacity relates to factual inability, which includes factual
situations in which the arbitrator is physically unable to perform
his functions for instance, continuous ill-health, etc. (Shyam
Telecom Ltd. :2008(4) ALT 266). If an arbitrator is genuinely
lacking in physical or mental ability to discharge his
obligations, or is found to have left his last known address
without intimation and is untraceable for quite some time, or
has been detained for custodial interrogation for a substantial
period of time for his having committed an offence and there is
uncertainty regarding his release from custody, and the Court is
of the opinion that the arbitrator has acquired de facto inability
and hence cannot act without undue delay, an order, terminating
the mandate of the arbitrator, may be passed. Similarly, if the
arbitrator becomes de jure unable to function as such, for any
reason other than manifestation of lack of independence or
impartiality for which he may have been approached to give his
ruling, approach under Section 14 is not barred. (Himadri
Chemicals & Industries Ltd.)
.....
71. The scheme of the Act makes it clear that the legislature did
not intend (i) either to provide multiple remedies; (ii) or to
provide mutually exclusive concurrent remedies.
Section 13 operates in a field that is completely different from
Section 14. One has no connection with the other. This is why
both Sections stipulate both the right as well as the remedy.
Section 13 is a complete code in that (i) it confers a right to
challenge an arbitrator; (ii) it indicates the grounds on which
such challenge could be made, by referring to Section 12(3);
(iii) it prescribes the forum where such a challenge can be made
(viz., the arbitral tribunal); and (iv) it also indicates the remedy
available to a party whose challenge under Section 13(2) fails.
Section 13(5) contains the remedy. (Chennai Metro Rail
Limited : 2014(2) ARBLR 341 (Madras)). In view of the
express language of Section 13(2) a challenge to an arbitrator,
on the grounds specified in Section 12(3), has to be made only
before the Arbitral Tribunal. Similarly, a controversy
concerning the de jure or de facto inability of the arbitrator to
perform his functions, or a controversy concerning the failure of
the arbitrator to act without undue delay in terms of
Section 14(1)(a), can be agitated only before the Court under
Section 14(2). Section 14 is not wide enough to include a
challenge to an arbitrator on the grounds specified in
Section 12(3). (Chennai Metro Rail Limited)."
23. Similarly, the Supreme Court in the case of Voestalpine Schienen
GmbH vs. Delhi Metro Rail Corporation Ltd.(supra) held as follows:-
"17. Keeping in mind the afore-quoted recommendation of the
Law Commission, with which spirit, Section 12 has been
amended by the Amendment Act, 2015, it is manifest that the
main purpose for amending the provision was to provide for
neutrality of arbitrators. In order to achieve this, Sub-section (5)
of Section 12 lays down that notwithstanding any prior
agreement to the contrary, any person whose relationship with
the parties or counsel or the subject matter of the dispute falls
under any of the categories specified in the Seventh Schedule,
he shall be ineligible to be appointed as an arbitrator. In such an
eventuality, i.e., when the arbitration Clause finds foul with the
amended provisions extracted above, the appointment of an
arbitrator would be beyond pale of the arbitration agreement,
empowering the court to appoint such arbitrator(s) as may be
permissible. That would be the effect of non-obstante Clause
contained in Sub-section (5) of Section 12 and the other party
cannot insist on appointment of the arbitrator in terms of
arbitration agreement.
24. In the light of the said legal position it becomes quite clear that under
Section 12(5), if a person‟s relationship with the parties or counsel or subject
matter of dispute falls in any of the categories specified in the Seventh
Schedule, the said person is ineligible to be appointed as an arbitrator. If a
party persists in nominating any such person as an arbitrator, it would be a
completely futile and waste of efforts to permit the Tribunal to continue to
adjudicate the matter and permit a challenge after completion of the
arbitration, under Section 34 of the Act. If an arbitrator is appointed contrary
to Section 12(5) read with the Seventh Schedule, he is de jure ineligible to
perform his functions and the mandate of such an arbitrator can be
terminated by the court under Section 14(2) of the Act. Section 13(3) and
13(5) would have no application in such circumstances.
