Delhi High Court
Omaxe Infrastructure And Construction ... vs Union Of India & Anr. on 4 May, 2018
Equivalent citations: AIRONLINE 2018 DEL 1721
Author: Navin Chawla
Bench: Navin Chawla
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ O.M.P. (T) (COMM.) 9/2018 and IA 1254/2018
Reserved on: 5th April, 2018
Date of decision : 4th May, 2018
OMAXE INFRASTRUCTURE AND CONSTRUCTION LTD.
..... Petitioner
Through: Mr. M.K. Ghosh, Ms.Tina Garg &
Mr. Rohit Dutta, Advs.
versus
UNION OF INDIA & ANR. ..... Respondents
Through: Mr. Anurag Ahluwalia, CGSC and
Ms Tejaswita Sachdeva, Adv with
Mr. P.K. Jain
CORAM:
HON'BLE MR. JUSTICE NAVIN CHAWLA
1. This petition under Section 14 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the 'Act') has been filed by the petitioner seeking a declaration that Sh.R.P.Singhal, appointed as a Sole Arbitrator by the respondent is de jure and de facto unable to perform his function as a Sole Arbitrator and praying for appointment of a Substitute Arbitrator in his place.
2. The disputes between the parties arose out of the Contract Agreement No. DG MAP/PHASE-II/NAGROTA/PKG-l(A) of 2010-11 for the work of "Construction of Married Accommodation at Nagrota".
3. The Engineer-in-Chief, vide letter dated 8th February, 2016 had appointed Sh. S.K.Gupta, ADG (Arbitration), Standing Panel of OMP (T)(Comm.) No.9/2018 Page 1 Arbitrators, Chandimandir Complex, Chandimandir to act as an Arbitrator for adjudicating the disputes. Sh.S.K.Gupta entered upon the reference on 27th February, 2016 and laid down a schedule for completion of the pleadings. Though various allegations are made by the petitioner regarding the conduct of the Arbitration Proceedings by Mr.Gupta, it is suffice to say that as Sh.Gupta was unable to pass an award even within the extended time period upto 26th August, 2017, the petitioner filed a petition under Section 29A of the Act praying for extension of time for making of the award as also for appointment of a Substitute Arbitrator. This petition was numbered as OMP (Misc.) (Comm.) No.40/2017.
4. This Court vide its order dated 27th October, 2017 was pleased to dispose of the said petition in view of the submission of the counsel for the respondent that Mr.Gupta had tendered his resignation on 5 th October, 2017 and by letter dated 24th October, 2017, the Engineer-in- Chief has been requested to appoint a Substitute Arbitrator in place of Mr.Gupta.
5. As far as the plea of the petitioner that an independent Arbitrator be appointed, this Court in its order dated 27th October, 2017 had observed as under:-
"4. I have considered submissions made by the Counsels for the parties. Clause 60 of the Agreement provides that the disputes between the parties shall be referred to the sole arbitrator to be appointed by the Engineer In-Chief, Army Head Quarters, New Delhi or in his absence, the Official Officiating as Engineer In- Chief or Director General of Works, if specifically delegated in writing by Engineer In-Chief, Army Head Quarters, New Delhi. It is further provided that if the arbitrator so appointed resigns or OMP (T)(Comm.) No.9/2018 Page 2 vacates his office or is unable or unwilling to act due to any reason whatsoever, the authority appointing may appoint a new arbitrator to act in his place.
5. In view above clause, I see no reason to deny the power of appointment vested with the Engineer In-Chief. The apprehension of the petitioner can be guarded through recourse to Section 12 of the Arbitration Act, if at all required. It would not be proper for me, at this stage, to presume that the new arbitrator so appointed would not act in any impartial manner or with promptness.
6. In view of the above, while extending the time period making an award for a period of six months from today, I direct the Engineer In-Chief, Army Head Quarters, New Delhi to appoint the Substitute arbitrator within a period of two weeks from today. The Substitute arbitrator who shall now to be appointed shall proceed from the stage where the arbitration proceedings were before the earlier appointed arbitrator."
