Delhi High Court - Orders
Era Infra Engineering Ltd vs Bharat Heavy Electricals Ltd on 27 September, 2022
Author: Neena Bansal Krishna
Bench: Neena Bansal Krishna
$~5 and 36
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ O.M.P. (T) (COMM.) 1/2019
ERA INFRA ENGINEERING LTD. ..... Petitioner
Through: Mr. Udit Seth, Ms. Priya Kanwat,
Advocates
versus
BHARAT HEAVY ELECTRICALS LTD ..... Respondent
Through: Mr. Dibya Nishant, Mr. Pallav
Kumar, Advocates.
36
+ O.M.P.(MISC.)(COMM.) 38/2017
ERA INFRA ENGINEERING LTD. ..... Petitioner
Through: Mr. Udit Seth, Ms. Priya Kanwat,
Advocates.
versus
BHARAT HEAVY ELECTRICAL LTD. ..... Respondent
Through: Mr. Dibya Nishant, Mr. Pallav
Kumar, Advocates.
CORAM:
HON'BLE MS. JUSTICE NEENA BANSAL KRISHNA
ORDER
% 27.09.2022
1. Petition under Section 14 of the Arbitration and Conciliation Act, 1996 has been filed on behalf of the petitioner for terminating the mandate of the sole Arbitrator.
2. It is submitted in the petition that NCLT, Delhi declared a moratorium and appointed a Resolution Professional vide Order dated 08.05.2018. This petition has been filed through Mr. Abhishek Kapoor, the Resolution Signature Not Verified Digitally Signed By:SAHIL SHARMA Signing Date:28.09.2022 18:33:33 Professional. It is submitted that the respondent vide Letter dated 26.10.2009 awarded the Contract for the work of "Part A1" of piling and foundations works including supply of all material except those propsed to be supplied by Bhel for 2*500 MW units(Unit 6 &7) at Anpara-D Thermal Power Plant(PTPP) of UPRUVNL at Anpara, Sonebhadra, U.P. The tentative value of the Contract was Rs. 77,42,00,000/- which was accepted by the petitioner vide its Letter dated 30.10.2009.
3. A formal Contract was entered into between the parties on 05.03.2010 which contained an Arbitration Clause as well. Disputes arose between the parties which could not be amicably resolved. The Arbitration Clause was invoked vide Letter dated 30.12.2015. Shri Shashi Kumar Uppal was appointed as the sole Arbitrator by the respondent through Letter dated 01.02.2016 which was accepted by the learned sole Arbitrator. He also clarified that he was an employee of the respondent since 1975 and had superannuated from the respondent Organisation in 2009. Various Arbitration hearings took place before the learned Arbitrator since he entered the Arbitration. It is submitted that on 13.05.2017, the learned Arbitrator rejected the request of petitioner to lead the evidence. Thereafter, the petitioner moved an application on 19.05.2017 seeking leave to cross-examine/lead evidence and filed the list of the witnesses to be cross-examined. The said application was also dismissed by the learned Arbitrator vide Order dated 29.05.2017 without hearing the parties. The review application dated 31.05.2017 was filed but again the same was dismissed without passing any reasoned Order on 29.05.2017 in violation of the principles of natural justice. Thereafter, review application was filed on 31.05.2017.
Signature Not Verified Digitally Signed By:SAHIL SHARMA Signing Date:28.09.2022 18:33:334. Also, a submission was made that the petitioner had not received the mandatory declaration under Section 12(1) of the Arbitration and Conciliation Act, 1996 from the Arbitrator. The Arbitrator then sent the mandatory declaration under Section 12(1) of the Arbitration and Conciliation Act, 1996 which was signed on 10.07.2017 and not at the time when the Arbitrator had entered upon reference. This Declaration was given immediately prior to the expiry to the mandate of the Arbitral Tribunal, in light of the Section 29 of the Act.
5. The Arbitrator has admitted in this Declaration that he was a former employee of the respondent; that he has acted as an Arbitrator for the respondent when he was in service and even after his superannuation and that he has maintained an Administrative Association with the petitioner when he was working with the respondent. He also stated that he shall be completing the entire Arbitration within 27 months.
6. It is submitted that the learned Arbitrator was appointed on 01.02.2016 and the period of the arbitral proceedings was extended for another six months upto 31.07.20217 by the consent of the parties. Thereafter, an application under Section 29 A of the Arbitration and Conciliation Act, 1996 was filed pursuant thereto the mandate of the Arbitrator was extended. During the pendency of the said petition, the petitioner has sought the change of sole Arbitrator but the respondent did not agree for appointment of substitute Arbitrator.
