Summary
The Court held that the State-officer members of the Stationery Purchase Committee were ineligible to continue as arbitrators under Section 12(5) read with the Seventh Schedule. Although the tribunal had been constituted before the 2015 amendment, a prolonged stay and absence of further steps meant that its arbitration proceedings could not technically be said to have commenced. The Court rejected reliance on the old contractual arrangement, set aside the High Court’s refusal to replace the tribunal and appointed Justice Abhay Manohar Sapre as arbitrator. Mere participation did not constitute the required express written waiver.
Issues
- Whether the State-officer arbitral tribunal could continue under the earlier contractual arrangement in the circumstances of the prolonged stay.
- What form of waiver was required to overcome Section 12(5) ineligibility.
Provisions considered
- Section 12(5), its proviso and Seventh Schedule, Entry 1, Arbitration and Conciliation Act, 1996State-officer tribunal members were ineligible; a prior agreement or participation could not replace a post-dispute express written waiver. (¶¶ 6-8.1, 9-10)
- Sections 11, 14 and 15, Arbitration and Conciliation Act, 1996The ineligible tribunal’s mandate had ended and an independent replacement arbitrator was appointed. (¶ 7-11)
Held
- Although constituted earlier, the tribunal took no further arbitral steps in the circumstances, including the stay operating from 2001 to 2017. The Court held that its proceedings could not technically be treated as having commenced; the High Court could not refuse replacement on its contrary premise. (¶ 6)
- Section 12(5) protects arbitral independence and impartiality notwithstanding a prior contrary agreement. The respondent State’s officers constituting the committee were ineligible under the Seventh Schedule and could not continue as arbitrators; a party could not insist on the disqualified contractual tribunal. (¶ 7-10)
- Statutory ineligibility results in de jure inability to act and termination of the mandate. Applying TRF, Bharat Broadband and Jaipur Zila Dugdh, the Court required a fresh arbitrator. (¶ 8-10)
- Waiver of Section 12(5) requires an express agreement in writing after the dispute has arisen. Participation or filing a claim does not by itself meet that special requirement; implied waiver principles cannot substitute for it. (¶ 8.1)
- Justice Abhay Manohar Sapre was appointed directly to avoid another remand. The parties were directed to appear before him within four weeks, with an expectation of early completion given the dispute’s age. The underlying supply dispute was not adjudicated. (¶ 10-12)
Result
Appeal allowed; High Court order set aside; replacement application allowed and Justice Abhay Manohar Sapre appointed arbitrator; parties to appear within four weeks; no costs.