6. The Engineer-in-Chief thereafter appointed Mr.R.P.Singhal, Jt DG (Contracts), HQ Chief Engineer Northern Command (Army) as a Sole Arbitrator. The petitioner, claiming that the appointment of Mr.R.P.Singhal was in violation of Section 12(5) read with Seventh Schedule of the Act as amended by the Arbitration and Conciliation (Amendment) Act, 2015 (hereinafter referred to as the 'Amending Act'), vide letters dated 20th November, 2017 and 13th December, 2017 requested Mr.R.P.Singhal to recuse/resign/not to take up the appointment as an Arbitrator.
7. Mr.Singhal, however, rejected the plea of the petitioner on the ground that as the petitioner had sought appointment of a Sole Arbitrator vide its letter dated 21st February, 2015, that is, prior to the amendment of the Act, the amended provisions of the Act shall not be applicable to his appointment. The petitioner, therefore, filed the present petition praying OMP (T)(Comm.) No.9/2018 Page 3 for a declaration that Mr.R.P.Singhal had become de jure and de facto unable to perform his functions as an Arbitrator and further, praying for the appointment of a Substitute Arbitrator in his place.
8. The respondent in its reply has reiterated the position that as the request for appointment of a Sole Arbitrator was made by the petitioner in its letter dated 21st February, 2015, the provisions of the un-amended Act would be applicable to the facts of the present case. It is further submitted that as prior to the amendment of the Act, an employee of the party could also be appointed as an Arbitrator, the appointment of Sh.Singhal is valid and cannot be challenged by the petitioner in the present petition. It is further submitted by the respondent that the reliance of the petitioner on the Procedural Order dated 27th February, 2016 passed by Sh.S.K.Gupta, recording therein that normally the award is to be published within six months from the date of entering into reference, for its submission that this shows that the Amended Act would apply to the present case, is ill-founded inasmuch as the said observation was not made in relation to the Amended Act, but to the Condition No.70 of IAFW 2249, which prescribes the time period for making of the award as six months from the date of entering upon the reference. It is further submitted that none of the proceedings before Mr.S.K.Gupta would show that the respondent had agreed for the Amended Act to be applicable to the facts of the present case. It is submitted that as far as the letter dated 5th October, 2017 of Sh.S.K.Gupta recording therein that he was resigning because he was unable to finalize the case within the time frame permitted as per the Amended Act is concerned, the same would not bind the respondent and would not be sufficient to make the said OMP (T)(Comm.) No.9/2018 Page 4 Amended Act applicable to the present case in terms of Section 26 of the Amending Act.
9. I have considered the submissions made by the counsels for the parties. The respondent, in its reply to the petition, has stated that though the petitioner had made a request for appointment of the Arbitrator on 21st February, 2015, the respondent had rejected the same vide its letter dated 19th March, 2015 on the ground that the same was premature and not in terms of clause 60 of the General Conditions of Contract. Thereafter, Sh.S.K.Gupta was appointed as an Arbitrator vide order dated 8th February, 2016 that is, after the Amended Act had come into force. The letter of appointment does not refer to the abovementioned letters dated 21st February, 2015 or 19th March, 2015. Therefore, it cannot be conclusively said that the appointment of the Arbitrator was pursuant to the request made by the petitioner on 21 st February, 2015. As the appointment of Sh.S.K.Gupta was admittedly after the Amending Act had come into force, in my opinion, the provisions of the Amended Act would apply to the arbitration proceedings.
10. This is further fortified by the action of the parties in the conduct of the arbitration proceedings. Admittedly, the parties had agreed to the extension of time for making of the Arbitral Award till 26th August, 2017 that is, by a period of 6 months beyond the one year period as prescribed in Section 29A(1) read with Section 29A (3) of the Amended Act.
11. As the Sole Arbitrator had failed to make the award within this extended period as well, the petitioner had filed an application under OMP (T)(Comm.) No.9/2018 Page 5 Section 29A (6) of the Amended Act seeking extension of time for making of the award as also substitution of the Sole Arbitrator.
12. In the meantime, Sh.S.K.Gupta tendered his resignation as an Arbitrator vide letter dated 5th October, 2017, wherein he mentions that he was unable to finalize the award within the time frame permitted as per the Amended Act.
