2021 (8) TMI 1271 - HC - Indian Laws

Seeking termination of the mandate of originally constituted Arbitral Tribunal - seeking appointment of a new Arbitrator - Section 14 read with Sections 11 and 15 of the Arbitration and Conciliation Act, 1996 - 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? - petitioner, who had already appeared before Arbitral Tribunal and participated in the proceedings, can now seek termination of the mandate of the Arbitral Tribunal or not? - HELD THAT - In SP SINGLA CONSTRUCTIONS PVT. LTD. VERSUS STATE OF HIMACHAL PRADESH AND ORS. 2018 (12) TMI 1929 - SUPREME COURT the chief Engineer, H.P. PWD appointed Superintendent Engineer pursuant to request of appellant as arbitrator in terms of Clause 65 of agreement but appellant-petitioner challenged such appointment on premise that arbitrator had not been appointed by name but had been appointed by designation. Reliance in that case was also placed 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. 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.

Summary

Issues Involved:
1. Termination of the mandate of the originally constituted Arbitral Tribunal.
2. Appointment of a new Arbitrator.
3. Applicability of Section 12(5) of the Arbitration and Conciliation Act, 1996.
4. Jurisdiction of the High Court to entertain the application under Section 14 of the Act.

Issue-wise Detailed Analysis:

1. Termination of the mandate of the originally constituted Arbitral Tribunal:
The petitioner sought the termination of the mandate of the originally constituted Arbitral Tribunal, arguing that the members of the Stationery Purchase Committee, being officers of the respondent, were ineligible under Section 12(5) of the Arbitration and Conciliation Act, 1996. The petitioner relied on the Supreme Court's judgment in TRF Ltd. vs. Energo Engineering Projects Limited, which held that an ineligible person cannot act as an arbitrator or appoint another arbitrator.

2. Appointment of a new Arbitrator:
The petitioner argued for the appointment of an independent and impartial arbitrator under Section 11 of the Act, contending that the erstwhile members of the Stationery Purchase Committee had ceased to hold their respective positions, necessitating the constitution of a new Arbitral Tribunal.

3. Applicability of Section 12(5) of the Arbitration and Conciliation Act, 1996:
The respondent contended that Section 12(5) of the Act, inserted w.e.f. 23.10.2015, does not apply to arbitral proceedings commenced before this date. The Arbitral Tribunal in question was constituted pursuant to a court order dated 3.5.2000, well before the amendment. The respondent cited several Supreme Court judgments, including Aravali Power Co. Pvt. Ltd. vs. Era Infra Engineering and Union of India vs. Pradeep Vinod Construction Co., to support their argument that the amendment does not have retrospective effect.

4. Jurisdiction of the High Court to entertain the application under Section 14 of the Act:
The respondent argued that the High Court does not have original civil jurisdiction to entertain the application under Section 14 of the Act. According to Section 2(e) of the Act, only a Civil Court of original jurisdiction, which includes a High Court exercising its ordinary original civil jurisdiction, can decide on the termination of the mandate.

Judgment:
The court dismissed the petitioner's application, holding that the amended Section 12(5) does not apply retrospectively to arbitral proceedings commenced before 23.10.2015. The court cited Supreme Court judgments, including Aravali Power Co. Pvt. Ltd. vs. Era Infra Engineering and Union of India vs. Parmar Construction Company, to substantiate that the amendment does not affect ongoing proceedings unless parties agree otherwise. The court also noted that the petitioner had participated in the arbitration proceedings without raising objections initially and had not provided evidence of bias or partiality by the Arbitral Tribunal members.

The court concluded that the petitioner could not seek termination of the mandate based on the amended Section 12(5) and directed the petitioner to participate in the proceedings before the Arbitral Tribunal constituted by the respondent. The court did not address the jurisdiction issue explicitly, as the application was dismissed on other grounds.

Conclusion:
The application for termination of the mandate and appointment of a new arbitrator was dismissed. The petitioner was directed to participate in the ongoing arbitration proceedings before the Stationery Purchase Committee. There was no order as to costs.