TMI Blog2021 (8) TMI 1271X X X X Extracts X X X X X X X X Extracts X X X X ..... Amendment Act 3 of 2016. It was held that Amendment Act shall not apply to the Arbitral Tribunal which had commenced its proceedings before its enforcement, inasmuch as same cannot have retrospective operation in arbitral proceedings already commenced unless parties otherwise agree. In the present case also when on invocation of arbitration clause by the petitioner, the Arbitral Tribunal consisting of the officers named by designation had already been appointed and has been acted upon, it cannot be said that there ever remained any vacuum in the Arbitral Tribunal because mere change of incumbents by reason of transfer or retirement would not make any difference as they were made members of the Arbitral Tribunal by designation and not by name. Therefore, there does not arise any necessity to appoint another Arbitral Tribunal. The present application fails and it is hereby dismissed. - A.C. No. 100/2019 - - - Dated:- 27-8-2021 - MOHAMMAD RAFIQ, C.J. For the Appellant : Sandeep Bajaj and Siddharth Shrivastava, Advocates For the Respondent : Pushpendra Yadav, Additional Advocate General ORDER Mohammad Rafiq, C.J. 1. This application under Section 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here exists an arbitration clause in the agreement between the parties. The Civil Court however rejected the said application vide order dated 27.2.1999. The respondent then filed Revision Petition No. 1117/1999 before this Court which was allowed vide order dated 03.05.2000. This Court referred the parties to the arbitration by Stationery Purchase Committee comprising of the officers of the respondent. Against the said order of this Court, the petitioner filed Special Leave Petition bearing SLP (C) No. 13914/2000 before the Supreme Court, which however was dismissed as withdrawn vide order dated 28.9.2000. The respondent constituted the Arbitral Tribunal, styled as Stationery Purchase Committee comprising their officers. The petitioner filed its objection to the constitution of the Arbitral Committee on 12.9.2000. The petitioner also challenged its jurisdiction by filing an application under Section 13 of the Act of 1996. The learned Arbitral Tribunal however vide order dated 2.2.2001 rejected the said application of the petitioner. Aggrieved thereby the petitioner filed a writ petition bearing W.P. No. 1824/2001 before this Court which however was dismissed vide order dated 24.1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs, have ceased to hold their respective positions as the constitution of the Arbitral Tribunal pertains to the year 2001. Now therefore a new Arbitral Tribunal in any case will have to be constituted and an independent and impartial Arbitrator should be appointed in terms of Section 11 of the Act to resolve the disputes between the parties. It is submitted that according to Section 11 of the Act of 1996, only a person can be appointed as an Arbitrator, which cannot be a specified post like Deputy Secretary of Stationery Purchase Committee. When an Arbitrator is approached in connection with his possible appointment, he is mandatorily required to disclose his relationship with the parties or his interest in the subject matter of the dispute in terms of Section 12 of the Act of 1996, a bare perusal of which makes it clear that ineligibility of an Arbitrator is to be seen from the date when an Arbitrator is approached by the party for his possible appointment. Therefore, no member of Stationery Purchase Committee can now be appointed as Arbitrator. Learned counsel in support of his argument has placed reliance on the judgment of Delhi High Court in the case of Omaxe Infrastructure an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever vide order dated 2.2.2001 rejected the said objection. Aggrieved by the aforesaid order of the Arbitral Committee, the petitioner filed WP No. 1824/2001 before this Court, which too was dismissed vide order dated 24.1.2017, while reserving liberty to the petitioner to raise objection before the appropriate forum at appropriate stage. The petitioner has now filed the present application under Section 14 read with Section 11 and 15 of the Arbitration Conciliation Act, 1996 seeking appointment of the Arbitrator. 6. Shri Pushpendra Yadav, learned Additional Advocate General submitted that Arbitral Tribunal in the present case was constituted pursuant to the order of this Court dated 3.5.2000 passed in Civil Revision No. 1117/1999. Although thereafter Section 12(5) in the Act of 1996 has been inserted w.e.f. 23.10.2015, but this sub section does not apply to the cases, where Arbitrator has already been appointed on or before commencement of Arbitration Conciliation (Amendment) Ordinance 2015. Since Section 12(5) was inserted w.e.f. 23.10.2015, it will have only prospective effect and that all the arbitral proceedings which were initiated prior to Amendment Ordinance 2015, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut also to appoint a new Arbitrator. The argument of the learned counsel for the petitioner is mainly founded on amended sub-section (5) inserted in Section 12 of the Act of 1996, which inter alia provides 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 shall be ineligible to be appointed as an arbitrator. But the question that requires answer in the present case is whether this subsection would apply to arbitration proceeding which had already commenced prior to introduction of the amendment by Act 3 of 2016 with effect from 23.10.2015. In other words, whether sub-section (5) of Section 12 read with Seventh Schedule appended to the Act of 1996 can be relied by a party which had already appeared before the Arbitral Tribunal, as in this case, the petitioner, who had already appeared before Arbitral Tribunal and participated in the proceedings, can now seek termination of the mandate of the Arbitral Tribunal? This argument has to be examined against the backdrop of the facts in the present case already noticed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C 520, held that mere fact that the arbitrator is an employee is not ipso facto a