13. The respondent had appeared before this Court in the petition filed by the petitioner under Section 29A (6) of the Amended Act and did not oppose the maintainability of the petition or the fact that the Amended Act would apply to the arbitration proceedings. It is only by the letter dated 9th November, 2017 that the respondent asserted that the appointment of Sh.S.K.Gupta was under the un-amended Act and further asserted that his 'inadvertent mistake' of referring to the Amended Act may 'jeopardize the stand of DG (MAP) in future litigations'. Mr.Gupta by the said letter, was requested by the respondent to amend his letter dated 5th October, 2017 in this regard.
14. The above sequence of events have been narrated by me only to highlight that because the appointment of the Sole Arbitrator has been made after coming into force of the Amended Act, the Amended Act would apply to the arbitration proceedings under Section 26 of the Amending Act. In my opinion, the parties have agreed that the Amended Act shall apply in relation to the arbitration proceedings.
15. Even otherwise, as the Substitute Arbitrator has been appointed by the respondent after the coming into force of the Amended Act, in my opinion, the provisions of the Amended Act shall be relevant for OMP (T)(Comm.) No.9/2018 Page 6 considering the validity of such appointment. Section 12 of the Act as amended reads as under:
"12. Grounds for challenge.--[(1) When a person is approached in connection with his possible appointment as an arbitrator, he shall disclose in writing any circumstances,--
(a) such as the existence either direct or indirect, of any past or present relationship with or interest in any of the parties or in relation to the subject-matter in dispute, whether financial, business, professional or other kind, which is likely to give rise to justifiable doubts as to his independence or impartiality; and
(b) which are likely to affect his ability to devote sufficient time to the arbitration and in particular his ability to complete the entire arbitration within a period of twelve months.
Explanation 1.-- The grounds stated in the Fifth Schedule shall guide in determining whether circumstances exist which give rise to justifiable doubts as to the independence or impartiality of an arbitrator.
Explanation 2.-- The disclosure shall be made by such person in the form specified in the Sixth Schedule.] (2) An arbitrator, from the time of his appointment and throughout the arbitral proceedings, shall, without delay, disclose to the parties in writing any circumstances referred to in sub- section (1) unless they have already been informed of them by him. (3) An arbitrator may be challenged only if -
(a) circumstances exist that give rise justifiable doubts as to his independence or impartiality, or
(b) he does not possess the qualifications agreed to by the parties.
(4) A party may challenge an arbitrator appointed by him, or in whose appointment he has participated, only for reasons of which he becomes aware after the appointment has been made. [(5) 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 OMP (T)(Comm.) No.9/2018 Page 7 specified in the Seventh Schedule shall be ineligible to be appointed as an arbitrator:
Provided that parties may, subsequent to disputes having arisen between them, waive the applicability of this sub-section by an express agreement in writing.]"
16. A reading of the above section would show that where a person is approached in connection with his possible appointment as an Arbitrator, he has to disclose in writing any circumstances which are likely to give rise to justifiable doubts as to his independence or impartiality. Section 12(5) of the Act explicitly states that notwithstanding any prior agreement to the contrary, any person whose relationship with the parties falls under any of the categories specified in the Seventh Schedule, shall be ineligible to be appointed as an Arbitrator. Therefore, the eligibility of the Substitute Arbitrator, namely, Sh.R.P.Singhal, to be appointed as an Arbitrator has to be judged as on the day he is approached in connection with his possible appointment. If Mr.Singhal is ineligible for being appointed on the date when he is approached, he cannot be appointed, whether under the Act as applicable prior to the amendment or thereafter.
17. It is relevant to note that prior to its amendment, Section 12(1) of the Act read as under:-
"(1) When a person is approached in connection with his possible appointment as an arbitrator, he shall disclose in writing any circumstances likely to give rise to justifiable doubts as to his independence or impartiality."
18. The Law Commission of India in its 246th report in August, 2004 recommended an amendment to Section 12 of the Act, specifically dealing with the issue of 'neutrality of arbitrators'. Paragraphs 53 to 60 OMP (T)(Comm.) No.9/2018 Page 8 of this report would be necessary to show the intent of the legislature in amending the Act and are reproduced hereinbelow:-
"NEUTRALITY OF ARBITRATORS
53. It is universally accepted that any quasi- judicial process, including the arbitration process, must be in accordance with principles of natural justice. In the context of arbitration, neutrality of arbitrators viz. their independence and impartiality, is critical to the entire process.
