Case Note & Summary
The dispute arose between Haryana Space Application Centre (HARSAC) and M/s Pan India Consultants Pvt. Ltd. regarding the modernization of land records in Haryana. HARSAC, designated as the nodal agency for Geographic Information System applications, awarded a contract to the Respondent in 2011. The Respondent failed to complete the work within the stipulated time, leading HARSAC to invoke the Performance Bank Guarantee in 2014. The Respondent challenged this action in the Delhi High Court, which directed that the bank guarantees remain alive pending arbitration. An arbitration tribunal was constituted, but delays ensued, prompting the Respondent to file an application for extending the time for the award. The District Judge granted an extension, which HARSAC contested in the Punjab and Haryana High Court. The High Court granted further extensions due to the pandemic. The Supreme Court found that the appointment of the Principal Secretary as an arbitrator was invalid under Section 12(5) of the Arbitration and Conciliation Act, 1996, as he had a controlling influence over HARSAC. Consequently, the court appointed Justice Kurian Joseph as a Sole Arbitrator to conclude the proceedings within six months, ensuring impartiality and adherence to the statutory requirements. The court directed both parties to share the arbitrator's fees equally and allowed the proceedings to be conducted virtually or at the seat of arbitration in Haryana.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Ineligibility of Appointing Authority - Arbitration and Conciliation Act, 1996, Section 12(5) - The appointment of the Principal Secretary as an arbitrator was deemed invalid due to his controlling influence over the Appellant, violating the mandatory provisions of the Act. The court directed the appointment of a Sole Arbitrator to ensure impartiality and expedite the arbitration process (Paras 17-18).
Issue of Consideration
Whether the appointment of the Principal Secretary as an arbitrator was valid under the Arbitration and Conciliation Act, 1996.
Final Decision
The Supreme Court appointed Justice Kurian Joseph as a Sole Arbitrator to conclude the arbitration proceedings within six months, finding the previous appointment invalid under the Arbitration and Conciliation Act, 1996.
Law Points
- Arbitration
- Conciliation Act
- 1996
- Section 12(5)
- Section 29A
- Service Level Agreement
- arbitration clause
- appointment of arbitrator
- performance bank guarantee
