Delhi High Court
A2Z Constructions vs Indian Statistical Institute on 6 September, 2022
$~1
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ARB.P. 578/2018, I.A. 10614/2018 (Stay)
A2Z CONSTRUCTIONS ..... Petitioner
Through: Mr. Gaurav Bahl, Advocate
(Ph. 98111328, e-mail:
[email protected])
versus
INDIAN STATISTICAL INSTITUTE ..... Respondent
Through: Mr. Neeraj Chaudhari and
Mr. Ravjyot Singh, Advocates
(Ph. 9999187343, e-mail:
[email protected]).
CORAM:
HON'BLE MS. JUSTICE MINI PUSHKARNA
JUDGEMENT
% 06.09.2022
1. There are directions from the Hon'ble Supreme Court as
contained in order dated 19.05.2022 in S.L.P. (C) No. 5306/2022,
which read as follows:
"In that view of the matter, we request all the Chief
Justices of the respective High Courts to ensure that all
pending applications under Sections 11(5) and 11(6) of the
Arbitration Act and/or any other applications either for
substitution of arbitrator and/or change of arbitrator,
which are pending for more than one year from the date of
filing, must be decided within six months from today. The
Registrar General(s) of the respective High Courts are
directed to submit the compliance report on completion of
six months from today. All endeavour shall be made by the
respective High Courts to decide and dispose of the
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applications under Sections 11(5) and 11(6) of the
Arbitration Act and/or any other like application at the
earliest and preferably within a period of six months from
the date of filing of the applications."
2. In view of the categorical mandate by Hon'ble Supreme Court,
the present petition is taken up for hearing.
3. It is submitted on behalf of learned counsel for the petitioner
that in the present case an Arbitrator was appointed by the respondent
in terms of Clause 36 of the Agreement dated 14.02.2011 between the
parties, which reads as under:
"36. ARBITRATION
Except where otherwise provide in the contract, all
questions and disputes relating to the interpretation of the
specifications, design ns, drawings and instructions herein
before mentioned, and as to tile quality or workmanship or
materials used on the work or as to any other question,
claim, right, matter or thing whatsoever in any way arising
out of or relating to the contract, designs, specifications,
estimates, instructions, orders on these conditions or
otherwise concerning the works, or the execution or failure
to execute the same whether arising during the progress of
the work or after the completion or abandonment thereof,
shall be referred to the sole arbitration of the person
appointed by the Head -Indian Statistical Institute. The
arbitrator to whom the matter is originally referred, being
unwilling or unable to act for any reason, Head - Indian
Statistical Institute , Delhi Centre shall appoint another
person to act as arbitrator in accordance with the terms of
the contract. Such person shall be entitled to proceed with
the reference from the stage at which it was left by his
predeces.sor. The arbitrator shall give a speaking award.
The award of the Arbitrator shall be final and binding on
the parties. The cost of the Arbitrator shall be borne
equally by both the parties.
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It is also a term of the contract that the party invoking
arbitration shall specify the dispute or disputes to be
referred to arbitration under this clause together with the
amount or amounts claimed in respect of each such
dispute. It is also a term of the contract that if the
contractor does not make any demand for arbitration in
respect of any claim in writing within 90 days of receiving
the intimation from the Employer that the final bill is ready
for payment, the claim of the contractor will be deemed to
have been waived and absolutely barred and the Employer
shall be discharged and released of all liabilities under the
contract in respect of these claims.
The Arbitrator may from time to time with consent of
parties enlarge the time for making publishing the award.
Subject as aforesaid the provisions of the Arbitration and
Conciliation Act, 1996, or any statutory modification or
re-enactment thereof and the rules made there under and
for the time being in force shall apply to the arbitration
reference under this clause."
4. The petitioner herein appeared before the said Arbitrator
appointed by the respondent and moved an application under Section
16 of the Arbitration and Conciliation Act, 1996 (hereinafter referred
to as 'the Act') challenging the competence of the Arbitral Tribunal.
The said application under Section 16 the Act was allowed by the
Arbitrator vide order dated 06.04.2015.
5. Against the aforesaid order dated 06.04.2015 passed by the
learned Arbitrator, the respondent herein filed an appeal before this
Court being ARB. A. 38/2015. The said appeal came to be disposed of
by this Court vide order dated 09.04.2018. By way of said order dated
09.04.2018, this Court allowed the arbitration appeal filed on behalf of
the respondent herein. The order dated 09.04.2018 passed in ARB. A.
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38/2015 held as follows:
"20. Further, the findings recorded by the learned
Arbitrator to allow the application of the respondent under
section 16 of the Act are misplaced. The learned Arbitrator
holds that where there is an allegation of collusion, it
would require interrogation of the suspects. Similarly, he
holds that there are accusing fingers being pointed out at
some unidentified members of the staff. He further holds
that to identify these members would require interrogation
and the learned Arbitrator does not have such power to
summon and interrogate anyone. This finding is entirely
misplaced and misconceived. The interrogation is to be
done by the police at the time of investigation of the FIR.
