Hll Lifecare Limited (Hll) vs Employees State Insurance ...
2022 Latest Caselaw 665 Del

                          $~7 and 8 (Original)
                          *     IN THE HIGH COURT OF DELHI AT NEW DELHI
                          +     O.M.P. (T) (COMM.) 115/2021 & I.A. 14768/2021, I.A.
                                3681/2022

                                HLL LIFECARE LIMITED (HLL)                 ..... Petitioner
                                              Through    Mr. Ratan K. Singh, Sr. Adv.
                                              along with Mr. Nikhilesh Krishnan and Mr.
                                              Mr. Raghav Mudgal, Advs.

                                                    versus

                                EMPLOYEES STATE INSURANCE
                                CORPORATION (ESIC)                    ..... Respondent
                                             Through     Mr. S. Wasim Qadri, Sr. Adv.
                                             along with Mr. Saeed Qadri and Mr. Tamim
                                             Qadri, Advs.

                          +     O.M.P. (T) (COMM.) 30/2022 & I.A. 3465/2022, I.A.
                                3466/2022

                                EMPLOYEES STATE INSURANCE
                                CORPORATION (ESIC)                     ..... Petitioner
                                             Through     Mr. S. Wasim Qadri, Sr. Adv.
                                             along with Mr. Saeed Qadri and Mr. Tamim
                                             Qadri, Advs.

                                                    versus

                                HLL LIFECARE LIMITED (HLL)             ..... Respondent
                                              Through    Mr. Ratan K. Singh, Sr. Adv.
                                              along with Mr. Nikhilesh Krishnan and Mr.
                                              Mr. Raghav Mudgal, Advs.
                                CORAM:
                                HON'BLE MR. JUSTICE C.HARI SHANKAR




Signature Not Verified
Digitally Signed
By:SUNIL SINGH NEGI
                          O.M.P. (T) (COMM.) 115/2021 and contd. matter        Page 1 of 21
Signing Date:14.03.2022
11:59:04
                                                JUDGEMENT (ORAL)

% 07.03.2022

OMP (T) (Comm) 30/2022, IA 3465/2022 (Section 151 CPC for stay) and IA 3466/2022 (Section 151 CPC for exemption)

1. This petition, under Section 14 of the Arbitration and Conciliation Act, 1996 ("the 1996 Act"), seeks termination of the mandate of Mr. Jagmhan Lal, the arbitrator presently in seisin of the arbitral disputes between the Employee State Insurance Corporation (ESIC) and HLL Lifecare Limited (HLL), consequent to the ESIC having appointed him as a sole arbitrator by letter dated 3rd August, 2018.

2. The disputes between the parties arose out of a Turnkey Agreement Contract dated 21st January, 2010, between ESIC and HLL. Clause 20.6 of the agreement envisaged resolution of the disputes between the parties by arbitration and read thus:

"20.6 In case of any disputes or differences in connection with or arising out of this agreement the same shall be referred to the Sole Arbitrator to be appointed by the Director General, ESIC, New Delhi. The award of the sole Arbitrator shall be final and binding on both the parties."

3. Disputes having arisen between the parties, HLL wrote to ESIC on 29th May, 2018, invoking Clause 20.6 read with Clause 20.8 of the agreement and requesting ESIC to appoint a sole arbitrator, as per the said clause. ESIC proceeded to appoint Mr. Jagmohan Lal, former Additional Director General, CPWD, as the arbitrator, and addressed a communication to Mr. Jagmohan Lal on 3rd August, 2018, with a copy Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI

Signing Date:14.03.2022 11:59:04 marked to HLL, which read thus:

"To,

Shri Jagmohan Lal, Former Addl. Director General CPWD, 121, Ankur, apartment, 7, I.P. Extension, New Delhi-110092 Mob. 09891426576

Subj:- In the matter off Arbitration between Employees' State Insurance Corporation and M/s HLL Lifecare Limited for the project Construction of ESIC Medical College & Hospital at Paripally Village, Kollam District, Kerala Sir,

WHEREAS the above mentioned Contract Agreement was entered between the Employees' State Insurance Corporation, CIG Road, New Delhi-110002 and M/s HLL Lifecare Limited to execute the said work on turnkey basis.