ground to raise any presumption of bias or partiality so long as there is no justifiable apprehension about arbitrator's independence or impartiality. It was held that appointment of the Chief Executive Officer as the sole arbitrator in terms of the arbitration clause by rejecting the demand of the respondent for appointment of an independent arbitrator cannot be faulted. In that case, the respondent participated in the arbitration proceedings without raising any objection and for the first time after the Amendment Act, 2015 came into effect, raised objection regarding constitution of the Arbitral Tribunal. The High Court entertained the apprehension of the respondent as reasonable in exercise of power under Section 11(6) applying principles of impartiality/neutrality and to avoid doubt in the mind of the petitioner, but the Supreme Court while reversing the judgment of the High Court held that the fact that the named arbitrator happens to be an employee of one of the parties to the arbitration agreement has not by itself, before the Amendment Act came into force, rendered such appointment invalid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies to the named arbitrator or named Arbitral Tribunal. Ignoring the named Arbitrator/Arbitral Tribunal and nominating an independent arbitrator shall be the exception to the rule, to be resorted for valid reasons. 12. The view similar to Raja Transport Pvt. Ltd. (supra) was also taken by the Supreme Court in ACE Pipeline Contracts (P) Ltd. Vs. Bharat Petroleum Corpn. Ltd. (2007) 5 SCC 304 and Union of India and another Vs. M.P. Gupta (2004) 10 SCC 504 holding that mere fact that the named arbitrator is an employee of one of the parties is not ipso facto a ground to raise any presumption of bias or partiality or lack of independence on his part. 13. In Union of India Vs. Parmar Construction Company (2019) 15 SCC 682, the Supreme Court upon a conjoint reading of Section 21 of the Principal Act and Section 26 of the Amendment Act, held that where the request to refer the dispute to arbitration has been sent and received by the other side before the 2015 Amendment Act came into force and in other words where the arbitration commenced prior to 23.10.2015, the provision of the 2015 Amendment Act shall not apply to such of the arbitral proceedings which have commenced in terms of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced on Section 12(5) as amended with effect from 23.10.2015 by Amendment Act 3 of 2016. It was held that Amendment Act shall not apply to the Arbitral Tribunal which had commenced its proceedings before its enforcement, inasmuch as same cannot have retrospective operation in arbitral proceedings already commenced unless parties otherwise agree. Repelling the argument of the appellant, similar to the one raised in the present case, the Supreme Court held that it was permissible to appoint a person by designation. The arbitration agreements involving government contracts providing that an employee of department or a higher official unconnected with the work or contract will be arbitrator are neither void nor unreasonable. Once appointment of arbitrator is made at the instance of Government, arbitration agreement could not have been invoked for second time. In the present case also when on invocation of arbitration clause by the petitioner, the Arbitral Tribunal consisting of the officers named by designation had already been appointed and has been acted upon, it cannot be said that there ever remained any vacuum in the Arbitral Tribunal because mere change of incumbents by reason of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of Arbitration Tribunal. The respondent has neither sent its reply nor selected two names from the list and replied to the appellant. Without responding to the appellant, the respondent has filed petition under Section 11(6) of the Arbitration and Conciliation Act before the High Court on 17.12.2018. When the respondent has not sent any reply to the communication dated 25.10.2018, the respondent is not justified in contending that the appointment of Arbitral Tribunal has not been made before filing of the application under Section 11 of the Act and that the right of the appellant to constitute Arbitral Tribunal is extinguished on filing of the application under Section 11(6) of the Act. xxx xxx xxx 39. There is an express provision in the modified clauses of General Conditions of Contract, as per Clauses 64(3)(a)(ii) and 64(3)(b), the Arbitral Tribunal shall consist of a panel of three Gazetted Railway Officers [Clause 64(3)(a)(ii)] and three retired Railway Officers retired not below the rank of Senior Administrative Grade Officers [Clause 64(3)(b)]. When the agreement specifically provides for appointment of Arbitral Tribunal consisting of three arbitrators from out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to such of the arbitral proceedings which have commenced in terms of the provisions of Section 21 of the Principal Act unless the parties otherwise agree. The Supreme Court also held that the request by respondent contractors for referring the dispute to arbitration was made and received by the appellants much before the 2015 Amendment Act came into force. Thus, the applications/requests made by the respondent contractors have to be examined in accordance with the principal Act, 1996 without taking resort to the 2015 Amendment Act which came into force from 23.10.2015. This was also the view taken by the Supreme Court in BCCI vrs. Kochi Cricket Private Ltd. (2018) 6 SCC 287. 19. The judgment of this Court in M/s. HCL Technologies Limited (supra) cited by the petitioner is distinguishable on facts. The dispute in that case arose much after the enforcement of the Amendment Act, 2015 came into effect from 23.10.2015. In fact, as would be evident from para 5 of that judgment, notice was served by the applicant on non-applicant on 16.6.2020 invoking the arbitration clause contained in Clause 1.23 of the agreement proposing to nominate the name of a retired Acting Chief Justice of thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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