The learned Arbitrator is not investigating the facts stated
in the FIR. The simple case before the learned Arbitrator
was as to whether the respondent is liable to refund excess
payment and also pay the other dues of the appellant. The
question of the learned Arbitrator interrogating any
suspect would not and does not arise.
21. The impugned order is erroneous and is liable to be set
aside. The said order wrongly holds that the disputes are
not capable of being adjudicated through Arbitration. I
accordingly quash the impugned order dated 6.4.2015.
The matter is remanded back to the arbitral tribunal for
fresh adjudication, as per law. It may be noted that
anything said herein would not in any manner influence
the investigation of the FIR filed by the appellants."
6. After passing of aforesaid order dated 09.04.2018 by this Court
in ARB. A. 38/2015, the parties approached the learned Sole
Arbitrator. However, the learned Arbitrator by order dated 04.05.2018
terminated his mandate on the ground of his pre-occupation.
7. Subsequently, the respondent appointed a retired ADJ to act as
the Sole Arbitrator. Against the aforesaid appointment of a fresh
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Arbitrator by the respondent, the petitioner herein has filed the present
petition under Section 12(5) and 14 of the Act, for termination of the
mandate of the Sole Arbitrator by declaration that appointment of the
new Arbitrator appointed vide letter dated 18.05.2018, is null and
void.
8. The present petition has been filed on behalf of the petitioner on
the ground that by virtue of Section 12(5) of the Act, as amended, the
Head of the respondent, ceases to have any authority to appoint an
arbitrator in the matter both in law and in fact. Learned counsel for the
petitioner has submitted that the present petition has been filed mainly
on the ground that Hon'ble Supreme Court as well as this Court has
held that by virtue of the Section 12(5) of the Act, if any person who
falls under any of the categories specified in the Seventh Schedule,
shall be ineligible to be appointed as an Arbitrator. Thus, it is
submitted on behalf of the petitioner that from the language employed
in the Seventh Schedule, Head of the respondent has become
ineligible by operation of law and fact. Thus, it is the case of the
petitioner that once the Head of the respondent becomes ineligible to
be appointed as an Arbitrator, he ceases to have any authority to
appoint any arbitrator.
9. Thus, in view of the aforesaid submissions, it is the case of the
petitioner that once the arbitrator has become ineligible by operation
of law, he cannot nominate another person as an arbitrator. The
Arbitrator has become ineligible as per prescription contained in
Section 12(5) of the Act. It is further the case of the petitioner that
once the identity of the head of the respondent as the sole arbitrator is
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lost, the power to nominate someone else as an arbitrator is
obliterated. Therefore, the appointment of the learned Sole Arbitrator
by the Head of the respondent, is wrong and illegal.
10. The petitioner relies upon the judgment of Hon'ble Supreme
Court in TRF Limited v. Energo Engineering Projects Ltd., (2017) 8
SCC 377.
11. Notice in the present case was issued by order dated
09.08.2018. By order dated 09.08.2018, this Court had held that the
arbitration proceedings be carried out subject to final outcome of the
present petition. Against the order dated 09.08.2018 passed by this
Court, the petitioner herein filed Special Leave to Appeal (C) No.
24667/2018 before Hon'ble Supreme Court. By order dated
13.09.2018, Hon'ble Supreme Court passed the following order:
"Application for exemption from filing c/c of the impugned
judgment is allowed.
Issue notice.
Status quo, as it exists today, shall be maintained by the
parties, in the meantime.
Tag with SLP(Civi) Nos. 7161-7162 of 2018."
12. By virtue of order dated 13.09.2018 passed by Hon'ble
Supreme Court in Special Leave to Appeal (C) No. 24667/2018,
arbitration proceedings have not proceeded thereafter. Status quo with
respect to the arbitration proceedings is still continuing, as the said
appeal before the Hon'ble Supreme Court is stated to be still pending.
13. Learned counsel for the petitioner has shown the status of the
case from the Supreme Court website printed out today morning,
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which shows that the case was last listed on 30.03.2022.
14. In view of the pendency of the appeal before Hon'ble Supreme
Court, the present matter has been adjourned time and again at the
request of the parties to await for the outcome of the appeal before
Hon'ble Supreme Court.
15. Learned appearing counsel for the petitioner submits that the
present petition may be kept pending and ought to be adjourned in
view of the status quo order passed by Hon'ble Supreme Court.