AND WHEREAS the said contract includes an arbitration agreement vide Clause No. 20.6 of Particular Condition of Contract which, interalia, provide that all disputes between the parties of the contract shall, after written noticed by either party to the contract to the other of them, be referred to the Sole Arbitrator to be appointed by the Director General, Employees' State Insurance Corporation.

AND WHEREAS certain disputes had arisen between the above noted parties.

NOW THEREFORE, by virtue of the aforesaid, I hereby inform your appointment as Sole Arbitrator and request you to enter on the reference and publish your findings and award in respect of disputes so far as these are referable to arbitration in accordance with this said agreement, a copy of which is enclosed.

The Arbitration proceedings shall be conducted in accordance with the provision of the Indian Arbitration and Conciliation Act, 1996, or any statutory amendment thereof and such Arbitral proceedings shall be held at New Delhi.

Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI

Signing Date:14.03.2022 11:59:04 Please acknowledge.

Yours faithfully, Sd.

(SUDIP DUTTA) CHIEF ENGINEER

Copy to:

1) PPS to D.G., ESIC for kind information please.

2) PPS to I.C. (PMD) for kind information please.

3) M/s HLL Lifecare Limited, HLL Bhawan, Golden Jubilee Block, Poojappura P.O., Thiruvananthapuram-695012 for information and necessary action please.

4) Sh. D.N. Arya, Superintending Engineer-IV, ESIC Hqrs. Office for information please.

Sd.

CHIEF ENGINEER"

4. Having thus been appointed as an arbitrator, Mr. Jagmohan Lal entered on reference.

5. The record of the proceedings held by the learned arbitrator on 24th September, 2018, read thus:

"Minutes of the 1st Preliminary Hearing held on 24th September, 2018 at New Delhi

*****

1. Both Parties agree that 'The Arbitration and Conciliation Act, 1996' duly amended by 'The Arbitration and Conciliation (Amendment) Act, 2015', will apply in the instant case.

2. A copy of the declaration under Section 12 of the above mentioned Act by the undersigned, was sent to both the Parties by Email Dt 14.8.2018. Ct's Ld Advocate states that they will take approval from the competent authority with regard to the appointment of the undersigned as the Sole Arbitrator in view of the above declaration given by the undersigned.

4. In view of above the matter is adjourned, in consultation Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI

Signing Date:14.03.2022 11:59:04 with both the Parties, to 10th of Oct. 2018 at 1100 hrs at the same Venue."

6. On 10th October, 2018, the learned arbitrator recorded the consent of the claimant, i.e. HLL, to his appointment as sole arbitrator.

7. Mr Ratan Singh, learned Senior Counsel for HLL points out that, therefore, ESIC had appointed Mr. Jagmohan Lal as the arbitrator of its choice and HLL had also, during the course of the proceedings, specifically conveyed his consent to the said appointment and that, ex facie, therefore, both the parties were agreeable to the arbitration being conducted by Mr. Jagmohan Lal.

8. Mr. Jagmohan Lal has continued with the arbitral proceedings since then.

9. Certain fresh disputes had arisen between the parties, which were referred, by ESIC, to arbitration by a learned retired Judge of this Court. HLL objected to the said appointment as being unilateral, and has thereafter, filed OMP (T) (Comm) 115/2021, which is also being disposed today, both petitions having being conjointly argued and heard.

10. During the pendency of the proceedings before Mr. Jagmohan Lal, HLL filed OMP (Misc) (Comm) 207/2020, for extension of the mandate of Mr. Jagmohan Lal, which had expired in the interregnum. ESIC, in its counter affidavit filed in the said matter, alleged that the

Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI

Signing Date:14.03.2022 11:59:04 Agreement dated 21st January, 2010 was executed by fraud and that the matter was subject matter of an investigation by the CBI as well as by the SFIO. ESIC also contested, in its counter affidavit, the appointment of Mr. Jagmohan Lal as arbitrator as being violative of Section 12(5) of the 1996 Act.

11. This Court opined that, in a petition for extension of the mandate of the arbitrator, the question of the validity of arbitrator's appointment could not be taken up and, therefore, reserved liberty with ESIC to file separate proceedings for the said purpose.

12. Thus has this petition come to be filed by ESIC, seeking the termination of the mandate of Mr Jagmohan Lal on the ground that he is de jure incapable of continuing to function as arbitrator.

