GANESH CONTAINERS MOVERS SYNDICATE v. RAJASTHAN SMALL INDUSTRIES CORPORATION LIMITED
2016-04-22
MOHAMMAD RAFIQ
body2016
DigiLaw.ai
ORDER : This application under Section 11 read with Section 15 of the Arbitration and Conciliation Act, 1996 (for short ‘the Act’) has been filed by the applicant, M/s. Ganesh Containers Movers Syndicate seeking appointment of independent arbitrator for adjudication of disputes between the parties in respect of agreement deed dated 28.01.2000. Foundational facts necessary for deciding this application are that the non-applicant, Rajasthan Small Industries Corporation Limited (for short ‘the Corporation’) invited tenders for ‘handling and road transportation of ISO containers and cargo between inland container depots at Jaipur, Jodhpur and Ports’. Applicant participated in the tender process. Upon considering the tender bid of applicant, non-applicant-Corporation issued in its favour Letter of Intent dated 21.01.2000. Subsequently, an agreement deed was executed between the parties on 28.01.2000 for handling and road transportation of ISO containers and cargo between the inland container depots at Jaipur, Jodhpur and Ports. The agreement was for a period of two years starting from 10.04.2000. It was further agreed that the agreement could be extended for another two years at the sole discretion of non-applicant corporation. Eventually, term of the agreement was extended for another two years from 31.01.2003. During currency of agreement, certain disputes arose between the parties as regards imposition of transit penalty for the month of August, 2002, refusal of non-applicant to waive the penalty in terms of Clause 3.4.8 of Schedule-3 (Description of Services) appended to the agreement deed; imposition of transit penalty for delay in transportation of containers exceeding gross weight of 23 metric tones between the periods from 2000 to 2002 and December, 2002 to January, 2003; non-payment of handling charges of containers for the period from October, 2003 to January, 2004; non-payment of charges for deliveries made of export bound containers even upon submission of log books/receipts issued by the port authorities; deduction of transit penalty from the bills of the applicant for delay in delivery of containers which were left behind undelivered by the erstwhile contractor of the non-applicant and non-payment of bills for transportation of containers with regard to multiple factors. Applicant requested non-applicant for appointment of arbitrator in terms of agreement of settlement of the disputes. Non-applicant appointed Shri I.C. Shrivastava, IAS (Retd.) as sole arbitrator vide letter dated 21.02.2005. The sole arbitrator, so appointed, did not function with required pace despite repeated requests of the applicant.
Applicant requested non-applicant for appointment of arbitrator in terms of agreement of settlement of the disputes. Non-applicant appointed Shri I.C. Shrivastava, IAS (Retd.) as sole arbitrator vide letter dated 21.02.2005. The sole arbitrator, so appointed, did not function with required pace despite repeated requests of the applicant. Therefore, non-applicant-Corporation vide order dated 23.10.2009 substituted him by its Chairman & Managing Director of the nonapplicant- Corporation as the sole arbitrator. It so happened that Chairman & Managing Director of the non-applicant-Corporation kept changing time and again. Applicant served on the non-applicant notice dated 13.08.2013 through its advocate requesting it to initiate arbitral proceedings within 15 days failing which the notice stated that applicant would be free to take any legal remedy. When no heed was paid to the repeated requests, the applicant approached this Court by filing present application. Mr. Kanishka Gupta, learned counsel for the applicant, relying upon order dated 30.09.2014 passed by Co-ordinate Bench of this Court in M/s. Hanuman Tube Well Co. Vs. Government of Rajasthan & Others (S.B. Civil Arbitration Application No. 90/2013) argued that in that matter, this Court was approached by the applicant therein by way of filing application under Section 11 of the Act for appointment of arbitrator. However, the application was contested on behalf of the employer on the premise that award has already been passed by the Standing Committee under Clause 23 of the agreement therein. During pendency of that application, applicant received a notice dated 11.02.2014 to attend meeting of the standing committee. Applicant responded the same by letter dated 21.02.2014 that participation in meeting of the standing committee is not at all desirable in view of filing of an application for appointment of an independent arbitrator as per Section 11 of the Act. Another notice dated 02.04.2014 was received by applicant therein for appearing before the standing committee. Applicant again reiterated its stand already conveyed by communication dated 21.02.2014. Despite the fact that award had already been passed, this Court appointed arbitrator in that matter. Aforesaid judgment of this Court was challenged before the Supreme Court by filing Petition for Special Leave to Appeal (C) No. 3810/2015 which was also dismissed vide order dated 27.02.2015.
