Calcutta High Court
Hari Om Projects Pvt Ltd vs Military Engineering Services And Anr on 13 November, 2025
Author: Shampa Sarkar
Bench: Shampa Sarkar
oc-22
ORDER SHEET
IN THE HIGH COURT AT CALCUTTA
COMMERCIAL DIVISION
ORIGINAL SIDE
AP-COM/672/2025
HARI OM PROJECTS PVT LTD.
VS
MILITARY ENGINEERING SERVICES AND ANR
BEFORE:
The Hon'ble JUSTICE SHAMPA SARKAR
Date: 13th November, 2025.
Appearance:
Mr. Shamik Sanjanwala [VC],
Ms. Aritra Chakrabarty, Adv.
Mr. Anindya Kanan, Adv. ...for petitioner.
Mr. S. C. Prasad, Adv. ...for respondents.
1. A tender notice was published on-line by the respondent no.1 for
certain works at Kalimpong. The petitioner participated. The contract was
awarded to the petitioner vide acceptance letter dated October 23, 2015. The
work order was issued on November 18, 2015. The petitioner claims to have
successfully completed the work and had signed and submitted the final bill
on January 4, 2022. Despite having received such bill, the payments were not
made. Accordingly, the petitioner invoked arbitration by a letter to the
Engineer-in-Chief, Army Headquarter, Kashmir House, New Delhi, requesting
reference of the dispute to a sole arbitrator. The list of claims were
enumerated in the said letter. The respondents failed to appoint an arbitrator.
Instead, by a letter dated November 16, 2022, it was informed to the
petitioner that the action of the petitioner in approaching the court for
appointing the arbitrator was not as per the terms and conditions of the
contract. The petitioner was asked to execute an agreement, waiving the
applicability of Section 12(5) of the Arbitration and Conciliation Act, 1996.
2. Condition 70 of the General Conditions of Contract was made
applicable in respect of the agreement entered into between the parties. The
2
said clause was invoked by the petitioner and referred to by the respondents.
However, the respondents wanted the petitioner to sign an agreement to
waive the applicability of section 12(5) of the Arbitration and Conciliation Act,
1996. The petitioner was not agreeable and was filed this application.
3. Mr. Prasad, learned counsel for the respondents submits that
the procedure prescribed in the General Conditions were not followed. The
Condition 70 provided that, the dispute shall be referred to the sole
arbitration of an Engineer Officer to be appointed by the authority. Thus, this
application should not be entertained.
4. The submission of Mr. Prasad is contrary to the law laid down
by the Hon'ble Apex Court in this regard. It has been held that unilateral
appointment by a party interested in the consequence of the arbitration, was
not permissible in law. The same would be contrary to the provision of equal
participation of the parties. The concept of equal participation of the parties
would also apply at the stage of appointment of an arbitrator. Thus, even
though the conditions provide for reference of dispute to a sole arbitrator to
be appointed by the authority, such portion of the provision is not workable
and, as such, such procedure has failed. The petitioner does not have any
other option, but to approach this court for appointment of an impartial and
independent tribunal as the law envisages. Reference is made in this
regard to Perkins Eastman Architects DPC and Another vs. HSCC
(India) Ltd. ; 2019 SCC OnLine SC 1517; and Central
Organisation for Railway Electrification vs. ECI SPIC SMO MCML
(JV) A joint Venture Company reported in 2024 SCC OnLine SC
3219. Unilateral appointment of an arbitrator by one of the parties
from its own panel of arbitrators or from its own employees is contrary
to law.
3
5. The Hon'ble Apex Court in Central Organization for
Railway Electrification (supra), held thus:-
"73. The 2015 amendment has introduced concrete
standards of impartiality and independence of arbitrators.
One of the facets of impartiality is procedural impartiality.
Procedural impartiality implies that the rules constitutive of
the decision-making process must favour neither party to
the dispute or favour or inhibit both parties equally.137
Further, a procedurally impartial adjudication entails equal
participation of parties in all aspects of adjudication for the
process to approach legitimacy.138 Participation in the
adjudicatory process is meaningless for a party against
whom the arbitrator is already prejudiced.139 Equal
participation of parties in the process of appointment of
arbitrators ensures that both sides have an equal say in the
establishment of a genuinely independent and impartial
arbitral process.
74. Under Sections 12(1) and 12(5), the Arbitration Act
recognises certain mandatory standards of independent and
impartial tribunals. The parties have to challenge the
independence or impartiality of the arbitrator or arbitrators
in terms of Section 12(3) before the same arbitral tribunal
under Section 13.140 If the tribunal rejects the challenge, it
has to continue with the arbitral proceedings and make an
award. Such an award can always be challenged under
Section 34. However, considerable time and expenses are
incurred by the parties by the time the award is set aside by
the courts. Equal participation of parties at the stage of the
appointment of arbitrators can thus obviate later challenges
to arbitrators.
75. Independence and impartiality of arbitral proceedings
and equality of parties are concomitant principles. The
independence and impartiality of arbitral proceedings can
be effectively enforced only if the parties can participate
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equally at all stages of an arbitral process. Therefore, the
principle of equal treatment of parties applies at all stages of
arbitral proceedings, including the stage of the appointment
of arbitrators.