13. Mr. S. Wasim Qadri, learned Senior Counsel for ESIC, has rested his case on the bedrock of Section 12(5) of the 1996 Act, in the backdrop of the pronouncement of the Supreme Court in Bharat Broadband Network Ltd. v. United Telecoms Ltd 1.

14. Section 12(5) of the 1996 Act reads thus:

"(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

(2019) 5 SCC 755 Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI

Signing Date:14.03.2022 11:59:04 by an express agreement in writing."

Section 12(5) was inserted w.e.f. 23rd October, 2015, by the Arbitration and Conciliation (Amendment) Act, 2016.

15. Having considered the rival contentions, it is clear that the facts in the present case mirror those in Bharat Broadband1.

16. In that case, too, the arbitration clause envisaged arbitration by an arbitrator to be appointed by the Chairman and Managing Director (CMD) of Bharat Broadband Network Ltd (BBNL), being one of the parties to the agreement. Disputes having arisen, United Telecoms Ltd. (UTL) invoked the arbitration clause vide a letter dated 3rd January, 2017 and called upon the CMD of BBNL to appoint an independent and impartial arbitrator to arbitrate on the disputes. The CMD of BBNL appointed one Mr. K.H. Khan, as a sole arbitrator. While the arbitral proceedings were in seisin before Mr. Khan, the Supreme Court, vide judgment dated 3rd July, 2017 in TRF Ltd v. Energo Engineering Projects Ltd 2, held that once Section 12(5) of the 1996 Act disabled the CMD of BBNL, as one of the parties to the agreement, from acting as arbitrator, the CMD would also be ipso facto disabled from appointing an arbitrator to arbitrate on the disputes. In other words, the Supreme Court held that a person, who was himself ineligible to act as an arbitrator, could not be conferred to the authority to appoint an arbitrator either.

17. Immediately on the pronouncement in TRF2, BBNL wrote to

Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI

Signing Date:14.03.2022 11:59:04 Mr. Khan, stating that in view of Section 12(5) of the 1996 Act read with the judgment in TRF, he could not continue as arbitrator. The application was rejected by Mr. Khan without reasons. BBNL challenged the decision before this Court, under Sections 14 and 15 of the 1996 Act, seeking termination of the mandate of Mr. Khan as having become de jure incapable of continuing to act as arbitrator and praying for appointment of a substitute arbitrator. This Court, vide judgment dated 22nd November, 2017, dismissed the petition on the ground that BBNL, having itself appointed the arbitrator, was estopped from challenging the appointment, especially after participating in the proceedings. This Court further opined that the filing of statement of a claim in writing before the learned arbitrator by UTL amounted to an express agreement in writing, acquiescing to arbitration by Mr. Khan and, therefore, constituted waiver within the meaning of proviso to Section 12(5) of the 1996 Act.

18. Dealing with the matter, the Supreme Court held in paras 15, 17 and 18 to 20 of the report in Bharat Broadband1 thus:

"15. Section 12(5), on the other hand, is a new provision which relates to the de jure inability of an arbitrator to act as such. Under this provision, any prior agreement to the contrary is wiped out by the non-obstante clause in Section 12(5) the moment any person whose relationship with the parties or the counsel or the subject matter of the dispute falls under the Seventh Schedule. The sub-section then declares that such person shall be "ineligible" to be appointed as arbitrator. The only way in which this ineligibility can be removed is by the proviso, which again is a special provision which states that parties may, subsequent to disputes having arisen between them, waive the applicability of Section 12(5) by an express agreement in writing. What is clear, therefore,

(2017) 8 SCC 377 Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI

Signing Date:14.03.2022 11:59:04 is that where, under any agreement between the parties, a person falls within any of the categories set out in the Seventh Schedule, he is, as a matter of law, ineligible to be appointed as an arbitrator. The only way in which this ineligibility can be removed, again, in law, is that parties may after disputes have arisen between them, waive the applicability of this sub- section by an "express agreement in writing". Obviously, the "express agreement in writing" has reference to a person who is interdicted by the Seventh Schedule, but who is stated by parties (after the disputes have arisen between them) to be a person in whom they have faith notwithstanding the fact that such person is interdicted by the Seventh Schedule.