Applicant again reiterated its stand already conveyed by communication dated 21.02.2014. Despite the fact that award had already been passed, this Court appointed arbitrator in that matter. Aforesaid judgment of this Court was challenged before the Supreme Court by filing Petition for Special Leave to Appeal (C) No. 3810/2015 which was also dismissed vide order dated 27.02.2015. Learned counsel argued that in the present case, even if during pendency of the present application before this Court, exparte award has been deliberately passed by the Chairman & Managing Director of the non-applicant-Corporation only with a view to frustrating the present application, when he had lost the mandate to act as arbitrator after filing of the present application. Such award should therefore be ignored. Learned counsel for the applicant in this connection relied upon judgment of the Supreme Court in Union of India Vs. Singh Builders Syndicate, (2009) 4 SCC 523 in which case too, the Supreme Court upheld order of appointment of independent arbitrator on failure of the earlier arbitrator to expeditiously proceed with the proceedings and conclude the same. Learned counsel for the applicant also relied upon judgment of the Supreme Court in NBCC Limited Vs. J.G. Engineering Private Limited, (2010) 2 SCC 385 and submitted that in that case too, when the arbitrator failed to render the award within the time limit fixed for doing so, mandate of arbitrator was taken to be terminated and the arbitrator was held not liable to continue as an arbitrator in the absence of the consent of both the parties. It is submitted that the applicant after serving notice on the present Chairman & Managing Director through its advocate, filed the present application. Even after filing of present application before this Court, when the applicant was served with a letter dated 18.12.2015 informing that the arbitration matter has been fixed for hearing on 05.01.2016, applicant submitted letter/ application before the Chairman & Managing Director requesting that arbitration proceedings may be kept in abeyance till disposal of the present arbitration application. However, ignoring applicant’s request, Chairman & Managing Director again fixed the matter on 13.01.2016. Representative of the applicant appeared before him with letter dated 12.01.2016 again requesting him to defer the proceedings till final disposal of the present application and informing about the next date fixed in the present application, i.e. 05.02.2016.
However, ignoring applicant’s request, Chairman & Managing Director again fixed the matter on 13.01.2016. Representative of the applicant appeared before him with letter dated 12.01.2016 again requesting him to defer the proceedings till final disposal of the present application and informing about the next date fixed in the present application, i.e. 05.02.2016. The sole arbitrator rejected the request and drew order sheet dated 13.01.2016 to the effect that the matter will be finalized on the basis of available facts and finally, he passed the award on 21.01.2016, which has been received by the applicant by registered post on 25.01.2016. It is contended that present Chairman & Managing Director has joined recently on 01.11.2015, therefore, he had no occasion to hear the arguments of the parties and ex-parte award has been passed only with a view to frustrate the present application. Per contra, Mr. R.P. Garg, learned counsel for the nonapplicant opposed the application and submitted that initially Shri I.C. Shrivastava, IAS (Retd.) was appointed by the Chairman cum Managing Director of the non-applicant-Corporation as the sole arbitrator in terms of Clause 4.20.1 of the agreement deed. On the request of applicant as well as non-applicant, Chairman & Managing Director vide order dated 23.10.2009 accepted to decide the dispute by himself. This was done with consent of the parties. Then, the Chairman & Managing Director heard the matter on number of times, but arbitral proceedings could not be completed for one reason or the other as well as because of the transfer of the then Chairman & Managing Director. At one stage, final arguments were heard by the Chairman & Managing Director, however, he could not render the final award. After joining of Shri Jaswant Sampat Ram as Chairman & Managing Director, he initiated further proceedings for deciding the dispute and counter claim of non-applicant. On 18.12.2015, he fixed the matter for hearing on 05.01.2016 and served a notice upon applicant and non-applicant both. After receipt of such notice/letter, applicant on 23.12.2015 submitted application to Chairman & Managing Director ( sole arbitrator) informing about filing of the present application for appointment of independent arbitrator and requested to keep the proceedings in abeyance. Thus, the applicant deliberately avoided to appear before the arbitrator thereafter.