54. In the Act, the test for neutrality is set out in Section 12(3) which provides--
'12. (3) An arbitrator may be challenged only if--
(a) circumstances exist that give rise to justifiable doubts as to his independence or impartiality....'
55. The Act does not lay down any other conditions to identify the "circumstances" which give rise to "justifiable doubts", and it is clear that there can be many such circumstances and situations. The test is not whether, given the circumstances, there is any-actual-bias for that is setting the bar too high;
but, whether the circumstances in question give rise to any- justifiable apprehensions-of bias.
56. The limits of this provision has been tested in the Indian Supreme Court in the context of contracts with State entities naming particular persons/designations (associated with that entity) as a potential arbitrator. It appears to be settled by a series of decisions of the Supreme Court (See Executive Engineer, Irrigation Division v.Gangaram Chhapolia, (1984) 3 SCC 627, Transport Deptt. v. Munuswamy Mudaliar 1988 Supp SCC 651, International Airports Authority v. K.D. Bali (1988) 2 SCC 360, S. Rajan v. State of Kerala (1992) 3 SCC 608, Indian Drugs & Pharmaceuticals Ltd. v. Indo Swiss Synthetics Gem Mfg. Co. Ltd. (1996) 1 SCC 54, Union of India v. M.P. Gupta (2004) 10 SCC 504 OMP (T)(Comm.) No.9/2018 Page 9 and ACE Pipeline Contracts (P) Ltd. v. Bharat Petroleum Corpn. Ltd. (2007) 5 SCC 304 that arbitration agreements in government contracts which provide for arbitration by a serving employee of the department, are valid and enforceable. While the Supreme Court, in Indian Indian Oil Corpn.
Ltd. v. Raja Transport (P) Ltd., (2009) 8 SCC 520 :
(2009) 3 SCC (Civ) 460, carved out a minor exception in situations when the arbitrator 'was the controlling or dealing authority in regard to the subject contract or if he is a direct subordinate (as contrasted from an officer of an inferior rank in some other department) to the officer whose decision is the subject-matter of the dispute' (SCC p. 533, para 34) and this exception was used by the Supreme Court in Denel (Proprietary) Ltd. v. Ministry of Defence, (2012) 2 SCC 759 : (2012) 2 SCC (Civ) 37 : AIR 2012 SC 817] and Bipromasz Bipron Trading Sa v. Bharat Electronics Ltd., (2012) 6 SCC 384 : (2012) 3 SCC (Civ) 702, to appoint an independent arbitrator under Section 11, this is not enough.
57. The balance between procedural fairness and binding nature of these contracts, appears to have been tilted in favour of the latter by the Supreme Court, and the Commission believes the present position of law is far from satisfactory. Since the principles of impartiality and independence cannot be discarded at any stage of the proceedings, specifically at the stage of constitution of the Arbitral Tribunal, it would be incongruous to say that party autonomy can be exercised in complete disregard of these principles
-- even if the same has been agreed prior to the disputes having arisen between the parties. There are certain minimum levels of independence and impartiality that should be required of the arbitral process regardless of the parties' apparent agreement. A sensible law cannot, for instance, permit appointment of an arbitrator who is himself a party to OMP (T)(Comm.) No.9/2018 Page 10 the dispute, or who is employed by (or similarly dependent on) one party, even if this is what the parties agreed. The Commission hastens to add that Mr P.K. Malhotra, the ex officio member of the Law Commission suggested having an exception for the State, and allow State parties to appoint employee arbitrators. The Commission is of the opinion that, on this issue, there cannot be any distinction between State and non-State parties. The concept of party autonomy cannot be stretched to a point where it negates the very basis of having impartial and independent adjudicators for resolution of disputes. In fact, when the party appointing an adjudicator is the State, the duty to appoint an impartial and independent adjudicator is that much more onerous
-- and the right to natural justice cannot be said to have been waived only on the basis of a "prior"
agreement between the parties at the time of the contract and before arising of the disputes.
58. Large-scale amendments have been suggested to address this fundamental issue of neutrality of arbitrators, which the Commission believes is critical to the functioning of the arbitration process in India. In particular, amendments have been proposed to Sections 11, 12 and 14 of the Act.