*****

17. The scheme of Sections 12, 13, and 14, therefore, is that where an arbitrator makes a disclosure in writing which is likely to give justifiable doubts as to his independence or impartiality, the appointment of such arbitrator may be challenged under Sections 12(1) to 12(4) read with Section

13. However, where such person becomes "ineligible" to be appointed as an arbitrator, there is no question of challenge to such arbitrator, before such arbitrator. In such a case, i.e., a case which falls under Section 12(5), Section 14(1)(a) of the Act gets attracted inasmuch as the arbitrator becomes, as a matter of law (i.e., de jure), unable to perform his functions under Section 12(5), being ineligible to be appointed as an arbitrator. This being so, his mandate automatically terminates, and he shall then be substituted by another arbitrator under Section 14(1) itself. It is only if a controversy occurs concerning whether he has become de jure unable to perform his functions as such, that a party has to apply to the Court to decide on the termination of the mandate, unless otherwise agreed by the parties. Thus, in all Section 12(5) cases, there is no challenge procedure to be availed of. If an arbitrator continues as such, being de jure unable to perform his functions, as he falls within any of the 19 categories mentioned in Section 12(5), read with the Seventh Schedule, a party may apply to the Court, which will then decide on whether his mandate has terminated. Questions which may typically arise under Section 14 may be as to whether such person falls within any of the categories mentioned in the Seventh Schedule, or whether there is a waiver as provided in the proviso to Section 12(5) of the Act. As a matter of law, it Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI

Signing Date:14.03.2022 11:59:04 is important to note that the proviso to Section 12(5) must be contrasted with Section 4 of the Act. Section 4 deals with cases of deemed waiver by conduct; whereas the proviso to Section 12(5) deals with waiver by express agreement in writing between the parties only if made subsequent to disputes having arisen between them.

18. On the facts of the present case, it is clear that the Managing Director of the appellant could not have acted as an arbitrator himself, being rendered ineligible to act as arbitrator under Item 5 of the Seventh Schedule, which reads as under:

"Arbitrator's relationship with the parties or counsel

*****

5. The arbitrator is a manager, director or part of the management, or has a similar controlling influence, in an affiliate of one of the parties if the affiliate is directly involved in the matters in dispute in the arbitration"

Whether such ineligible person could himself appoint another arbitrator was only made clear by this Court's judgment in TRF Ltd. (supra) on 03.07.2017, this Court holding that an appointment made by an ineligible person is itself void ab initio. Thus, it was only on 03.07.2017, that it became clear beyond doubt that the appointment of Shri Khan would be void ab initio. Since such appointment goes to "eligibility", i.e., to the root of the matter, it is obvious that Shri Khan's appointment would be void. There is no doubt in this case that disputes arose only after the introduction of Section 12(5) into the statute book, and Shri Khan was appointed long after 23.10.2015. The judgment in TRF Ltd. (supra) nowhere states that it will apply only prospectively, i.e., the appointments that have been made of persons such as Shri Khan would be valid if made before the date of the judgment. Section 26 of the Amendment Act, 2015 makes it clear that the Amendment Act, 2015 shall apply in relation to arbitral proceedings commenced on or after 23.10.2015. Indeed, the judgment itself set aside the order appointing the arbitrator, which was an order dated 27.01.2016, by which the Managing Director of the respondent nominated a former Judge of this Court as sole arbitrator in terms of clause 33(d) of the Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI

Signing Date:14.03.2022 11:59:04 Purchase Order dated 10.05.2014. It will be noticed that the facts in the present case are somewhat similar. The APO itself is of the year 21 2014, whereas the appointment by the Managing Director is after the Amendment Act, 2015, just as in the case of TRF Ltd. (supra). Considering that the appointment in the case of TRF Ltd. (supra) of a retired Judge of this Court was set aside as being non est in law, the appointment of Shri Khan in the present case must follow suit.

19. However, the learned Senior Advocate appearing on behalf of the respondent has argued that Section 12(4) would bar the appellant's application before the Court. Section 12(4) will only apply when a challenge is made to an arbitrator, inter alia, by the same party who has appointed such arbitrator. This then refers to the challenge procedure set out in Section 13 of the Act. Section 12(4) has no applicability to an application made to the Court under Section 14(2) to determine whether the mandate of an arbitrator has terminated as he has, in law, become unable to perform his functions because he is ineligible to be appointed as such under Section 12(5) of the Act.