After receipt of such notice/letter, applicant on 23.12.2015 submitted application to Chairman & Managing Director ( sole arbitrator) informing about filing of the present application for appointment of independent arbitrator and requested to keep the proceedings in abeyance. Thus, the applicant deliberately avoided to appear before the arbitrator thereafter. Having given consent to get the dispute decided by Chairman & Managing Director as per Clause 4.20.1 of the agreement, the applicant was bound to appear before the arbitrator. Chairman & Managing Director again served letter dated 05.01.2016 intimating date fixed for hearing to be 13.01.2016. Pleadings of both the parties were complete and arguments were to be heard finally. It is contended that the proceedings could not be timely concluded due to non-cooperation of the applicant. Subsequently, the arbitrator has passed the award on 21.01.2016 and copy of the same has been sent to the applicant. Learned counsel for the non-applicant in support of his argument relied upon the decisions of the Supreme Court in Bhupinder Singh Bindra Vs. Union of India & Another, (1995) 5 SCC 329 , wherein it has been held that where the officer named in the arbitration clause appointed as arbitrator was willing to proceed with the arbitration and no allegation of misconduct, fraud or disqualification was made against him, but due to non-cooperation of one of the parties (the contractor), delay occurred in making the award, the court has no jurisdiction to revoke the appointment of the arbitrator on the ground of laches and appoint another person as arbitrator without consent of both the parties to the contract. I have given my anxious consideration to rival submissions, perused the material on record and carefully studied the cited judgments. Agreement executed between the parties on 28.01.2000, contains Clause 4.20.1 being the arbitration clause, which reads as under: “All disputes and differences arising out of or in any way concerning this Contract shall be referred to the Managing Director himself, herself or his or her nominees for the sole arbitration. There will be no objections to any such appointment on the ground that the person so appointed is an employee of the corporation; that he has dealt with the matters to which the contract relates and that in course of his duties. As such arbitration shall be final and binding on the parties to the contract.
There will be no objections to any such appointment on the ground that the person so appointed is an employee of the corporation; that he has dealt with the matters to which the contract relates and that in course of his duties. As such arbitration shall be final and binding on the parties to the contract. If the person to whom the matter was originally referred to for arbitration becomes unable to function on account of vacation of office, transfer, resignation, retirement from the services, suspension or for any other reason, whatsoever, the Managing Director shall nominate another person to take over his function as soon as possible. Such person shall proceed further from the stage where the matter was left by his predecessor. The arbitrator shall give reasons for the award.” It is in terms of the aforesaid clause that Shri I.C. Shrivastava, IAS (Retd.) was appointed as the sole arbitrator. However, when he did not function as arbitrator for a long time, the non-applicant substituted him by the then Chairman & Managing Director vide order dated 23.10.2009. By that time, already almost five years had lapsed. The applicant filed present application on 13.05.2015, which shows that no proceedings took place in the matter for about four more years and the matter remained standstill. The applicant waited for quite long time till it filed present application. It is only when the notice of the present application was issued to the non-applicant, preliminary objections were filed by the non- applicant on 29.01.2016 asserting about pendency of proceedings before the Chairman & Managing Director. In between, notice dated 18.12.2015 was served on the applicant by the Chairman & Managing Director informing that the matter has been fixed for hearing on 05.01.2016. The applicant refused to participate in the proceedings on the premise that it has already filed application under Sections 11 and 15 of the Act before this Court and sent a letter dated 24.12.2015 requesting that proceedings may be kept in abeyance. The sole arbitrator ignored that request and again by letter dated 05.01.2016 informed the applicant that the matter was pending since long and now it was at the final stage and therefore, the applicant should attend the proceedings on 13.01.2016.