59. The Commission has proposed the requirement of having specific disclosures by the arbitrator, at the stage of his-possible-appointment, regarding existence of any relationship or interest of any kind which is likely to give rise to justifiable doubts. The Commission has proposed the incorporation of the Fourth Schedule, which has drawn from the red and orange lists of the IBA Guidelines on Conflicts of Interest in International Arbitration, and which would be treated as a "guide" to determine whether circumstances exist which give rise to such justifiable doubts. On the other hand, in terms of the proposed Section 12(5) of the Act and the Fifth Schedule which OMP (T)(Comm.) No.9/2018 Page 11 incorporates the categories from the red list of the IBA Guidelines (as above), the person proposed to be appointed as an arbitrator shall be -ineligible- to be so appointed, -notwithstanding - any prior agreement
- to the contrary. In the event such an ineligible person is purported to be appointed as an arbitrator, he shall be de jure deemed to be unable to perform his functions, in terms of the proposed Explanation to Section 14. Therefore, while the disclosure is required with respect to a broader list of categories (as set out in the Fourth Schedule, and as based on the red and orange lists of the IBA Guidelines), the- ineligibility- to be appointed as an arbitrator (and the consequent de jure inability to so act) follows from a smaller and more serious sub-set of situations (as set out in the Fifth Schedule, and as based on the red list of the IBA Guidelines).
60. The Commission, however, feels that -real-
and-genuine-party autonomy must be respected, and, in certain situations, parties should be allowed to waive even the categories of ineligibility as set in the proposed Fifth Schedule. This could be in situations of family arbitrations or other arbitrations where a person commands the blind faith and trust of the parties to the dispute, despite the existence of objective "justifiable doubts" regarding his independence and impartiality. To deal with such situations, the Commission has proposed the proviso to Section 12(5), where parties may, -subsequent to disputes having arisen between them-, waive the applicability of the proposed Section 12(5) by an express agreement in writing. In all other cases, the general rule in the proposed Section 12(5) must be followed. In the event the High Court is approached in connection with appointment of an arbitrator, the Commission has proposed seeking the disclosure in terms of Section 12(1) and in which context the High Court or the designate is to have "due regard" to the OMP (T)(Comm.) No.9/2018 Page 12 contents of such disclosure in appointing the arbitrator." (emphasis supplied)
19. A reading of the above recommendation would show that the Law Commission took note of the fact that, while Section 12(3) of the un- amended Act provides that an Arbitrator may be challenged if circumstances exist that give rise to justifiable doubts as to his independence or impartiality, the Act does not lay down any conditions to identify the 'circumstances' which give rise to 'justifiable doubts'. The Law Commission further recommended that the position in Government contracts which provide for arbitration by a serving employee of the department is far from satisfactory. It further recommended that there cannot be any distinction between the State and non-State parties. In this regard, the concept of party autonomy cannot be stretched to a point where it negates the very basis of having impartial and independent adjudicators for resolution of disputes. The Law Commission, therefore, inter alia recommended insertion of Section 12(5) to the Act along with the Seventh Schedule.
20. The amendment to the Act was considered by the Supreme Court in Voestalpine Schienen Gmbh vs. Delhi Metro Rail Corporation Limited (2017) 4 SCC 665. The Supreme Court highlighted the distinction between the concept of 'independence' and 'impartiality'. It further held that time has come to send positive signals to the international business community, in order to create a healthy arbitration environment and a conducive arbitration culture in this country. This duty becomes more onerous in Government contracts, where one of the OMP (T)(Comm.) No.9/2018 Page 13 parties to the dispute is the Government or Pubic Sector Undertaking itself and the authority to appoint the Arbitrator rests with it.
21. Keeping the above object in mind, it cannot be accepted that though the Arbitrator is being appointed after coming into force of the Amended Act, the circumstances giving rise to the justifiable doubts as to his independence or impartiality will not be judged by the parameters set out in the Amended Act.
22. Counsel for the respondent, relying upon the judgment of the Supreme Court in Milkfood Ltd. vs. GMC Ice Cream (P) Ltd. (2004) 7 SCC 288, and judgment of this Court in Apex Encon Projects Pvt. Ltd. vs. Union of India & Anr. 2017 SCC OnLine Del 9779, contended that the amendments made in the Act by way of the Amending Act would not have any retrospective effect. He further relies upon Section 26 of the Amending Act read with Section 21 of the Act to contend that as the arbitration proceedings in the present case had commenced before the commencement of the Amended Act, the provisions of the Amending Act would not be applicable.
