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4. Learned counsel for the petitioner submitted that the sole arbitrator named under the subject contract being directly involved with the 4 of 27 dispute in the instant contract would not be impartial or neutral thus failing to satisfy the test of impartiality and independence as mandated under the Act. Reference was made to various correspondence which had been forwarded by the Executive Engineer to the arbitrator appended as annexures to the petition to substantiate its assertion. Even a reasonable apprehension of bias or impartiality is sufficient to disqualify him from being appointed as an arbitrator. The very active participation of the Superintending Engineer and also request dated 24.3.2015 prior to so called date of entering of reference on 27.3.2015, was primarily for appointment of a neutral, independent and impartial arbitrator in place of named arbitrator and the same ought to be granted. Active and unhealthy participation of the arbitrator much prior to his appointment, disqualified him under Section 11(8) of the Act and therefore he could not claim that he was validly appointed under the Act. No intimation or communication in writing regarding appointment of arbitrator was delivered to the petitioner under Section 3(1) and (2) of the Act. Reliance was placed on judgments in Northern Railway Administration, Ministry of Railway, New Delhi vs. Patel Engineering Company Limited, (2008) 10 SCC 240, Bipromasz Bipron Trading SA vs. Bharat Electronics Limited (BEL), (2012) 6 SCC 384 and Denel (Proprietary) Limited vs. Ministry of Defence, (2012) 2 SCC

14. Commencement of arbitration proceedings either on 26.12.2014 or on 23.01.2015 in terms of Section 21 of the Act cannot be said to have taken place as in pursuance to letter of the petitioner dated 26.12.2014, the Executive Engineer had called the petitioner in his office on 23.1.2015 for discussion to resolve the dispute and as per minutes of meeting dated 23.01.2015, the dispute remaining unresolved, it was agreed to refer the dispute to the arbitrator under Clause 25A of the Agreement. Thereafter, no reference was ever made to the arbitrator in terms thereof till 24.3.2015 i.e. when the petitioner had asked for appointing an independent and impartial arbitrator by changing the named arbitrator. The only document which was placed on record by the Respondent Corporation was the file noting dated 06.02.2015 stating that all the documents and contract documents be submitted to the Circle officer for deciding the pending issues. This showed that the arbitrator was yet to be appointed. Further, the said document dated 06.02.2015 had not been even referred to by the Superintending Engineer in his letter dated 27.03.2015. The Apex Court in Bipromasz Bipron Trading SA,'s case (supra) held that in the absence of proper service of letter appointing arbitrator, the appointment is not valid in eyes of law and the Court can always exercise its powers under Section 11 of the Act and appoint an arbitrator. Thus, in the present case, there was failure on the part of the Respondent Corporation to adhere to the arbitration agreement. As observed earlier, the petitioner had addressed a communication on 24.3.2015 for appointing an impartial and independent arbitrator by changing the named arbitrator and, thereafter on 27.3.2015, the Superintending Engineer, i.e. the named arbitrator had sought to proceed further which was sufficient 16 of 27 for the petitioner to invoke the jurisdiction of this Court under Section 11(6) of the Act by treating its request contained in letter dated 24.3.2015 as impliedly rejected. However, it would be essential to notice that aforesaid apprehension was translated into an order dated 13.5.2015 (Annexure R.3) when formally the request was declined. In such circumstances, the petition filed on 8.4.2015 cannot be held to be premature or not maintainable before this Court.

15. Adverting to second issue with regard to appointment of an independent and impartial arbitrator, in Denel (Proprietary) Limited's case (supra), the Apex Court opined that in normal circumstances while exercising jurisdiction under Section 11(6) of the Act, the court would adhere to the terms of the agreement as closely as possible. But if the circumstances warrant, the Chief Justice or the nominee of the Chief Justice is not debarred from appointing an independent arbitrator other than the named arbitrator. The court is also required to have due regard to the provisions contained in Section 11(8) of the Act which provides that apart from ensuring that the arbitrator possesses the necessary qualifications required of the arbitrator by the agreement of the parties, the court shall have due regard to other considerations as are likely to ensure the appointment of an independent and impartial arbitrator. The relevant observations made by the Apex Court read thus:-

18. This has been recognized by the legislative mandate expressed by way of amendment incorporated in the Act. The Parliament in order to give effect to consistent view taken by the Courts on the need for fair and impartial arbitrator had amended the Act by Arbitration and Conciliation (Amendment) Act, 2015 (in short, "the amended Act") effective from 23.10.2015. As per amended Section 11(8) of the Act, the Supreme Court or as the case may be, the High Court or the person or institution designated by such court, before appointing an arbitrator shall seek a disclosure in writing from the perspective arbitrator in terms of sub section (1) of Section 12 and have due regard to the contents of the disclosure and other considerations as are likely to secure the appointment of an independent and impartial arbitrator. Further, in order to avoid parties choosing their own employees as arbitrators, the Act has expressly barred such appointment and has made it a disqualification. Section 12(5) of the amended Act provides that even if there existed any prior agreement to the contrary where the relationship of any person with the parties or counsel or the subject matter of the dispute falls under any of the categories specified in the Seventh Schedule shall be ineligible to be appointed as an Arbitrator. Exception has been carved out where the parties may waive the applicability of this sub section by an express agreement in writing subsequent to dispute having arisen between 23 of 27 them. In other words, Section 12(5) of the Amended Act has made it clear that persons coming under Seventh Schedule are not eligible for appointment as arbitrators. It specifically bars appointing employees of one of the disputing parties as arbitrator notwithstanding the contractual clause permitting the same. Entry 1 in the Seventh Schedule which is relevant is as under:-