The sole arbitrator ignored that request and again by letter dated 05.01.2016 informed the applicant that the matter was pending since long and now it was at the final stage and therefore, the applicant should attend the proceedings on 13.01.2016. Representative of the applicant again appeared before the sole arbitrator and submitted letter dated 12.01.2016 with the request to adjourn the proceedings till disposal of present application and also informing that next date in the present matter is 05.02.2016. Even then, the sole arbitrator has passed ex-parte award dated 21.01.2016, which has been received by the applicant on 25.01.2016. This Court in M/s. Hanuman Tube Well Co. (supra) was dealing with a case where the reference before the Standing Committee was not made within a period of 30 days as required. It was asserted by the applicant therein that no action was taken in compliance of Clause 23 of the agreement for referring the dispute to all the members of the standing committee within a period of one month from the date of receipt of contractor’s application. However, during pendency of the application, the applicant received a notice dated 11.02.2014 in relation to meeting of the standing committee, to which the applicant responded on 21.02.2014 with the specific stand that participation in meeting of the standing committee was not desirable in view of the filing of application for appointment of an independent arbitrator as per Section 11 of the Act. However, another notice dated 02.04.2014 was received by the applicant for appearing before the standing committee. The applicant vide letter dated 21.02.2014 again reiterated such stand. This Court called for the record which transpired that on 25.10.2013, a note was put by financial advisor as per RPWA-90 and a decision was taken to place the matter before the standing committee on 30.10.2013. However, the draft agenda, at the first instance, was placed for approval on 19.11.2013. No information with regard to making of reference was given to the applicant up till 11.02.2014, although the process to make reference was initiated on 21.10.2013. Respondents therein filed reply to the application under Section 11 of the Act on 09.01.2014, but therein they did not come out with a definite case about reference of the dispute as per Clause 23.
Respondents therein filed reply to the application under Section 11 of the Act on 09.01.2014, but therein they did not come out with a definite case about reference of the dispute as per Clause 23. If they wanted to do so, they could have done so within 30 days from the date of receipt of request, but they made the reference after filing of the arbitration application before this Court. In those facts, this Court held as under: “This Court in M/s. Mahendra Singh & Co. Vs. State of Rajasthan & Anr., reported in 2014 (1) RLW 514 (Raj.), while relying upon the judgment of Hon’ble Supreme Court in Deep Trading Co. (M/s.) Vs. M/s. Indian Oil Corporation, reported in 2013 DNJ (SC) 378, held that if appointment of arbitrator is made during pendency of the proceedings under Section 11 (6) of the Act of 1996, then such reference is of no consequence and that does not disentitle a party to seek appointment of the arbitrator by the Chief Justice in accordance with the provisions of the Act of 1996. Looking to the facts discussed above, I am of the considered opinion that in the instant matter the reference as per Clause 23 was made during pendency of this application, hence, the reference made and its all consequential proceedings are not in consonance with the law established.” Aforesaid judgment was challenged before the Supreme Court and the same was upheld vide order dated 27.02.2015 passed in Petition for Special Leave to Appeal (C) No. 3810/2015. In Union of India vs. Singh Builders Syndicate (supra), challenge was made to the order dated 27.03.2006 appointing a retired Judge of the High Court as sole arbitrator to decide the disputes arising in respect of a construction contract between the Northern Railways (appellant) and the respondent therein. Ground of challenge was that appointment of arbitrator could be made only in terms of Clause 64 of the general terms and conditions of the contract which requires two serving Gazetted Railway Officers of equal status being appointed as Arbitrators, one by the contractor from a panel made available by the General Manager of Northern Railways and the other by the Northern Railways, and the two arbitrators so appointed, in turn appointing an Umpire. The respondent therein made a request for arbitration in the year 1999.