23. I have already negated the submission of the respondent and held that in the present case, the proceedings cannot be said to have commenced prior to the coming into force of the Amending Act. However, I have considered the submission made by the counsel for the respondent even de hors such finding for the sake of completeness.
24. As noted above, Section 12 of the Act would be relevant at a stage when a person is approached in connection with his possible appointment as an Arbitrator. Further, even in the Un-amended Act, an Arbitrator could be challenged where circumstances exist that give rise to justifiable OMP (T)(Comm.) No.9/2018 Page 14 doubts as to his independence or impartiality. The amendment merely incorporates the provisions of the Red and Orange lists of the IBA Guidelines on Conflicts of Interest in International Arbitration, which would act as a guide on whether circumstances exist which give rise to such justifiable doubts. Section 12(5) read with the Seventh Schedule of the Act, as explained by the Supreme Court in HRD Corporation (Marcus Oil & Chemical Division) vs. Gail (India) Ltd. (Formerly Gas Authority of India Ltd.) 2017 SCC OnLine SC 1024, covers situations which are more serious and are non-waivable. In Re School Board Election for the Parish of Pulborough. Bourke & Ors. Vs. Nutt (1894) 1 QB 725, Lord Esher has explained that a statute may have been enacted in the present tense and when the present tense is used, it is used not in relation to time, but as the present tense of logic. In such cases, time to be looked at is not when the disqualification was suffered, whether before or after the passing of the Act, but the time at which it has to be determined whether the disqualification has been suffered. The relevant extracts from the said opinion are reproduced hereinunder:
".......... So that in this very statute there are enactments in the present tense, and Cotton, L.J., pointed out that the language used was applicable to the state of things existing at the time when the petition is presented. Bowen, L.J., in the same case, said of the Act: "I think it is framed on the idea that a bankruptcy code is being constructed, and when the present tense is used, it is used, not in relation to time, but as the present tense of logic." That is, as I understand, that the time to be looked at is not that at which the act of bankruptcy was committed, whether before or after the passing of the Act, but the time at which it has to be determined whether an act of bankruptcy has been committee. The judgment of Fry, L.J., is to the same effect, and the case seems to me to show OMP (T)(Comm.) No.9/2018 Page 15 that when the present tense is used in this statute the time to be considered is the time at which the Court has to act, and not the time at which the condition of things on which it has to act came into existence.
Applying this principle to the present case, the important time is that at which it has to be considered whether the person is disqualified from being elected to or exercising any office. If that is the true construction of the Act it is not retrospective, but prospective, for it relates to a time after the passing of the Act. Therefore, on the authority of this Court, and on the ordinary rules of construction, it seems to me that we cannot say this section is retrospective; and even if it could be said that it is retrospective, its enactments are solely for the public benefit, and the rule that restricts the operation of a penal retrospective statute does not apply, because this statue is not penal."
25. In re A Solicitor's Clerk (1957) 1 WLR 1219, Lord Goddard C.J. has explained the rule of interpretation of statutes as under:-
"......In all editions of Maxwell on the Interpretation of Statutes it is stated that it is a fundamental rule of English law that no statute should be construed to have a retrospective operation unless such a construction appears very clearly in the terms of the Act or arises by a necessary or distinct implication and this passage has received judicial approval by the Court of Appeal: see West v. Gwynne, per Kennedy L J., and there are other cases to the same effect. But in my opinion this Act is not in truth retrospective. It enables an order to be made disqualifying a person from acting as a solicitor's clerk in the future and what happened in the past is the cause or reason for the making of the order, but the order has no retrospective effect. It would be retrospective if the Act provided that anything done before the Act came into force or before the order was made should be void and voidable, or if a penalty were inflected for having acted in this or any other capacity before the Act came into force or before the order was made. This Act simply enables a disqualification to be imposed for the future which in no way affects anything done by the appellant in the past. Accordingly, in our opinion, the committee had OMP (T)(Comm.) No.9/2018 Page 16 jurisdiction to make the order complained of an the appeal fails."
