Section 12(5) Of A&C Act Would Apply To Arbitral Proceedings Initiated Prior To 2015 Amendment Act: Punjab & Haryana HC
The Punjab and Haryana High Court observed that Section 12(5) of the Arbitration and Conciliation Act, 1996 (A&C Act) would apply to arbitral proceedings initiated before the Amendment Act 2015.
The Court observed thus in a Petition preferred by a company under Section 11 of A&C Act for constitution of an independent and impartial Arbitral Tribunal.
A Single Bench of Justice Suvir Sehgal held, “It may be mentioned that the judgments of the Supreme Court in Aravali Power Company Pvt. Ltd’s case (supra) and SP Singla Constructions Pvt. Ltd.’s case (supra), upon which reliance has been placed by the State counsel, were relied upon by the Madhya Pradesh High Court in Ellora Paper Mills Limited’s case, while deciding the matter but as observed above the judgment of the Madhya Pradesh High Court has been set aside by the Supreme Court. Therefore, the first question that has arisen for consideration in the present case is squarely covered by Ellora Paper Mills Limited’s case (supra). The provision of Section 12(5) of the Arbitration Act would apply to arbitral proceedings which were initiated prior to 23.10.2015 and continued thereafter.”
Advocate Anirudh Wadhwa appeared for the Petitioner while Addl. A.G. Aman Bahri appeared for the Respondents.
Factual Background -
The counsel for the Petitioner-Company submitted that a bid submitted by the Petitioner for construction of a four-lane railway over bridge was awarded vide letter. It was submitted that although the project was required to be completed within 15 months but there were continuous delays and the Petitioner sent a chain of letters to the Respondents-Authorities, requesting them to increase the contract price and compensate it. The Respondents were requested to appoint a Conciliator for an amicable settlement and they intimated that the request for conciliation has not been approved.
Thereafter, the Petitioner nominated O.P. Goyal as its Arbitrator while the Respondents appointed H.R. Raheja as a serving officer and R.K. Aggarwal was appointed as the Presiding Officer. After expressing doubts about the impartiality of the Tribunal, the Petitioner approached the High Court but its Petition was dismissed. The SLP (Special Leave Petition) and Review were also dismissed and the Tribunal continued with the proceedings. Meanwhile, the A&C Act was amended and the Petitioner then filed a Petition before the District Judge. During the pendency of the Petition, the Application filed under Sections 14 and 15 of A&C Act was rejected by the District Judge, which was challenged before the High Court.
The High Court in the above context of the case, noted, “It cannot be said that petitioner had joined the proceedings and is debarred from questioning the impartiality of the Tribunal. This court is therefore of the firm view that the participation in the arbitral proceedings and raising an objection by the petitioner does not amount to acquiescence.”
The Court further took note of the fact that the Petitioner had never lost interest in the proceedings and it had been merely requesting for deferment in order to get the decision of the Court on the eligibility of the Arbitrators, moreso, after the introduction of Section 12(5) in the Arbitration Act.
“As has been held by the Delhi High Court, with the termination of the proceedings by the Arbitral Tribunal, everything has come to a close. In view of the mandate of Section 12(5) read with Seventh Schedule of the Arbitration Act, two of the Arbitrators are ineligible to resume office as Arbitrators, therefore, sending the petitioner back to the Arbitral Tribunal to file an application for review/recall of its order would amount to putting the clock back, which is not permissible in view of the amendment in the statute”, it said.
The Court, therefore, concluded that it has the power to appoint a substitute Arbitrator(s) in place of the Arbitral Tribunal, proceedings before whom have been terminated.
Accordingly, the High Court nominated a former Judge Justice (Retd.) H.S. Sidhu as the Sole Arbitrator to adjudicate the disputes between the parties.
Cause Title- SP Singla Constructions Pvt. Ltd. v. State of Haryana and Others (Neutral Citation: 2024:PHHC:150047)
Appearance:
Petitioner: Advocates Anirudh Wadhwa, Gurmohan Singh Bedi, Pawandeep Singh, Anand Vardhan Khanna, Kartik Gupta, and Rahul Rohilla.
Respondents: Addl. A.G. Aman Bahri, Advocates Vicky Chauhan, and Deepak Balyan.