7. It is submitted that in the Declaration dated 10.07.2017 under Section 12 of the Arbitration and Conciliation Act, 1996, the learned Arbitrator had admitted that he would take 24 months to complete the arbitration and thereafter 3 months to pronounce the Award; whereas the Act provides that Signature Not Verified Digitally Signed By:SAHIL SHARMA Signing Date:28.09.2022 18:33:33 the proceedings must be concluded in 12 months. Furthermore, the undertaking to complete the arbitration within 27 months has been given only on 10.07.2017 i.e. 18 months upon entering upon the reference. It shows that the undue delay has been caused by the Arbitrator in disregard to the statutory time limit prescribed under Section 29A of the Act. There is also intimate relationship between the sole Arbitrator and the respondent giving doubts to the independence and impartiality of the Arbitrator. The Arbitrator was in the senior management of the respondent Organisation and even after his superannuation, he has been deriving substantial financial benefits from the respondent being appointed as Arbitrator in numerous Arbitrations.
8. Hence, the present petition under Section 14 of the Arbitration and Conciliation Act has been filed with a prayer that the mandate of the learned Arbitrator be terminated and a fresh and independent Arbitrator may be appointed to adjudicate the disputes between the parties.
9. A reply has been filed on behalf of the respondent wherein it is submitted that the petitioner can approach the Court only after publication of the Award and the present petition is premature. Furthermore, the petitioner by participating in proceedings before the learned Arbitrator, has waived its right to object to the appointment of learned Arbitrator. The term of Arbitral Tribunal came to end on 31.07.2017 but no objection ever was raised by the petitioner in regard to his appointment. It is asserted that the allegations made by the petitioner against the learned Arbitrator are figment of his own imagination.
10. It is further submitted that the petitioner had filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996 where the petitioner Signature Not Verified Digitally Signed By:SAHIL SHARMA Signing Date:28.09.2022 18:33:33 again challenged the modus of appointment of the Arbitrator. This Court directed vide Order dated 9th March, 2016 that the petition filed under Section 9 of the Act may be treated as one under Section 17 of the Act. Thereafter, the petitioner again started participating in the proceedings before the learned Arbitrator.
11. On merits, it is admitted that extension had been taken by the learned Arbitrator but it is asserted that the grounds agitated in the petition for substitution of the sole Arbitrator are without merit and the petition is liable to be dismissed.
12. Learned counsel for the respondent submits that without prejudice, in view of the Judgement, Bharat Broadband Network Limited Vs. United Telecoms Limited 2019 SCC online SC 547, the substitute Arbitrator may be appointed.
13. Submissions heard.
14. In view of the observations of the Judgement, Bharat (Supra), wherein it has been held that where the Arbitrator has been appointed by the party itself unilaterally, the mandate may be terminated and a substitute Arbitrator may be appointed, the petition is allowed.
15. In light of the facts and submissions made, Ms. Indira Banerjee, Judge of Supreme Court of India (Retd.), Mobile No. 9560808777 is hereby appointed as the independent Arbitrator to adjudicate the disputes between the parties.
16. The parties are at liberty to raise their respective objections before the Arbitrator.
17. The fees of the learned Arbitrator may be fixed in accordance with the Schedule IV of A&C Act, 1996; or as may be otherwise agreed between the Signature Not Verified Digitally Signed By:SAHIL SHARMA Signing Date:28.09.2022 18:33:33 Arbitrator and the parties.
18. This is subject to the Arbitrator making necessary disclosure as under
Section 12(1) of A&C Act, 1996 and not being ineligible under Section 12(5) of the A&C Act, 1996.
19. Learned counsels for the parties are directed to contact the learned Arbitrator within one week of being communicated a copy of this Order to them by the Registry of this Court.
20. The petition is accordingly disposed of in the above terms. O.M.P.(MISC.)(COMM.) 38/2017
1. Considering that a substitute Arbitrator has been appointed, the mandate of the Tribunal is extended till 9 months from the date of this Order.
NEENA BANSAL KRISHNA, J SEPTEMBER 27, 2022/PA Signature Not Verified Digitally Signed By:SAHIL SHARMA Signing Date:28.09.2022 18:33:33