Case Note & Summary
The petitioner, a construction company, entered into six separate agreements with the Central Public Works Department (CPWD) for various construction works at NITK campus, Surathkal, between 2014-15. Disputes arose regarding alleged delays and lapses in execution, leading the CPWD to demand compensation under the contracts. When the petitioner denied liability, the CPWD sought appointment of arbitrators as per the arbitration clauses. Initially, the CPWD proposed the appointment of a Permanent Arbitrator from the Ministry of Housing and Urban Affairs, but the petitioner did not consent as required under Section 12(5) of the Arbitration and Conciliation Act, 1996. Subsequently, the CPWD unilaterally appointed retired Additional Director Generals of CPWD as arbitrators in the six matters. The petitioner objected, arguing that these appointments were invalid because the arbitrators, being former employees of CPWD, were ineligible under the Seventh Schedule of the Act, and that express written consent of the petitioner was mandatory. The appointed arbitrators rejected the objections, holding that the contractual clause (Clause 25) dispensed with the need for the contractor's consent. Aggrieved, the petitioner filed the present civil miscellaneous petitions under Sections 11(6) and 12 of the Act, seeking appointment of an independent substitute arbitrator, preferably a retired judge. The High Court clubbed the petitions for common hearing. The legal issue centered on the interplay between statutory ineligibility under the Act and contractual provisions, specifically whether a person whose relationship with one party falls under the Seventh Schedule can be appointed as arbitrator without the other party's express consent, and whether a contract clause can override the statutory mandate. The Court examined the facts of the appointments and the objections raised. The judgment text, however, is incomplete as it breaks off during the narration of the arbitrators' rejection of the objections, and the final operative part of the court's order is not recorded in the provided excerpt.
Headnote
A) Arbitration - Appointment of Arbitrator - Ineligibility and Consent - Sections 12(5) and Seventh Schedule, Arbitration and Conciliation Act, 1996 - The appointment of retired officers of CPWD as arbitrators in disputes between CPWD and the contractor was challenged on the ground that they were ineligible under the Seventh Schedule as they had a relationship with one party; the petitioner contended that express consent was mandatory under Section 12(5); the arbitrators held that under the contractual clause consent was not necessary; the High Court, in disposal of the petitions under Section 11(6), examined whether the appointments were valid (Paras 6-8).
Issue of Consideration
Whether the appointment of a retired Additional Director General of CPWD as arbitrator in a dispute involving CPWD is valid in the absence of consent of the other party under Section 12(5) of the Arbitration and Conciliation Act, 1996.
Law Points
- Section 12(5) of the Arbitration and Conciliation Act
- 1996 requires express consent of parties for appointment of an arbitrator falling under the Seventh Schedule
- Appointment of a retired employee of a party as arbitrator without consent is invalid
- Contractual clause cannot override statutory ineligibility