(Emphasis supplied)
26. The Supreme Court in State of Bombay (Now Maharashtra) vs. Vishnu Ramchandra (1961) 2 SCR 26, had applied the above principles to hold that an externment order under Section 57 of the Bombay Police Act could be made taking into account a conviction sufficiently proximate in time. I quote from the said judgment as under:-
"12. Now, Section 57 of the Bombay Police Act, 1951, does not create a new offence nor makes punishable that which was not an offence. It is designed to protect the public from the activities of undesirable persons who have been convicted of offences of a particular kind. The section only enables the authorities to take note of their convictions and to put them outside the area of their activities, so that the public may be protected against a repetition of such activities. As observed by Phillimore, J., in Rex v. Austin.
"No man has such a vested right in his past crimes and their consequences as would entitle him to insist that in no future legislation shall any regard whatever be had to his previous history."
An offender who has been punished may be restrained in his acts and conduct by some legislation, which takes note of his antecedents; but so long as the action taken against him is after the Act comes into force, the statute cannot be said to be applied retrospectively. The Act in question was thus not applied retrospectively but prospectively.
13. It remains only to consider if the language of the section bars an action based on past actions before the Act was passed. The verb "has been" is in the present perfect tense, and may mean either "shall have been " or "shall be". Looking, however, to the scheme of the enactment as a whole and particularly the other portions of it, it is manifest that the former meaning is intended.
OMP (T)(Comm.) No.9/2018 Page 17 The verb "has been" describes past actions, and, to borrow the language of Fry, L.J., in Ex parte Pratt "is used to express a hypothesis, without regard to time".
14. An externment order, however, to satisfy the requirements of Section 57 of the Bombay Police Act, must be made bona fide, taking into account a conviction which is sufficiently proximate in time. Since no absolute Rule can be laid down, each case must depend on its own facts."
27. In the present case, therefore, not only the language used in Section 12 of the Amending Act but also the purpose for which such amendment was made leads me to the conclusion that the provisions of Section 12 have to be applied on the date when the person is approached in connection with his possible appointment as an Arbitrator. If he is so approached after the commencement of the Amending Act, in my opinion, certainly the Amended Act would be applicable.
28. Counsel for the respondent relied upon the judgment of the Supreme Court in Aravali Power Company Pvt. Ltd. Vs. Era Infra Engineering Ltd. (2017) 15 SCC 32, to contend that the Supreme Court has held that as the invocation of arbitration was prior to the coming into force of the Amending Act, the statutory provisions that were enforced before the Amending Act came into effect would govern the controversy.
29. In my view, the judgment of the Supreme Court in Aravali Power Company (Supra) would not be applicable to the facts of the present case as in that case not only was the invocation of arbitration prior to the coming into force of the Amending Act, but also, the Arbitrator had been appointed and the parties had even appeared before the Arbitrator before coming into the force of the Amending Act. The provisions of the OMP (T)(Comm.) No.9/2018 Page 18 Amended Act were sought to be relied upon to challenge the appointed Arbitrator. The Supreme Court held that as the invocation of Arbitration, the appointment of an Arbitrator and even the arbitration proceedings had commenced prior to the coming into force of the Amended Act, the statutory provisions that would govern the controversy therein are those that were in force before the Amending Act came into effect. The Supreme Court did not consider the issue as to whether the Amended Act would apply where the Arbitrator is being appointed after the coming into force of the Amended Act.
30. In Apex Encon Projects Pvt. Ltd. (supra) this Court had relied upon inter-alia the judgment dated 27.05.2016 in the case of Omaxe Infrastructure & Construction Pvt. Ltd. v. Union of India, passed in OMP(T)(COMM) 41/2016. The said judgment has been challenged by the petitioner before the Supreme Court by way of Special Leave Petition (C) No.25921/2016 and the Supreme Court by way of its order dated 09.09.2016 has granted a stay on the arbitration proceedings. The Supreme Court vide its order dated 21.07.2017 has further granted leave in the said Special Leave Petition.
31. In Apex Encon Projects Pvt. Ltd. (Supra) this Court had further relied upon the judgment of the Division Bench of this Court in Ardee Infrastructure Pvt. Ltd. v. Ms.Anuratha Bhatia, 237 (2017) DLT 140(DB). In view of the judgment of the Supreme Court in Board of Control for Cricket in India v. Kochi Cricket Pvt. Ltd., 2018 SCC OnLine SC 232, the judgment of the Division Bench of this Court in Ardee Infrastructure Pvt. Ltd (supra) is no longer good law.
