HC: No party can be permitted to unilaterally appoint an Arbitrator as it would defeat the purpose of unbiased adjudication

  

On 23^rd July, a bench of Delhi High Court consisting of Justice Suresh Kumar Kait while rejecting the contention that the Arbitrator has to be appointed by the appointing authority in the issue of resurfacing of Runway and Aircraft Operating Areas at AF Station Chandigarh, held that no party can be permitted to unilaterally appoint an Arbitrator, as the same would defeat the purpose of unbiased adjudication of dispute between the parties.

Facts of the case:

Chief Engineer (AF) WAC invited applications from the Contractors for issue of tender for the work relating to “Resurfacing of Runway and Aircraft Operating Areas at AF Station Chandigarh” and later authorized the petitioner to tender for the above work and thereafter, petitioner submitted the tender. The period fixed for completion of the work was 28 months commencing from 05.04.2017 and ending with 04.08.2019. However, it was completed on 27.05.2020. But since respondent No.1 failed and neglected in releasing various amounts due for payment, petitioner referred such matters in dispute to Dispute Resolution Board. Being dissatisfied therewith, petitioner issued a notice under Clause 6(b) on page 29 of the Agreement read with Condition 70 of the General Conditions of Contract contained in I.A.F.W.-2249 and thereby referred the disputes for arbitration and requested the appointing authority, i.e. respondent No.2 for reference of the resultant disputes to arbitration and for appointment of a sole Arbitrator.  Upon failure of respondent No.2 to appoint Arbitrator in terms of agreement within 30 days the petitioner has approached this Court seeking appointment of an Arbitrator.

Contention of the petitioner:

Mr. S.K. Chandwani, learned counsel for the petitioner submitted the following:

1. It was submitted that upon receipt of the letter of acceptance dated 31.03.2017, petitioner mobilized its organization and deployed at site the necessary manpower, materials, machinery and other facilities and commenced the works so as to complete before the due date according to the contractual conditions.
2. Respondent No.1 failed and neglected in releasing various amounts due for payment to the petitioner as per the contract.
3. Despite the petitioner’s request, the appointing authority, i.e. respondent No.2 failed to appoint Arbitrator in terms of agreement within 30 days of petitioner’s Notice dated 15.02.2021.

Contention of the respondent:

Mr. Ripudaman Bhardwaj, learned Central Government Standing Counsel, has opposed the claim of petitioner while submitting that in terms of an agreement between the parties, the Arbitrator has to be appointed by respondent No.2 and therefore, this petition cannot be allowed.

Observation and Judgement of the court:

 

The Hon’ble bench of the court observed the following:

1. According to petitioner, the claim raised in the present petition is of approximately Rs.39,34,40,117.73 besides 18% per annum interest and cost of arbitration. The arbitration agreement between the parties and invocation of arbitration are not disputed by the respondents.
2. The contention of respondents that the Arbitrator has to be appointed by respondent No.2 is rejected, as no party can be permitted to unilaterally appoint an Arbitrator, as the same would defeat the purpose of unbiased adjudication of dispute between the parties.

In the light of the above, the court appointed Justice KG Balakrishnan, former Chief Justice of India as the Sole Arbitrator to adjudicate the dispute between the parties.

Thus, the petition was disposed off. 

 Read Judgment ;

 

 SOURCE ;  www.latestlaws.com/

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