20. This then brings us to the applicability of the proviso to Section 12(5) on the facts of this case. Unlike Section 4 of the Act which deals with deemed waiver of the right to object by conduct, the proviso to Section 12(5) will only apply if subsequent to disputes having arisen between the parties, the parties waive the applicability of sub-section 22 (5) of Section 12 by an express agreement in writing. For this reason, the argument based on the analogy of Section 7 of the Act must also be rejected. Section 7 deals with arbitration agreements that must be in writing, and then explains that such agreements may be contained in documents which provide a record of such agreements. On the other hand, Section 12(5) refers to an "express agreement in writing". The expression "express agreement in writing" refers to an agreement made in words as opposed to an agreement which is to be inferred by conduct. Here, Section 9 of the Indian Contract Act, 1872 becomes important. It states:

"9. Promises, express and implied.--In so far as a proposal or acceptance of any promise is made in words, the promise is said to be express. In so far as such proposal or acceptance is made otherwise than in Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI

Signing Date:14.03.2022 11:59:04 words, the promise is said to be implied."

It is thus necessary that there be an "express" agreement in writing. This agreement must be an agreement by which both parties, with full knowledge of the fact that Shri Khan is ineligible to be appointed as an arbitrator, still go ahead and say that they have full faith and confidence in him to continue as such. The facts of the present case disclose no such express agreement. The appointment letter which is relied upon by the High Court as indicating an express agreement on the facts of the case is dated 17.01.2017. On this date, the Managing 23 Director of the appellant was certainly not aware that Shri Khan could not be appointed by him as Section 12(5) read with the Seventh Schedule only went to the invalidity of the appointment of the Managing Director himself as an arbitrator. Shri Khan's invalid appointment only became clear after the declaration of the law by the Supreme Court in TRF Ltd. (supra) which, as we have seen hereinabove, was only on 03.07.2017. After this date, far from there being an express agreement between the parties as to the validity of Shri Khan's appointment, the appellant filed an application on 07.10.2017 before the sole arbitrator, bringing the arbitrator's attention to the judgment in TRF Ltd. (supra) and asking him to declare that he has become de jure incapable of acting as an arbitrator. Equally, the fact that a statement of claim may have been filed before the arbitrator, would not mean that there is an express agreement in words which would make it clear that both parties wish Shri Khan to continue as arbitrator despite being ineligible to act as such. This being the case, the impugned judgment is not correct when it applies Section 4, Section 7, Section 12(4), Section 13(2), and Section 16(2) of the Act to the facts of the present case, and goes on to state that the appellant cannot be allowed to raise the issue of eligibility of an arbitrator, having itself appointed the arbitrator. The judgment under appeal is also 24 incorrect in stating that there is an express waiver in writing from the fact that an appointment letter has been issued by the appellant, and a statement of claim has been filed by the respondent before the arbitrator. The moment the appellant came to know that Shri Khan's appointment itself would be invalid, it filed an application before the sole arbitrator for termination of his mandate."

Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI

Signing Date:14.03.2022 11:59:04

19. The view expressed by the Supreme Court in the afore-extracted passages from Bharat Broadband1, is clear and unequivocal. The said decision makes it clear that the challenge to the authority of the arbitrator to arbitrate on the ground of Section 12(5) of the 1996 Act can be brought as much at the instance of the party, who appointed the arbitrator, as at the instance of the opposite party. It is further clarified that there can be no waiver or acquiescence against bringing such an action and that the only circumstance in which such an action would not lie is where case falls within the proviso to Section 12(5) of the 1996 Act. The scope and ambit of proviso to Section 12(5) of the 1996 Act has also been authoritatively expounded in the said decision. The Supreme Court has clearly held that there can be no question of any implied waiver by conduct of the applicability of Section 12(5) and that the proviso could apply only where there was an express agreement by both parties in writing agreeing to waive the applicability of Section 12(5). Short of such express agreement in writing, the conduct of the parties, irrespective of how unequivocally it may imply consent to arbitration by the concerned arbitrator, cannot suffice as waiver of the applicability of Section 12(5) within the meaning of the proviso thereto.

20. At the cost of repetition, a written agreement to waive applicability of Section 12(5) by both parties is the sine qua non, for the proviso to apply. Absent such written agreement, Section 12(5) applies with full force and vigour.