16. Perusal of the order dated 13.09.2018 as passed by Hon'ble
Supreme Court shows that Hon'ble Supreme Court has directed
maintenance of status quo, as it existed that day, by the parties. Since
the appeal pending before Hon'ble Supreme Court is against the order
dated 09.08.2018 passed by this Court wherein there were directions
that the arbitration proceedings may continue before the learned
Arbitrator subject to outcome of the petition pending in the High
Court, it is clear that the status quo order, as directed by Hon'ble
Supreme Court, pertains to the arbitration proceedings pending
between the parties. Thus, by way of order dated 13.09.2018, the
Hon'ble Supreme Court has directed status quo with respect to the
arbitration proceedings pending between the parties. Thus, in view of
the aforesaid order dated 13.09.2018 passed by Hon'ble Supreme
Court, the arbitration proceedings have remained in limbo and have
not proceeded any further. Thus, both the parties are still complying
with the directions of Hon'ble Supreme Court passed vide order dated
13.09.2018 and status quo as regards the arbitration proceedings is
being maintained by the parties.
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By:PREETI
Signing Date:12.09.2022
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17. As regards the pendency of the present petition, it is seen that
the present matter was being adjourned time and again for a long time
at the request of the parties due to pendency of the aforesaid appeal
before Hon'ble Supreme Court. However, in view of the clear
mandate of Hon'ble Supreme Court vide order dated 19.05.2022 in
S.L.P. (C) No. 5306/2022, the present matter has been heard in order
to comply with the clear and categorical directions of Hon'ble
Supreme Court.
18. The issue which has been raised by the petitioner in the present
case as regards the authority of the respondent to appoint a Sole
Arbitrator in view of the judgment of Hon'ble Supreme Court in the
case of TRF Limited (Supra), is now pending before Hon'ble Supreme
Court in the appeal filed by the petitioner herein. Perusal of order
dated 13.09.2018 passed by Hon'ble Supreme Court, in fact shows
that the appeal filed on behalf of the petitioner herein has been tagged
along with SLP (Civil) Nos.7161-7162/2018. As per learned counsel
for the petitioner, the said petitions also raise the same issue as regards
the power of any party to appoint an Arbitrator in view of the clear
embargo under Section 12(5) of the Act and in view of the law
declared by Hon'ble Supreme Court in the case of TRF Limited
(Supra) .
19. Thus, the issue which has been raised in the present petition is
now pending consideration before Hon'ble Supreme Court. The
arbitration proceedings between the parties herein would now be
dependent on the outcome of the petitions pending before the Hon'ble
Supreme Court.
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By:PREETI
Signing Date:12.09.2022
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20. Thus, if the appeal filed on behalf of the petitioner herein before
Hon'ble Supreme Court was to be allowed by Hon'ble Supreme
Court, then the effect of such order would be that the mandate of the
Arbitrator appointed by the respondent would stand terminated. In that
eventuality, the present petition would in any way not survive.
Similarly, if the appeal on behalf of the petitioner herein pending
before Hon'ble Supreme Court was to be dismissed by Hon'ble
Supreme Court, then the consequence would be that the Sole
Arbitrator as appointed by the respondent shall continue and
arbitration proceedings will carry on between the parties. In either
way, whether the appeal filed on behalf of the petitioner before
Hon'ble Supreme Court is allowed or dismissed, the issue as regards
the continuation of the Arbitrator appointed by the respondent herein,
shall be decided finally by Hon'ble Supreme Court itself.
21. Learned counsel appearing for the respondent submits that the
order passed by the respondent appointing Sole Arbitrator is
absolutely correct and as per law. He further submits that the
respondent herein is being represented before the Hon'ble Supreme
Court in the appeal filed on behalf of the present petitioner and that
they are defending their actions before Hon'ble Supreme Court.
22. In view of the aforesaid discussion, no useful purpose will be
served in keeping the present petition pending, and the same is sought
to be disposed of by this order.
23. It is clarified that the disposal of the present petition will not
come in the way of the petitioner herein to pursue his appeal i.e.
Special Leave to Appeal (C) No. 24667/2018 before Hon'ble Supreme
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Court. It is also clarified that since the present petition is being
disposed of after hearing both the parties in view of the clear mandate
passed by Hon'ble Supreme Court for disposal of the petitions which
are pending for more than one year pertaining to appointment of an
Arbitrator or substitution/ change of Arbitrator, it is directed that the
respondent herein shall not raise any objection with respect to the
disposal of the present petition at the time when the appeal filed by the
petitioner herein is taken up for hearing by Hon'ble Supreme Court.
24. The present petition is disposed of in the aforesaid terms.
Pending application also stands disposed of accordingly. The
petitioner is, however, given liberty to revive the present petition in
case any cause of action still subsists.
MINI PUSHKARNA, J
SEPTEMBER 6, 2022
PB
Signature Not Verified
By:PREETI
Signing Date:12.09.2022
10:26:54
