Jharkhand High Court
State Of Jharkhand Information vs M/S Rites Ltd on 22 December, 2009
Author: M.Y.Eqbal
Bench: M. Y. Eqbal
IN THE HIGH COURT OF JHARKHAND AT RANCHI
C.M.P. No. 264 of 2008
1. State of Jharkhand, Information Technology
Department
2. Joint Secretary, Department of Information
Technology, Goft. Of Jharkhand
3. Assistant Director, Govt. of Jharkhand,
Department of Information Technology
... ... ... Petitioners
Versus
M/s. RITES LTD ... ... ... Respondent
------
CORAM: THE HON'BLE MR. JUSTICE M. Y. EQBAL
------
For the Petitioner: Mr. P.K. Prasad, A.G.
For the Respondent: Mr. Binod Poddar, Sr. Advocate
------
Reserved on: 19.11.2009 Pronounced on: 22nd December, 2009
Heard Mr. P.K. Prasad, learned Advocate General appearing for the applicant-State and, Mr. Binod Poddar, learned Sr. Counsel appearing for the respondent (petitioner in A.A. No.41 of 2007).
2. The instant application has been filed by the applicant purported to be under Section 151 of the Code of Civil Procedure, making a prayer for change of the Arbitrator appointed by this Court by order dated 26.7.2008 passed in Arbitration Application No.41 of 2007. By the said order, with the consent of the parties, a retired Judge of this Court, Justice S. Roy, was appointed as an arbitrator to adjudicate upon the disputes arose between the parties. The contention of the applicant-State is that in course of argument of the arbitration application, names of two retied Hon'ble Judges, namely Justice S. Roy and Justice S.K. Chattopadhyay, were suggested. Unfortunately, the arguing counsel of the respondent-State did not have time to consult the respondent-State and the concerned department and without consulting the concerned department, counsel for the State consented for the appointment of Justice S. Roy, retired Judge of this Court as an arbitrator. According to the applicant, appointment of Justice S. Roy is not with the consent of the parties. The applicant-State further contended in the 2 supplementary affidavit that the dispute being highly technical, only a technical person should be appointed. According to the applicant, such highly technical matter cannot be properly appreciated by a person other than a technical person. Several other allegations and insinuations have been made against the arbitrator.
3. The petitioner opposed the application by filing counter affidavit stating inter alia that such application is not maintainable. It is contended that once the parties had agreed to the appointment of an arbitrator, they cannot challenge the same on the basis of some baseless apprehension. The name of the arbitrator was duly agreed upon by the applicant-State of Jharkhand and therefore, they cannot say that they did not accorded consent for the said name. Further, there is no condition in that contract for appointment of technical expert as an arbitrator.
4. From perusal of the application filed by the State purported to be under Section 151 of the Code of Civil Procedure, it is not a case where simple prayer has been made for change of arbitrator on the ground that some technical expert be appointed in his place. On the contrary, some aspersions and stigmatic statements have been made in the application. In para.6 of the application, it is alleged by the State that in another case relating to arbitration between M/s. Webel Technology Vs. State of Jharkhand through I.T. Department, Justice S. Roy (Retired) was appointed as a sole arbitrator in which after conclusion of the hearing, he asked both the parties to deposit Rs.64000/- each for writing judgment and for preparation of award, to which the State of Jharkhand did not agree. However, other party paid the entire amount of Rs.1,28,000/- including the share of the State Government. It is further alleged that in the said case, the sole arbitrator did not consider the counter claim and defence of the department and gave an award which is under challenge in Miscellaneous Case pending before the Subordinate Judge, Ranchi. In the supplementary affidavit, further allegations have been made that pending hearing of this application, the sole arbitrator so appointed, namely Justice S. Roy, commenced the arbitration proceeding and held two sittings, despite the fact that 3 pendnecy of this application was brought to the notice of the sole arbitrator who held that since the matter has not been stayed, he would proceed with the arbitrator proceeding.
5. In the aforesaid premises where prayer for change of the arbitrator is made by the applicant-State by casting stigma on the arbitrator, the question that falls for consideration is as to whether such application is maintainable under Section 151 of the Code of Civil Procedure.
6. Admittedly, the contract contains arbitrator clause and the process of the appointment of arbitrator and the procedure for challenge of the appointment of the arbitrator is prescribed in the Arbitration and Conciliation Act, 1996. Section 12 of the Arbitration and Conciliation Act, 1996 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 likely to give rise to justifiable doubts as to his independence or impartiality.
(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 to 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."
7. From bare perusal of the aforesaid provision, it is manifestly clear that the parties are free to agree on the procedure for challenging the arbitrator subject to the provision of Section 13(4) of the Act. The Scheme evolves by Sections 12, 13 and 16 of the Act is totally different from that of the provision contained in the Arbitration Act, 1940.
8. In the instant case, since prayer has been made for change of the arbitrator and/or revocation of the authority of arbitrator not only on the ground that the arbitrator does not possess technical qualification but also on the ground of some aspersions and doubt about his integrity, the respondent-State has to file 4 regular application under Sections 12 and 13 of the Act. In my view, such prayer cannot be made by filing application under Section 151 CPC. In this regard, reference may be made to the decision of the Supreme Court in the case of Konkan Railway Corporation Ltd. vs. Rani Construction Pvt. Ltd. (2002)2 SCC 388 and in para-20 their Lordships observed:
"20. It might be that though the Chief Justice or his designate might have taken all due care to nominate an independent and impartial arbitrator, a party in a given case may have justifiable doubts about that arbitrator's independence or impartiality. In that event it would be open to that party to challenge the arbitrator nominated under Section 12, adopting the procedure under section 13. There is no reason whatever to conclude that the grounds for challenge under Section 13 are not available only because the arbitrator has been nominated by the Chief Justice or his designate under Section 11."
9. For the reason aforesaid, the instant application under Section 151 CPC for revocation of the authority of arbitrator or for change of the arbitrator is not maintainable, which is, accordingly, rejected. However, liberty is given to the respondent-State to file proper application in accordance with law.
( M.Y.Eqbal,J.) Pandey/2Cps./AFR