21. This Bench has also had an occasion to take a similar view in its Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI

Signing Date:14.03.2022 11:59:04 earlier decisions in JMC Projects (India) Ltd v. Indure Private Limited3 and Larsen and Toubro Limited v. HLL Lifecare Limited 4. In JMC3, this Court took stock of the decisions of the Supreme Court in TRF2, Perkins Eastman Architects DPC v. HSCC (India) Ltd 5, and Bharat Broadband1 as well as the judgment of this Court in Proddatur Cable TV Digi Services v. Siti Cable Network Limited 6, among other cases. Pursuant thereto, it was thus opined by this Court in paras 31, 34 and 35 to 40 of the report in JMC3, thus:

"31. A reading of the afore-extracted passages from Bharat Broadband Network Ltd.1, however, make it abundantly clear that, unlike Section 4 of the 1996 Act, the agreement in writing, to which the proviso to sub-Section 12(5) refers, has to be express. Agreement, by conduct, is excluded, ipso facto, from the applicability of the said proviso.

*****

34. "Express waiver of rights", as a jurisprudential oncept, has invoked judicial cogitation, on more than one occasion. In Inderpreet Singh Kahlon v. State of Punjab 7, it was held thus:

"Waiver is the abandonment of a right, and thus is a defence against its subsequent enforcement. Waiver may be express or, where there is knowledge of the right, may be implied from conduct which is inconsistent with the continuance of the right. A mere statement of an intention not to insist on a right does not suffice in the absence of consideration; but a deliberate election not to insist on full rights, although made without first obtaining full disclosure of material facts, and to come to a settlement on that basis, will be binding."

35. Thus, even where waiver was allowable by consent -

2020 SCC OnLine Del 1950

2021 SCC OnLine Del 4465

2019 SCC OnLine SC 1517

2020 SCC OnLine Del 350

(2006) 11 SCC 356 Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI

Signing Date:14.03.2022 11:59:04 which, notably, the proviso to Section 12(5) of the 1996 Act does not permit - the Supreme Court opined that a mere statement not to insist on a right was insufficient to constitute waiver. In Mademsetty Satyanarayana v. G. Yelloji Rao 8, the Supreme Court quoted, approvingly, the definition of "waiver", as devised by the Privy Council in Dawson's Bank Ltd. v. Nippon Menkwa Kabushiki Kaisha 9, as "an agreement to release or not to assert a right". Emphasizing that "waiver" involved "intentional relinquishment of a known right", it was underscored, in Associated Hotels of India Ltd. v. S.B. Sardar Ranjit Singh 10, that "there can be no waiver unless the person against whom the waiver is claimed had full knowledge of his rights and of facts enabling him to take effectual action for the enforcement of such rights". Waiver, whether express or implied, necessarily requires "an intentional act with knowledge." 11 Even more emphatic is the following exposition, to be found in State of Punjab v. Davinder Pal Singh Bhullar 12 (in para 41 of the report):

"Waiver is an intentional relinquishment of a right. It involves conscious abandonment of an existing legal right, advantage, benefit, claim or privilege, which except for such a waiver, a party could have enjoyed. In fact, it is an agreement not to assert a right. There can be no waiver unless the person who is said to have waived, is fully informed as to his rights and with full knowledge about the same, he intentionally abandons them. (Vide Dawsons Bank Ltd. v. Nippon Menkwa Kabushiki Kaisha, (1934-

35) 62 IA 100 : AIR 1935 PC 79, Basheshar Nath v. CIT, AIR 1959 SC 149, Mademsetty Satyanarayana v. G. Yelloji Rao, AIR 1965 SC 1405, Associated Hotels of India Ltd. v. S.B. Sardar Ranjit Singh, AIR 1968 SC 933, Jaswantsingh Mathurasingh v. Ahmedabad Municipal Corpn., 1992 Supp (1) SCC 5, Sikkim Subba Associates v. State of Sikkim, (2001) 5 SCC 629 : (2001) 5 SCC 629 : AIR 2001 SC 2062 and Krishna Bahadur v. Purna Theatre, (2004) 8 SCC 229 : 2004 SCC (L&S) 1086 : (2004) 8 SCC 229 : AIR 2004 SC 4282.)"

(1965) 2 SCR 221

1935 SCC OnLine PC 8

(1968) 2 SCR 548

Motilal Padampat Sugar Mills vs. State of U.P. (1979) 2 SCC 409

(2011) 14 SCC 770 Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI

Signing Date:14.03.2022 11:59:04 "Waiver", held Joginder Singh Sodhi v. Amar Kaur 13, "is a question of fact which must be expressly pleaded and clearly proved." To the same effect, as the above decisions, is A.P.S.R.T.C. v. S. Jayaram 14.