The respondent therein made a request for arbitration in the year 1999. When the appellant therein failed to take necessary steps, the respondent moved an application under Section 11 of the Act. In pursuance of the directions issued on 11.11.2002 by the designate of the Chief Justice of the Delhi High Court, an arbitral tribunal was constituted in terms of Clause 64, consisting of Shri A.K. Mishra, (Chief Engineer/TPS) nominated by the contractor, Shri S.P. Virdi (Dy. F.A. & CEO) nominated by the appellant and Shri H.K. Jaggi (Chief Bridge Engineer) as the Umpire. Even before the proceedings could begin, Shri A.K. Mishra, one of the arbitrators, was transferred and consequently he tendered resignation. As the appellant failed to provide a fresh panel to enable the respondent to make a fresh nomination, the respondent again approach Delhi High Court by filing another application under Section 11 of the Act. A fresh panel was made available thereafter from which the respondent nominated Shri Ashok Gupta as its Arbitrator. Hardly after one sitting of the arbitral tribunal, Shri Ashok Gupta was also transferred and he too tendered his resignation. As the appellant again failed to take steps for filling the vacancy, the respondent again approached Delhi High Court. In pursuance of order dated 24.08.2005 passed by the High Court, again a panel was made available and the respondent made its choice on 09.09.2005. As no steps were taken in pursuance of it by the appellant, the respondent sent a reminder on 14.10.2005. In that background, the respondent again approached the Court on 10.11.2005 by filing application under Section 11 of the Act seeking appointment of an independent arbitrate or. During pendency of that application, the General Manager of Northern Railways appointed Sri Ved Pal as the contractor’s nominee arbitrator on 22.11.2005. The High Court was of the view that no useful purpose would be served by again reconstituting a three Member Arbitral Tribunal in accordance with Clause 64. It was found that the matter was pending from 1999 and the cumbersome process of constituting an Arbitral Tribunal in terms of the Arbitration agreement and the delays on the part of Railways in complying with the provisions of the arbitration agreement, led to the arbitration becoming virtually a non-starter. Therefore, the High Court allowed the application on 27.03.2006 and appointed retired Judge of the Delhi High Court as the arbitrator.
Therefore, the High Court allowed the application on 27.03.2006 and appointed retired Judge of the Delhi High Court as the arbitrator. Aforementioned order of the High Court was challenged before the Supreme Court, which upheld the order while relying upon its earlier judgment in Northern Railway Administration, Ministry of Railway, New Delhi Vs. Patel Engineering Company Ltd., (2008) 10 SCC 240 wherein it was held that the appointment of arbitrator/s named in the arbitration agreement is not mandatory or a must, but the emphasis should be on the terms of the arbitration agreement being adhered and/or given effect, as closely as possible. It was further held that the Chief Justice or his designate should first ensure that the remedies provided under the arbitration agreement are exhausted, but at the same time also ensure that the twin requirements of sub-section (8) of Section 11 of the Act are kept in view. Invariably the court should first appoint the Arbitrators in the manner provided for in the arbitration agreement. But where the independence and impartiality of the Arbitrator/s appointed/nominated in terms of the arbitration agreement is in doubt, or where the Arbitral Tribunal appointed in the manner provided in the arbitration agreement has not functioned and it becomes necessary to make fresh appointment, the Chief Justice or his designate is not powerless to make appropriate alternative arrangements to give effect to the provisions for arbitration. It was held that the Chief Justice or any person or institution designated by him to take necessary measures in appointing an arbitrator, in view of provisions contained in Section 11 (8) of the Act, shall have “due regard” to the two cumulative conditions relating to qualifications and other considerations as are likely to secure the appointment of an independent and impartial arbitrator. The expression “due regard” means that proper attention to several circumstances have been focused. The expression “necessary” as a general rule can be broadly stated to be those which are reasonably required to be done or legally ancillary to the accomplishment of the intended act. Necessary measures can be stated to be the reasonable steps required to be taken. The Supreme Court in Union of India & Others Vs.