***
124. The doctrine of bias as evolved in English and Indian law emphasizes independence and impartiality in the process of adjudication to inspire the confidence of the public in the adjudicatory processes. Although Section 12 deals with the quality of independence and impartiality inherent in the arbitrators, the provision's emphasis is to ensure an independent and impartial arbitral process."
In Perkins Eastman (supra), the Hon'ble Apex Court held thus :-
..."20. We thus have two categories of cases. The first, similar to the one dealt with in TRF Ltd. [TRF Ltd. v. EnergoEngg. Projects Ltd., (2017) 8 SCC 377 : (2017) 4 SCC (Civ) 72] 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 Ltd. [TRF Ltd. v. EnergoEngg. Projects Ltd., (2017) 8 SCC 377 : (2017) 4 SCC (Civ) 72] , all cases having clauses similar to that with which we are presently concerned, a party to the agreement would be disentitled to make any 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 Ltd. [TRF Ltd. v. EnergoEngg. Projects Ltd., (2017) 5 8 SCC 377 : (2017) 4 SCC (Civ) 72] Para 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 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 (3 of 2016) and recognised by the decision of this Court in TRF Ltd. [TRF Ltd. v. EnergoEngg. Projects Ltd., (2017) 8 SCC 377 : (2017) 4 SCC (Civ) 72] ...
24. In Voestalpine [VoestalpineSchienen GmbH v. DMRC, (2017) 4 SCC 665 : (2017) 2 SCC (Civ) 607] , this Court dealt with independence and impartiality of the arbitrator as under : (SCC pp. 687-88 & 690-91, paras 20 to 22 & 30) "20. Independence and impartiality of the arbitrator are the hallmarks of any arbitration proceedings. Rule against bias is one of the fundamental principles of natural justice which applied to all judicial and quasi-judicial proceedings. It is for this reason that notwithstanding the fact that relationship between the parties to the arbitration and the arbitrators themselves are contractual in nature and the source of an arbitrator's appointment is deduced from the agreement entered into between the parties, notwithstanding the same non-independence and non-impartiality of such arbitrator (though contractually agreed upon) would render him ineligible to conduct the arbitration. The genesis behind this rational is that even when an arbitrator is appointed in terms of contract and by the parties to the contract, he is independent of the parties. Functions and duties require him to rise above the partisan interest of the parties and not to act in, or so as to further, the particular interest of either parties. After all, the arbitrator has adjudicatory role to 6 perform and, therefore, he must be independent of parties as well as impartial. The United Kingdom Supreme Court has beautifully highlighted this aspect in Hashwani v. Jivraj [Hashwani v. Jivraj, (2011) 1 WLR 1872 : 2011 UKSC 40] in the following words : (WLR p. 1889, para 45) '45. ... the dominant purpose of appointing an arbitrator or arbitrators is the impartial resolution of the dispute between the parties in accordance with the terms of the agreement and, although the contract between the parties and the arbitrators would be a contract for the provision of personal services, they were not personal services under the direction of the parties.'
21. Similarly, Cour de Cassation, France, in a judgment delivered in 1972 in Consorts Ury [Fouchard, Gaillard, Goldman on International Commercial Arbitration, 562 [Emmanuel Gaillard & John Savage (Eds.) 1999] {quoting Cour de cassation [Cass.] [Supreme Court for judicial matters] Consorts Ury v. S.A. des Galeries Lafayette, Cass.2e civ., 13-4-1972, JCP, Pt. II, No. 17189 (1972) (France)}.] , underlined that:
'an independent mind is indispensable in the exercise of judicial power, whatever the source of that power may be, and it is one of the essential qualities of an arbitrator'.
22. Independence and impartiality are two different concepts. An arbitrator may be independent and yet, lack impartiality, or vice versa. Impartiality, as is well accepted, is a more subjective concept as compared to independence. Independence, which is more an objective concept, may, thus, be more straightforwardly ascertained by the parties at the outset of the arbitration proceedings in light of the circumstances disclosed by the arbitrator, while partiality will more likely surface during the arbitration proceedings.
***
30. Time has come to send positive signals to the international business community, in order to create healthy arbitration environment and conducive arbitration culture in this country. Further, as highlighted by the Law Commission also in its report, duty becomes more onerous in government contracts, where one of the parties to the dispute is the Government or public sector undertaking itself and the authority to appoint the arbitrator rests with it. In the instant case also, though choice is given by DMRC to the opposite party but it is limited to choose an arbitrator from the panel prepared by DMRC. It, therefore, becomes imperative to have a much broadbased panel, so that there is no misapprehension that principle of impartiality and independence would be discarded at any stage of the proceedings, specially at the stage of constitution of the Arbitral Tribunal. We, therefore, direct that DMRC shall 7 prepare a broadbased panel on the aforesaid lines, within a period of two months from today..."
6. The dispute is with regard to non payment of the final bill and other breaches that the petitioner alleged that the respondents had committed.
7. Accordingly, Justice Nadira Patherya [Retired], Judge of this Hon'ble High Court is appointed as the learned Arbitrator.
8. This order is passed subject to compliance of Section 12 of the Arbitration and Conciliation Act, 1996.
9. The learned Arbitrator shall fix her remuneration in terms of the Schedule of the Act.
10. This court has not gone into the merits of the issues. All points including the point of arbitrability of the claim and the limitation, etc. shall be decided by the learned Arbitrator.
11. AP-COM/672/2025 is accordingly disposed of.
(SHAMPA SARKAR, J.) S. Mandi/pkd.