36. In the face of the law laid down in the aforesaid decisions, chiefly, in Bharat Broadband Network Ltd.1, it is not possible to accede to the submissions of Mr. Mehta.

37. The Supreme Court has laid down clearly and unmistakably, that the "express agreement in writing", to which the proviso to Section 12(5) alludes, has to be exactly that, and no less; in other words, the parties must expressly agree in writing to a waiver of Section 12(5) of the 1996 Act.

38. The said agreement in writing must reflect awareness, on the parties, to the applicability of the said provision as well as the resultant invalidation, of the learned arbitrator, to arbitrate on the disputes between them, as well as a conscious intention to waive the applicability of the said provision, in the case of the disputes between them.

39. It is obvious that the filing of applications for extension of time for continuance and completion of the arbitral proceedings, or applications to the arbitrator, for extension of time to file the affidavit of evidence, etc., cannot constitute an "agreement in writing" within the meaning of the proviso to Section 12(5) of the 1996 Act.

40. In view of the aforesaid discussion, it is apparent that, by the operation of Section 12(5) of the 1996 Act, in the light of the decisions of the Supreme Court in TRF Ltd.2 , Perkins Eastman Architects DPC5 and Bharat Broadband Network Ltd.1, the learned sole arbitrator, appointed by Mr. N.P. Gupta, before whom the arbitral proceedings have been continuing thus far, has been rendered de jure incapable of continuing to function as arbitrator, within the meaning of Section 14(1)(a) of the 1996 Act."

22. JMC3 was subsequently followed in Larsen and Toubro4. Mr.

(2005) 1 SCC 31

(2004) 13 SCC 792 Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI

Signing Date:14.03.2022 11:59:04 Ratan Kumar Singh, learned Senior Counsel for HLL, submits that notice has been issued in the Special Leave Petition preferred against the decision of this Court in Larsen and Toubro4 but candidly acknowledges that there is no stay of operation of the said decision.

23. That being so, given the view expressed by the Supreme Court in Bharat Broadband1, which binds this Court under Article 141 of the Constitution of India, and following my earlier decisions in JMC3 and HLL Lifecare4, I have no option but to hold that the appointment of Mr. Jagmohan Lal was ab initio void, being contrary to Section 12(5) of the 1996 Act read with the judgment of the Supreme Court in Bharat Broadband1.

24. Accordingly, the mandate of Mr. Jagmohan Lal, presently, in seisin of the disputes between the parties, stands terminated.

25. This Court has not expressed any opinion on any of the other contentions advanced in the present petition, i.e. OMP (T) (Comm) 30/2022, by HLL. Nor shall this judgment be treated as an expression of opinion on the impartiality, capability or competence of Mr. Jagmohan Lal to arbitrate on the disputes. If his authority stands terminated, it is only by operation of law as declared in the statute and by the Supreme Court in Bharat Broadband1.

26. OMP (T) (Comm) 30/2022, accordingly, stands allowed in the aforesaid terms with no order as to costs. All miscellaneous applications stand disposed of.

Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI

Signing Date:14.03.2022 11:59:04 OMP (T) (Comm) 115/2021, IA 14768/2021 (Section 151 CPC for stay and IA 3681/2022 (Section 151 CPC for condonation of delay of 7 days in filing rejoinder)

27. This petition, in a way, is connected to OMP (T) (Comm) 30/2022.

28. During the pendency of proceedings before Mr. Jagmohan Lal, ESIC refused the request of HLL for extension of time and wrote to HLL that it was imposing liquidated damages to the tune of ₹ 48,56,51,305/- and encashing the bank guarantee furnished by HLL. HLL objected to the said proposal, whereupon ESIC, vide letter dated 13th July, 2021, wrote to HLL, proposing to refer the disputes to arbitration. ESIC, vide another letter dated 22nd July, 2021, suggested two names, of which HLL was requested to select one for appointment as an arbitrator to arbitrate on the dispute. HLL, vide its reply dated 22nd July, 2021, submitted that the dispute was already part of the issue in controversy before Mr. Jagmohan Lal and that, therefore, no occasion arose for a fresh arbitration. HLL also objected to arbitration by either of the persons named in the letter dated 13th July, 2021 of ESIC.

