Case Note & Summary
The petitioners, M/s. Sri Krishna Shelters Pvt. Ltd., were awarded six construction contracts by the Central Public Works Department (CPWD) for works at NITK Surathkal in the years 2014-15. These works included construction of a sports complex, non-faculty apartments, vertical extension of a science building, a library building, extension of a mechanical engineering block, and a multi-storeyed boys' hostel. The petitioners submitted tenders that were accepted, and they provided performance guarantees as required. Work commencement letters were issued, and construction program charts were submitted. Delays occurred, and respondent No.2 issued show-cause notices demanding compensation under clause 2 of the agreements, which the petitioners denied. Disputes having arisen, respondent No.2 invoked the arbitration clause (clause 25) and requested respondent No.1 to appoint arbitrators for recovery of the claimed amounts. Initially, the Dispute Resolution Committee intended to appoint Rajesh Banga as a permanent arbitrator from the Ministry of Housing and Urban Affairs, but the petitioners did not consent as required under Section 12(5) of the Arbitration and Conciliation Act, 1996, and he expressed inability to act. Thereafter, respondent No.1 appointed L.P. Srivastava, Jagmohan Lal, S.R. Pandey, and K.K. Varma, all retired CPWD officials, as arbitrators for the six contracts. Each of these intended arbitrators made written disclosures as required under Section 12(5) read with Schedule VI of the Act. The appointed arbitrators entered upon reference and issued notices. The petitioners filed objections contending that their consent had not been obtained, which they argued was mandatory under Section 12(5) of the Act, and therefore the appointments were invalid. The arbitrators rejected these objections by separate orders, holding that Clause 25 of the agreements did not require the consent of the petitioners. Consequently, the petitioners approached the High Court of Karnataka under Sections 11(6) and 12 of the Act by filing four Civil Miscellaneous Petitions (CMP Nos. 107, 108, 120, and 121 of 2019) seeking appointment of an independent substitute arbitrator, preferably a retired judge, to adjudicate the disputes. The High Court clubbed the petitions as they involved a common question of law. The core legal issue was whether the arbitrators appointed by the respondent were ineligible due to lack of consent under Section 12(5) and whether the court should appoint a substitute under Section 11(6). The text of the order is incomplete, and the final decision of the court is not available.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Mandatory Consent of Parties - Arbitration and Conciliation Act, 1996, Sections 11(6), 12, 12(5) - The petitioners challenged the appointment of arbitrators by the respondent CPWD on the ground that their consent was not obtained as mandated under Section 12(5) of the Act. The arbitrators overruled the objections, holding that Clause 25 of the contract did not require consent of the petitioners. (Paras 6-8) B) Arbitration Law - Disclosure by Arbitrator - Statutory Disclosure under Schedule VI - Arbitration and Conciliation Act, 1996, Section 12(5) r/w Schedule VI - The arbitrators appointed by the respondent made written disclosures in accordance with Section 12(5) read with Schedule VI of the Act, informing the parties of their eligibility. (Para 6)
Issue of Consideration
Whether the arbitrators appointed by the respondent CPWD are ineligible under Section 12(5) of the Arbitration and Conciliation Act, 1996, and whether independent arbitrators should be appointed instead.
Law Points
- Arbitration - Substitution of Arbitrator - Section 11(6) and 12 of Arbitration and Conciliation Act
- 1996
- Ineligibility of arbitrator
- Mandatory consent of parties
- Clause 25 of contract.
