Himachal Pradesh High Court
____________________________________________________ vs Department Of Tourism & Civil Aviation & ... on 9 December, 2022
Author: A.A. Sayed
Bench: A.A. Sayed
IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA
.
Arb. Case No. 185 of 2022.
Date of decision: 09.12.2022
____________________________________________________
Usha Breco Ltd. & another ...Petitioners
Versus
Department of Tourism & Civil Aviation & another
...Respondents
____________________________________________________
Coram:
The Hon'ble Mr. Justice A.A. Sayed, Chief Justice
Whether approved for reporting?1
_____________________________________________
For the petitioners : Mr. Ramanjit Singh, Ms. Aakriti Gupta,
Mr. Ankit Konwar and Mr. Pranjal
Munjal, Advocates.
For the respondents: Mr. Yudhvir Singh Thakur, Deputy
Advocate General, for respondent No.
1.
A.A. Sayed, Chief Justice (Oral)
This is an application filed by the petitioners under Section 11(6) of the Arbitration and Conciliation Act, 1996, ('the Act' for short), seeking appointment of an Arbitrator to adjudicate the disputes and differences between the parties.
2. Pursuant to a Request for Proposal (RFP) issued by the respondents, the petitioners were awarded the work for 1 Whether the reporters of Local Papers may be allowedto see the judgment?
::: Downloaded on - 15/12/2022 20:31:06 :::CIS -2-development of Ropeway connecting Kullu By-pass to Bijli .
Mahadev through Public Private Participation mode. An Agreement was executed between the parties.
3. It is not in dispute that Clause 29.3.1 of the Agreement contains an arbitration agreement, whereunder the disputes between the parties are to be referred to arbitration by the Secretary (Law), Government of Himachal Pradesh as a sole Arbitrator. r
4. In view of the dispute and differences between the parties, the petitioners invoked arbitration by notice dated 9th March, 2022. The respondents neither responded to the said notice by filing a reply nor acted upon the said notice.
5. In Datar Switchgears Ltd. Versus Tata Finance Ltd. and another, (2000) 8 Supreme Court Cases 151, the Supreme Court has held in paragraph 19 that upon the filing of the application under Section 11(6) of the Act, the right of the opposite side to make appointment of Arbitrator ceases/is forfeited.
6. Moreover, in Perkins Eastman Architects DPC and another versus HSCC (India) Ltd., reported in (2020) 20 ::: Downloaded on - 15/12/2022 20:31:06 :::CIS -3- SCC 760, the Supreme Court in paragraphs 20 & 21 has held as .
follows:-
"20. We thus have two categories of cases. The first, similar to the one dealt with in TRF Limited, 2017 8 SCC 377 where the Managing Director himself is named as an arbitrator with an additional power to appoint any other person as an arbitrator. In the second category, the Managing Director is not to act as an arbitrator himself but is empowered or authorised to appoint any other person of his choice or discretion as an arbitrator. If, in the first category of cases, the Managing Director was found incompetent, it was because of the interest that he would be said to be having in the outcome or result of the dispute.
The element of invalidity would thus be directly relatable to and arise from the interest that he would be having in such outcome or decision. If that be the test, similar invalidity would always arise and spring even in the second category of cases. If the interest that he has in the outcome of the dispute, is taken to be the basis for the possibility of bias, it will always be present irrespective of whether the matter stands under the first or second category of cases. We are conscious that if such deduction is drawn from the decision of this Court in TRF Limited, 2017 8 SCC 377 , all cases having clauses similar to that with which we are presently concerned, a party to the agreement would be disentitled to make any ::: Downloaded on - 15/12/2022 20:31:06 :::CIS -4- appointment of an Arbitrator on its own and it would always be available to argue that a party or .
an official or an authority having interest in the dispute would be disentitled to make appointment of an Arbitrator.
21. But, in our view that has to be the logical deduction from TRF Limited, 2017 8 SCC 377 . Paragraph 50 of the decision shows that this Court was concerned with the issue, "whether the Managing Director, after becoming ineligible by operation of law, is he still eligible to nominate an Arbitrator" The ineligibility referred to therein, was as a result of operation of law, in that a person having an interest in the dispute or in the outcome or decision thereof, must not only be ineligible to act as an arbitrator but must also not be eligible to appoint anyone else as an arbitrator and that such person cannot and should not 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 ::: Downloaded on - 15/12/2022 20:31:06 :::CIS -5- 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."
7. In view of Section 12(5) of the Act and the enunciation of law by the Supreme Court in the aforesaid case of Perkins Eastman (supra), the Secretary (Law), Government of Himachal Pradesh would be ineligible to be appointed as an Arbitrator as he would have an interest in the outcome or decision of the dispute. The learned Counsel for the petitioner is right in contending that if the Secretary (Law), Government of Himachal Pradesh is appointed as Arbitrator, there would be a justifiable doubt as to his independence and impartiality as Arbitrator.
8. Having regard to the facts and circumstances of the case, a case is made out by the petitioners for this Court to exercise powers under Section 11(6) of the Act to appoint an independent Arbitrator. The learned Deputy Advocate General, ::: Downloaded on - 15/12/2022 20:31:06 :::CIS -6- on instructions, states that there would be no objection if an .
independent person is appointed as an Arbitrator.
9. Hence, by consent of learned Counsel for the parties, the following order is passed:
ORDER
(i) Mr. Ajay Kumar, Senior Advocate, is appointed as a sole Arbitrator to adjudicate the disputes and differences between the parties.
(ii) The learned Arbitrator, before entering the arbitration reference, shall forward a statement of disclosure as per the requirement of Section 11(8) read with Section 12(1) of the Arbitration and Conciliation Act, 1996, to the Registrar (Judicial) of this Court, (to be +placed on record of this application) and a copy thereof be forwarded to the parties;
(iii) The parties shall appear before the Arbitrator on a date which may be fixed by the learned Arbitrator, not later than four weeks from the receipt of this order by him.::: Downloaded on - 15/12/2022 20:31:06 :::CIS -7-
(iv) The fees payable to the Arbitral Tribunal shall be as .
prescribed in the Fourth Schedule appended to the Arbitration and Conciliation Act, 1996.
(v) Office to forward a copy of this order to the learned Arbitrator on the following address:
Shri Ajay Kumar, Senior Advocate, 22, The Mall, Shimla-171001.
(vi) The Application is allowed in the above terms.
( A.A.Sayed ) Chief Justice December 09, 2022 (hemlata) ::: Downloaded on - 15/12/2022 20:31:06 :::CIS