The expression “necessary” as a general rule can be broadly stated to be those which are reasonably required to be done or legally ancillary to the accomplishment of the intended act. Necessary measures can be stated to be the reasonable steps required to be taken. The Supreme Court in Union of India & Others Vs. Uttar Pradesh State Bridge Corporation Limited, (2015) 2 SCC 52 held that when there is a failure on part of Arbitral Tribunal to act and it is unable to perform its function either de jure or de facto, it is open to a party to arbitration proceedings to approach the Court to decide on termination of its mandate and seek appointment of substitute arbitrator. In that case, members of Arbitral Tribunal were unable to proceed in the matter for almost four years, without any rhyme or justifiable reasons. Despite specific orders of the High Court directing the Arbitral Tribunal to hold regular sittings and complete the proceedings within three months, the Arbitral Tribunal remained unaffected and took directions of the High Court in a cavalier manner. It was held that High Court rightly gave a finding that Arbitral Tribunal failed to perform its function. Where arbitrators are not able to devote time to arbitration proceedings or become incapable of acting as arbitrators, the Court may step in to appoint substitute arbitrator ignoring procedure agreed to between the parties. The Supreme Court held that order of the High Court terminating mandate of Arbitral Tribunal is flawless. In the present case too, the applicant had to approach this Court due to prolongation of the matter before the sole arbitrator, who kept changing, one after another. Initially Shri I.C. Shrivastava, IAS (Retd.) and thereafter, successive Chairman & Managing Director of the non-applicant Corporation were appointed as sole arbitrator. It is only after notice of this application was served on the non-applicant that it filed preliminary objections before this Court referring to Clause 4.20.1, admitting appointment of Shri I.C. Shrivastava, IAS (Retd.) as the sole arbitrator and thereafter when he failed to function, withdrawing him and admitting the fact that Chairman & Managing Director transferred arbitration proceedings into himself vide order dated 23.10.2009. Further, the non-applicant admitted that the present Chairman & Managing Director initiated further proceedings by fixing 05.01.2016 as the date of hearing and serving a notice on the applicant.
Further, the non-applicant admitted that the present Chairman & Managing Director initiated further proceedings by fixing 05.01.2016 as the date of hearing and serving a notice on the applicant. But then, the Chairman & Managing Director, who acted as arbitrator, was requested by the applicant vide letter dated 23.12.2015 to keep the proceedings in abeyance, which request was ignored by him. Chairman & Managing Director again served letter dated 05.01.2016 on the applicant intimating 13.01.2016 as the date fixed in the matter, on which date representative of the applicant appeared before him and submitted letter dated 12.01.2016 requesting to defer the matter till disposal of the present application. The Chairman & Managing Director remained unimpressed and speeded up the proceedings and drew the order sheet on 13.01.2016 to the effect that the matter shall be heard on whatever material was on record and sent copy thereof to the applicant. He, thereafter, eventually passed ex-parte award dated 21.01.2016, which according to the applicant was passed without hearing him. The Chairman & Managing Director had no occasion to deal with the matter in the past and award has been passed only with a view to frustrating the present application. The facts of the case would show that the applicant has made out a case to terminate mandate of the sole arbitrator in terms of the ratio of the judgment of the Supreme Court in Union of India & Others Vs. Uttar Pradesh State Bridge Corporation Limited. His application was already pending before this Court and was awaiting appropriate order to be passed. This Court does not appreciate the manner in which the sole arbitrator has acted in the present matter. Despite receipt of the notice of present application, sole arbitrator has hurried up to conclude the proceedings and remained unaffected by request for deferment. He without paying any heed to repeated requests of the applicant to keep the proceedings in abeyance and await the order of this Court, passed the ex-parte award.