25. Reliance of the learned counsel for the respondent on the judgment of
the Division Bench of this court in the case of Progressive Career Academy
Pvt. Ltd. vs. FIIT JEE Ltd.(supra) is misplaced. That was a decision made
prior to coming into face of the Arbitration and Conciliation (Amendment)
Act, 2015.
26. The Division Bench of this court in the case of Progressive Career
Academy Pvt. Ltd. vs. FIIT JEE Ltd. (supra) held as follows:-
"20. A comparison of the provisions dealing with the challenge
to the arbitrator‟s authority in the A&C Act and the
UNCITRAL Model Law discloses that there are unnecessary
and cosmetic differences in these provisions, except for one
significant and far-reaching difference. The UNCITRAL Model
Law, in Article 13(3), explicitly enables the party challenging
the decision of the Arbitral Tribunal to approach the Court on
the subject of bias or impartiality of the Arbitral Tribunal.
However, after making provisions for a challenge to the verdict
of Arbitral Tribunal on the aspect of bias, the UNCITRAL
Model Law prohibits any further Appeal. It seems to us,
therefore, that there is no room for debate that the Indian
Parliament did not want curial interference at an interlocutory
stage of the arbitral proceedings on perceived grounds of
alleged bias. In fact, Section 13(5) of the A&C Act indicates
that if a challenge has been made within fifteen days of the
concerned party becoming aware of the constitution of the
Arbitral Tribunal or within fifteen days from such party
becoming aware of any circumstances pointing towards
impartiality or independence of the Arbitral Tribunal, a
challenge on this score is possible in the form of Objections to
the Final Award under Section 34 of the A&C Act. Indeed, this
is a significant and sufficient indicator of Parliament‟s resolve
not to brook any interference by the Court till after the
publication of the Award. Indian Law is palpably different also
to the English, Australia and Canadian Arbitration Law. This
difference makes the words of Lord Halsbury in Eastman
Photographic Materials Co. all the more pithy and poignant."
27. Hence, the Division Bench there was considering the remedy provided
under Section 13 (3) & 13(5) of the Act. The court held that in case a party
challenges the appointment of an arbitrator on grounds as provided therein
and the arbitrator does not withdraw then the party aggrieved would have a
remedy under Section 13(3) of the Act before the Arbitral Tribunal. In case,
it does not succeed before the tribunal, the aggrieved party would have to
await the award and then challenge the same. By the present petition we are
concerned with the Arbitrator being de jure unable to perform his functions
in view of Section 12(5) read with the Seventh Schedule of the Act which
are newly inserted provision pursuant to the recent amendments. Hence, the
judgment of the Division Bench does not apply to the facts of the present
case.
28. In view of the above legal position, where an arbitrator is ineligible to
be appointed as an arbitrator as he suffers from disqualification stipulated
under Section 12(5) and the Seventh Schedule of the Act and a party persists
in appointing such an arbitrator, this court would have powers under Section
14(2) of the Act to terminate the mandate of such an arbitrator.
29. Accordingly, in view of the above factual position, i.e. the learned
arbitrator Sh.R.K.Jain being on the panel of advisers of the respondent and
presently advising the respondent on two projects, I terminate the mandate of
Sh. R.K. Jain, learned Co-Arbitrator nominated by the respondent. The
respondent are given 30 days time to nominate their new arbitrator in terms
of Clause 44.3 of the Concession Agreement between the parties. In case of
failure of the respondent to do the needful, the petitioner is free to approach
this court.
30. As far as the prayer of termination of the mandate of the second
Arbitrator, namely, Mr. Justice N. Kumar (Retd.) is concerned, the said
request is baseless. His appointment has been made by ICADR as per agreed
procedure. The argument is misplaced and the request of the petitioner to
that extent is rejected.
31. The petition is allowed as above. All pending applications also stand
disposed of.
(JAYANT NATH)
JUDGE
MAY 15, 2017/rb
