Case Note & Summary
The petitioner, a contractor, was awarded a works contract by the Central Public Works Department (CPWD) for construction of a Sewage Treatment Plant. The contract contained a detailed dispute resolution clause (Clause 25) requiring exhaustion of pre‑arbitral steps. After disputes arose, the petitioner followed the procedure: raising claims, rejection by the Executive Engineer, Superintending Engineer (no reply), Chief Engineer rejection, and reference to the Dispute Redressal Committee (DRC). Meanwhile, the petitioner filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996 for interim measures. The DRC rejected the claims on 11 January 2021. The petitioner then sought appointment of an arbitrator, and the Chief Engineer appointed a former Chief Engineer of CPWD as sole arbitrator on 01 February 2021. The petitioner immediately objected, contending that the arbitrator, being a former employee, had a conflict of interest under Section 12(5) of the Act and failed to furnish a disclosure statement as required by Section 12(1)(b), proceeding directly to call for claims. Reliance was placed on the Supreme Court’s decision in Ellora Paper Mills Ltd. v. State of M.P. The petitioner approached the High Court under Section 11(6) and (8) of the Act, seeking termination of the existing tribunal and appointment of an impartial sole arbitrator. The matter was heard and reserved for orders on 21 July 2022, and the order was pronounced on 11 August 2022. However, the provided text ends with the petitioner’s submissions, and the final decision is not available.
Issue of Consideration
Whether the appointment of respondent No.3 as sole arbitrator should be terminated and an independent arbitrator appointed under Section 11(6) of the Arbitration and Conciliation Act, 1996, in view of the alleged conflict of interest and non-compliance with Section 12(1)(b).
Case Details
2022 LawText (KAR) (08) 22
P. Harischandra Reddy (petitioner), Kumar.M.N for R1 and R2
Government of India, Central Public Work Department represented by its Executive Engineer and Chief Engineer, and B.N. Nagaraja
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Nature of Litigation
Petition under Section 11 of the Arbitration and Conciliation Act, 1996 seeking termination of existing arbitral tribunal and appointment of independent sole arbitrator.
Remedy Sought
Appointment of an independent and impartial sole arbitrator in place of the 3rd respondent, and termination of the existing arbitral tribunal.
Filing Reason
Dissatisfaction with the arbitrator appointed by the respondents, alleging conflict of interest due to former employment with CPWD and non-compliance with disclosure requirements under Section 12.
Previous Decisions
The petitioner had earlier filed Commercial A.A. No.75/2020 under Section 9 for interim protection; the Dispute Redressal Committee rejected claims on 11.01.2021; respondent No.2 appointed respondent No.3 as arbitrator on 01.02.2021.
Issues
Whether the appointment of respondent No.3 as arbitrator should be terminated due to conflict of interest and non-compliance with Section 12 of the Arbitration and Conciliation Act, 1996.
Submissions/Arguments
Petitioner argues that arbitrator, being former Chief Engineer of CPWD, has conflict of interest under Section 12(5) of the Arbitration Act.
Petitioner contends that the arbitrator failed to comply with disclosure requirement under Section 12(1)(b) before calling for claims.
Petitioner relies on Supreme Court decision in Ellora Paper Mills Ltd. v. State of M.P.
Judgment Excerpts
to pass an appropriate order by terminating the existing arbitral tribunal for appointment of independent and impartial Sole Arbitrator
It is a term of contract that each party invoking arbitration must exhaust the aforesaid mechanism of settlement of claims/disputes prior to invoking arbitration.
the arbitrator appointed by respondent No.2 is a former Chief Engineer of CPWD and as such, there is a conflict of interest as envisaged under Section 12(5) of the A&C Act
Procedural History
Petitioner was awarded works contract; disputes arose; petitioner wrote letter on 22.05.2020; respondent No.1 rejected on 12.06.2020; referred to Superintending Engineer on 12.06.2020, no reply; referred to respondent No.2, rejected on 14.07.2020; petitioner sought DRC appointment on 17.07.2020; DRC referred on 12.08.2020; petitioner filed Section 9 petition (Commercial A.A. No.75/2020); DRC rejected claims on 11.01.2021; petitioner approached respondent No.2 for arbitrator on 18.01.2021; respondent No.2 appointed respondent No.3 on 01.02.2021; respondent No.3 called for claims on 12.02.2021; petitioner filed this petition. The matter was heard and reserved for orders on 21.07.2022, and order pronounced on 11.08.2022.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 9, Section 11(6), Section 11(8), Section 12, Section 12(1)(b), Section 12(5), Section 14, Section 15(b)