Despite receipt of the notice of present application, sole arbitrator has hurried up to conclude the proceedings and remained unaffected by request for deferment. He without paying any heed to repeated requests of the applicant to keep the proceedings in abeyance and await the order of this Court, passed the ex-parte award. Mandate of law contained in sub-section (6) of Section 11 of the Act has to be followed in all such cases, which provides that, “a party may request the Chief Justice or any person or institution designated by him to take the necessary measures.” The expression “necessary” as a general rule can be broadly stated to be those things which are reasonably required to be done or legally ancillary to the accomplishment of the intended act. This expression has to be read with the requirement in Section 11 (8) of the Act that the Chief Justice or the person or an institution designated by him in appointing an arbitrator shall have “due regard” to the two cumulative conditions contained in Sections 11 (8) (a) and (b) relating to qualifications and other considerations as are likely to secure the appointment of an independent and impartial arbitrator. As held by the Supreme Court in Northern Railway Administration, Ministry of Railway, New Delhi (supra), the Court must first ensure that the remedies provided for are exhausted. But at the same time, due regard has to be given to the qualifications required by the agreement and other considerations. The expression “due regard” means that proper attention to several circumstances have been focused. The expression “necessary” as a general rule can be broadly stated to be those things which are reasonably required to be done or legally ancillary to the accomplishment of the intended act. Necessary measures are the steps which are reasonably required to be taken, one of which is to secure appointment of an independent and impartial arbitrator, which aspect has been emphasised by the Parliament even in the newly introduced the Arbitration and Conciliation (Amendment) Act, 2015, especially in Clauses 1 and 5 of the Fifth Schedule with reference to explanation to Section 12 (1) (b) and Clauses 1 and 5 of Seventh Schedule with reference to Section 12 (5) of the Act.
Section 12 (1) of the Act provides that when a person is approached in connection with his possible appointment as an arbitrator, he shall disclose in writing any circumstances, (a) such as the existence either direct or indirect, of any past or present relationship with or interest in any of the parties or in relation to the subject matter in dispute, whether financial, business, professional or other kind, which is likely to give rise to justifiable doubts as to his independence or impartiality and (b) which are likely to affect his ability to devote sufficient time to the arbitration and in particular his ability to complete the entire arbitration within a period of twelve months. Section 12 (5) of the Act provides that notwithstanding any prior agreement to the contrary, any person whose relationship, with the parties or counsel or the subject matter of the dispute, falls under any of the categories specified in the Seventh Schedule, shall be ineligible to be appointed as an arbitrator. Clauses 1 of both Schedule Fifth and Seventh are similarly worded which provide that if the arbitrator is an employee, consultant, advisor or has other past or present business relationship with a party, it would give rise to justifiable doubts as to his independence or impartiality. Clauses 5 of both Schedule Fifth and Seventh also provide that for a similar consequence, if any arbitrator happens to be manager, director or part of the management, or has a similar controlling influence, in an affiliate of one of the parties if the affiliate is directly involved in the matters in dispute in the arbitration. Sub-section (5) of Section 12 of the Act has been given overriding effect over any prior agreement to the contrary. Therefore, independence and impartiality of arbitrator as mandated by Amending Act of 2015 has now been made paramount consideration for appointment of arbitrator. In view of the peculiar facts of this case, the Chairman & Managing Director, had by his dillydally and lackadaisical approach in conducting arbitral proceedings, lost the mandate to continue to act as arbitrator. The application filed by the applicant to terminate his mandate and appoint fresh arbitrator was pending before this Court. In spite of being informed of this fact and request for deferment, he deliberately passed the ex-parte award only with a view to frustrate this application.
The application filed by the applicant to terminate his mandate and appoint fresh arbitrator was pending before this Court. In spite of being informed of this fact and request for deferment, he deliberately passed the ex-parte award only with a view to frustrate this application. He thus having lost the mandate, the ex-parte award passed by him would have no legal sanctity and is liable to be ignored. In view of above discussion, this Court is inclined to allow this application and the same is accordingly allowed. Mr. J.P. Bansal, retired District Judge, 34-A, Hari Kishan Somani Marg, Hathroi Fort Scheme, Jaipur (Phone 0141-2363484) is hereby appointed as an independent sole arbitrator to resolve the disputes between the parties. The cost of arbitration proceedings and the arbitration fees shall be as per the Manual of Procedure for Alternative Dispute Resolution, 2009, of this Court, as amended from time to time. A copy of this order be sent to Mr. J.P. Bansal, retired District Judge, 34-A, Hari Kishan Somani Marg, Hathroi Fort Scheme, Jaipur (Phone 0141-2363484)