Summary
The High Court’s appointment of an independent substitute arbitrator contrary to the agreed procedure was set aside. The contractor had repeatedly consented to and expressed faith in the Corporation’s Managing Director; no material established bias. The 2015 ineligibility amendment did not govern these earlier arbitral proceedings. However, the Supreme Court separately set aside the hurried ex parte award under Article 142 and directed the present Managing Director to continue arbitration with sufficient opportunity to both parties.
Issues
- Whether an independent arbitrator could be appointed under Sections 11 and 15 contrary to the agreed procedure after participation and express consent.
- Whether Section 12(5), introduced in 2015, disqualified the Managing Director in arbitral proceedings commenced earlier.
- Whether delay justified substitution without invoking termination of mandate.
- Whether the ex parte award should stand despite the contractor’s opportunity concerns.
Provisions considered
- Sections 11(6), 14 and 15, Arbitration and Conciliation Act, 1996Replacement ordinarily follows the original appointment rules, including the contract. Mere delay did not justify the independent appointment on these facts; no Section 14 termination application had been made. (¶¶ 28, 29, 30, 31, 32, 33, 34)
- Section 12(5), Arbitration and Conciliation Act, 1996The amendment’s ineligibility regime could not be invoked for these already-commenced proceedings; absence of bias material was assessed under the earlier legal regime. (¶¶ 21, 22, 23, 24, 25, 26, 27)
- Section 26, Arbitration and Conciliation (Amendment) Act, 2015Arbitration commenced before 23 October 2015 remained governed by the earlier provisions, the parties not having agreed to apply the amendment. (¶¶ 23, 24, 25, 26, 27)
Held
- In the governing pre-amendment regime, the named arbitrator’s employment did not itself establish bias. The contractor consented to the Managing Director, participated and expressly reaffirmed confidence; without supporting material it could not then demand an independent arbitrator contrary to Clause 4.20.1. (¶¶ 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22)
- The Section 12(5) amendment did not apply to the arbitral proceedings commenced before 23 October 2015 absent agreement otherwise. TRF concerned post-amendment invocation and was distinguishable. (¶¶ 23, 24, 25, 26, 27)
- Delay must be assessed in context, including incomplete records needing reconstruction and the absence of a request to expedite or a Section 14 termination petition. Mere neglect or delay did not itself authorize a contrary appointment under Sections 11 and 15; the replacement rules include the agreed contractual procedure. (¶¶ 28, 29, 30, 31, 32, 33, 34)
- The long-pending tribunal hurried to an ex parte award after the High Court application, without clarity that the records had been reconstructed. To avoid further prolonged Section 34 litigation and secure a proper opportunity to substantiate claims, the Supreme Court set aside that award under Article 142. (¶¶ 35, 36, 37, 38)
- The present Managing Director must continue the proceedings, allow both sides further evidence and oral submissions, and make a final award within four months without influence from the High Court’s views. (¶ 39)
Result
Appeal allowed and High Court order dated 22 April 2016 set aside. Ex parte award dated 21 January 2016 separately set aside under Article 142. Present Managing Director appointed sole arbitrator to continue proceedings and pass a fresh award within four months after sufficient opportunity to both parties.