OMP (T)(Comm.) No.9/2018 Page 19
32. In Board of Control for Cricket in India (supra) the Supreme Court has considered the effect of the Amending Act on the proceedings pending under Section 34 of the Act. Stating that the execution of the decree pertains to the realm of procedure and not to the substantive rights vested in the Judgment Debtor to resist such execution, it was held that the amended Section 36 of the Act would apply even to the Section 34 applications pending as on the date of the commencement of the Amending Act. In the present case also, the appointment of an Arbitrator is a matter of procedure and the respondent cannot claim that it has vested rights to appoint a person as an Arbitrator who otherwise would be ineligible after the coming into force of the Amended Act.
33. In Board of Control for Cricket in India (supra), the Supreme Court states that Section 26 of the Amending Act makes it clear that the Amending Act, as a whole, is prospective in nature. It further left the question of whether certain provisions thereof are only clarificatory, declaratory or procedural and, therefore, retrospective, open to a separate and independent inquiry. In the present case, not only is Section 12 of the Act a matter of procedure, but, as explained above, is clarificatory of the meaning to be attributed to circumstances that lead to "justifiable doubts"
to the independence or impartiality of the Arbitrator.
34. Learned counsel for the petitioner has further relied upon a Circular no.66456/Manual/622/E8 dated 07.11.2016 whereby instructions have been issued by the Ministry of Defence, calling for switching over to the provisions of the Amended Arbitration Act in cases pending arbitration, filed under the Pre-Amended Act with the consent of the OMP (T)(Comm.) No.9/2018 Page 20 parties. The said circular, in my view, rightly requires the Departments to make the provisions of the Amended Act applicable even to pending arbitration proceedings. After all, as explained above, the amendment was brought about to send a positive signal to the International Business Community in order to create a healthy arbitration environment and a conducive arbitration culture in this country. The Government and the Public Sector Companies have to take the initiative to ensure that this intent of the legislature is achieved rather than defeated by its insistence in appointing an Arbitrator who would fall foul of the amended provisions of the Act.
35. Another important factor in this case is that Mr.S.K. Gupta had been appointed as a Sole Arbitrator by the Engineer-in-Chief on 08.02.2016. In spite of expiry of 1½ years, the case did not proceed further than the completion of pleadings before the said Arbitrator. The said Mr.Gupta tendered his resignation as an Arbitrator on 05.10.2017 and Mr.R.P.Singhal was appointed as an Arbitrator. The Supreme Court in Union of India v. Singh Builders Syndicate, (2009) 4 SCC 523, stated that, the object of Alternate Dispute Resolution is to have expedient and effective disposal of the disputes through a private forum of the parties' choice. Where such object is defeated due to officers from the Department being appointed as an Arbitrator, the Court will not be powerless and shall replace the Arbitrator in exercise of its power under Section 11 of the Act. In the present case, the conduct of the arbitration proceedings leads me to the conclusion that replacing the Arbitrator with another officer of the Department would defeat the object of the Act of OMP (T)(Comm.) No.9/2018 Page 21 ensuring expeditious adjudication of the disputes. In my opinion, therefore, it would be a fit case for this Court to exercise its jurisdiction under Section 14 of the Act to not only order the termination of the mandate of Mr.R.P. Singhal as an Arbitrator, but also to appoint a Substitute Arbitrator in his place.
36. In view of the above, I have no hesitation in terminating the mandate of Mr.R.P. Singhal as a Sole Arbitrator to adjudicate the disputes that have arisen between the parties in relation to the above mentioned Agreement. I further propose to appoint Justice Swatanter Kumar, 9 Tyagaraj Marg, New Delhi-110011, Ph. No.23010300 (former Judge of the Supreme Court) as a Sole Arbitrator for adjudicating such disputes. The proposed Arbitrator is requested to file his disclosure statement in terms of Section 11(8) of the Act. This order may be communicated to the proposed Arbitrator by the counsel for the petitioner.
37. List on 25.05.2018.
Dasti.
NAVIN CHAWLA, J
MAY 04, 2018
RN/vp
OMP (T)(Comm.) No.9/2018 Page 22