29. ESIC proceeded, vide letter dated 6th September, 2021, to appoint Mr. Arvind Minocha, Senior Advocate as the sole arbitrator to arbitrate on the disputes. Mr. Minocha, however, declined the appointment vide communication dated 9th September, 2021 on the ground that the appointment was unilateral.

30. HLL's grievance is that ESIC, thereafter, proceeded, again Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI

Signing Date:14.03.2022 11:59:04 unilaterally, to appoint a learned retired Judge of this Court to arbitrate on the disputes between the parties, vide letter dated 12th October, 2021. HLL, thereafter, wrote to the learned arbitrator on 18th October, 2021, objecting to his assumption of jurisdiction on the ground that his appointment was unilateral and also contended that the issue in controversy was already subject matter of proceedings before Mr. Jagmohan Lal.

31. As the learned arbitrator appointed by ESIC vide letter dated 12th October, 2021 continued to exercise jurisdiction, HLL has approached this Court by way of OMP (T) (Comm) 115/2021, seeking termination of the mandate of the learned arbitrator.

32. Mr. Qadri, learned Senior Counsel has very fairly submitted that, as the appointment of the learned arbitrator vide letter dated 12th October, 2021 was unilateral, this Court may proceed to appoint another arbitrator to arbitrate on the disputes. He, however, submits that as the claim of the HLL against ESIC is the region of almost ₹ 437 Crores and the damages being claimed by ESIC is also in the region of around ₹ 50 Crores, the arbitration may be conducted by a Senior learned retired Judge of this Court or by a learned retired Judge of the Supreme Court.

33. In view thereof, this Court terminates the mandate of the learned arbitrator as appointed by ESIC on 12th October, 2021. It is made clear that this termination is not to be treated as an expression of opinion by this Court on the partiality, competence or capability of the Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI

Signing Date:14.03.2022 11:59:04 learned arbitrator, a respected retired Judge of this Court, and for whom this Court has the highest regard.

34. In the circumstances, this Court requests Hon'ble Justice G. Rohini (retired) (Phone No. 8826000333, Email Address: [email protected]), an eminent retired Chief Justice of this Court, to arbitrate on the disputes forming subject matter of both these petitions, i.e. the disputes which were pending before Mr. Jagmohan Lal as well as the disputes forming subject matter of the communications which were referred by ESIC to arbitration vide letter dated 12th October, 2021.

35. It would be open to HLL to contend before the learned arbitrator that the disputes being sought to be raised by ESIC, starting with its communication dated 21st June, 2021, and which were referred to the learned arbitrator on 12th October, 2021, were actually subject matter of the earlier arbitral proceedings. The learned arbitrator would take a view on the said submissions if and when advanced by HLL.

36. This Court makes it absolutely clear that it has not entered any observation on merits on the claims of either of the parties against each other.

37. Insofar as the claims which were pending before Mr. Jagmohan Lal are concerned, it appears that the matter had reached the stage of final arguments. Learned Senior Counsel for both parties are agreeable to the learned arbitrator hearing the said disputes finally Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI

Signing Date:14.03.2022 11:59:04 based on the proceedings and the evidence gathered before Mr. Jagmohan Lal, though Mr Ratan Singh, learned Senior Counsel for HLL, clarifies that this concession is being made without prejudice.

38. Insofar as the later disputes, which ESIC sought to refer to arbitration by its letters dated 6th September, 2021 and 12th October, 2021, are concerned, it would be for the learned arbitrator to take a view as to whether the said disputes are covered by the issues which were pending before Mr. Jagmohan Lal or whether they mandate a fresh filing of statement of claim and fresh proceedings. This Court does not express any view thereon. All questions of fact and law, including maintainability, are left open for agitation in the arbitral proceedings.

39. The learned arbitrator would be entitled to charge fees in accordance with the Fourth Schedule to the 1996 Act or as fixed by the learned arbitrator in consultation with the parties.

40. The learned arbitrator is also requested to furnish the requisite disclosure under Section 12(2) of the 1996 Act within a week of entering on reference.

41. This petition, i.e. OMP (T) (Comm) 115/2021 stands allowed to the aforesaid extent with no order as to costs. All miscellaneous applications also stand disposed of.

C.HARI SHANKAR, J MARCH 7, 2022/r.bararia Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI

Signing Date:14.03.2022 11:59:04