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TMI Blog2022 (11) TMI 1484X X X X Extracts X X X X X X X X Extracts X X X X ..... arising under this Agreement including any dispute as to any amount outstanding, the real meaning or purport hereof ("Dispute"), such Dispute shall be finally resolved by arbitration. Such arbitration shall be conducted in accordance with the provisions of the Indian Arbitration and Conciliation Act, 1996 or any amendment or reenactment thereof by a single arbitrator to be appointed by the Lender. The venue of arbitration shall be at New Delhi and the arbitration shall be conducted in English language." 4. It appears that certain disputes arose between the parties in the context of the aforesaid agreement, as a consequence of which, the respondent-Bank invoked the arbitration clause, leading to initiation of arbitration proceedings, culminating in the Award dated 30/1/2013. The said Award was made subject matter of challenge at the behest of the petitioners, by filing Arbitration Petition No. 427/2013, under Section 34 of the Arbitration and Conciliation Act, 1996. On 17/8/2015, the aforesaid petition was allowed by a learned Single Judge of this Court, accepting the contentions raised on behalf of the petitioners as regards violation of principles of natural justice on the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in terms of the arbitration clause, it was hit by Section 12(5) of the aforesaid Act read with Seventh Schedule thereof. It was submitted that the appointment itself was vitiated in terms of the said provision and the law clarified by the Supreme Court in the case of Perkins Eastman Architects DPC and Anr. Vs. HSCC (India) Limited (2020) 20 SCC 620. Hence, the impugned Award deserved to be set aside, only on the said ground. 8. It was further submitted that the petitioners had sufficiently demonstrated in the petition as to the manner in which the learned Arbitrator proceeded in the matter, indicating that proper opportunity was not granted to the petitioners to lead evidence, particularly in the backdrop of the admitted position that issues were not framed during the arbitral proceedings. It was only in the Award that the learned Arbitrator referred to issues that were framed for consideration. It was submitted that the entire proceedings stood vitiated, thereby indicating that within the limited scope available under Section 34 of the aforesaid Act, this Court ought to interfere with the Award, in the facts and circumstances of the present case. On this basis, it was submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all other grounds of challenge pale into insignificance. 13. It was specifically contended on behalf of the respondent-Bank that the aforesaid ground was not raised in the petition and that therefore, this Court may not consider ruling on the said ground. A perusal of the grounds of challenge raised in the petition shows that the Award is challenged as being perverse, against settled provisions of law and public policy. Although, the said ground appears to be general in nature, it would cover the aforesaid specific ground raised on behalf of the petitioners, in the context of Section 12(5) of the aforesaid Act. This is because, the same is a pure question of law, which goes to the very root of the matter and therefore, this Court in inclined to consider the same on merits. 14. In order to appreciate the said ground, it would be necessary to peruse the arbitration clause, which has been quoted above. As per aforesaid arbitration clause, it is only the respondent-Bank, which has authority to appoint a sole Arbitrator for resolving the disputes that may arise between the parties. 15. Section 12(5) of the aforesaid Act reads as follows: "Section 12(5)-Notwithstanding any prior agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on agreement, has not been complied with and yet proceeds with the arbitration without stating his objection to such non-compliance without undue delay or, if a time limit is provided for stating that objection, within that period of time, shall be deemed to have waived his right to so object." 19. A proper application of Section 4(a) of the said Act, to the facts of the present case, would show that even if applicability of Section 12(5) of the said Act was to be waived, the same was required to be done only in terms of the proviso to Section 12(5) of the said Act, quoted hereinabove. The specific manner of waiving the applicability of Section 12(5) of the said Act is mandated in the proviso thereof, but such procedure was admittedly not followed in the present case and therefore, it cannot be said that merely because the petitioners participated in the arbitration proceedings, they were dis-entitled from raising the ground about the arbitration proceedings having been vitiated, due to unilateral appointment of the Arbitrator by the respondent-Bank. 20. The Supreme Court in the case of Perkins Eastman Architects DPC and Anr. Vs. HSCC (India) Limited (supra) considered the effect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot have any role in charting out any course to the dispute resolution by having the power to appoint an arbitrator. The next sentences in the paragraph, further show that cases where both the parties could nominate respective arbitrators of their choice were found to be completely a different situation. The reason is clear that whatever advantage a party may derive by nominating an arbitrator of its choice would get counter balanced by equal power with the other party. But, in a case where only one party has a right to appoint a sole arbitrator, its choice will always have an element of exclusivity in determining or charting the course for dispute resolution. Naturally, the person who has an interest in the outcome or decision of the dispute must not have the power to appoint a sole arbitrator. That has to be taken as the essence of the amendments brought in by the Arbitration and Conciliation (Amendment) Act, 2015 (Act 3 of 2016) and recognised by the decision of this Court in TRF Limited." 21. The Supreme Court has clearly laid down that a person having an interest in the dispute or in the outcome thereof, is ineligible not only to act as an Arbitrator, but, is also rendered ine ..... X X X X Extracts X X X X X X X X Extracts X X X X
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