PERKINS EASTMAN ARCHITECTS DPC & ANR.C (INDIA) LTD. versus HSCC (INDIA) LTD on 26 November 2019

[2019] 17 S.C.R. 275

PERKINS EASTMAN ARCHITECTS DPC & ANR.

v.

HSCC (INDIA) LTD.

(Arbitration Application No. 32 of 2019)

NOVEMBER 26, 2019

[UDAY UMESH LALIT AND INDU MALHOTRA, JJ.]

Arbitration and Conciliation Act, 1996 :

ss. 2(1)(f), 11(12)(a) and 11(6) – Termination of contract –Appointment of sole Arbitrator – Application u/ss. 11(12)(a)and 11(6) by the contraCtor company on the grounds that soleArbitrator waS not appointed by Competent Authority; that suchappointment was beyond the period prescribed and that anindependent and impartial arbitrator was required to be appointed– Objection to maintainability of the application – Held : In thefacts of the present case, the arbiration is an InternationalCommercial Arbitration and hence the application is maintainable – However, the delay in appointing the Arbitrator cannot be saidto be of such magnitude to attract exercise of power u/s 11 – Ifthere are justifiable doubts as to the independence and impartialityof the sole arbitrator, and if other circumstances warrantappointment of an independent Arbitrator by ignoring theprocedure prescribed, such appointment can be made by the Court– In the facts of the present case, the application is entertainable – Retired Judge of Supreme Court appointed as the sole Arbitrator.

Arbitration:

Appointment of sole Arbitrator – Held : Where only oneparty has a right to appoint sole Arbitrator, its choice will alwayshave an element of exclusivity in determining or charting thecourse for dispute resolution – The person having interest in theoutcome or decision of the dispute, must not have the power toappoint sole arbitrator and in such case appointment can be madeby the Court.

Allowing the arbitration applications, the Court HELD: 1. It is not disputed by the respondent that it wasa requisite condition to declare a lead member of the Consortium

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Aand the applicant No.1 was shown to be the lead member of theConsortium. Even if the liability of both the applicants was statedin Clause 9 of the Consortium Agapplicant No.1 to be the leadmember. The lead member of the Consortium company i.e.applicant No.1 being an Architectural Firm having its registeredoffice in New York, requirements of Section 2(1)(f) of theBArbitration and Conciliation Act, 1996 are satisfied and thearbitration in the present case would be an “InternationalCommercial Arbitration” [Paras 8 and 10] [286-A-B; 289-A-B]

Larsen and Toubro Limited SCOMI Engineering BHDCv. Mumbai Metropolitan Region Development Authority(2019) 2 SCC 271 : [2018] 14 SCR 22 – relied on.

2. The communication invoking arbitration in terms ofClause 24 was sent by the Applicants on 28.06.2019 and theperiod within which the respondent was to make the necessaryDappointment expired on 28.07.2019. The next day was a workingday but the appointment was made on Tuesday, the 30[th] July,2019. Technically, the appointment was not within the timestipulated but such delay on part of the respondent could notbe said to be an infraction of such magnitude that exercise ofpower by the Court under Section 11 of the Act merely on thatEground is called for. [Para 12] [289-C-E]

3.1. In the present case, Clause 24 of the Agreementempowers the Chairman and Managing Director of therespondent to make the appointment of a sole arbitrator and saidFClause also stipulates that no person other than a personappointed by such Chairman and Managing Director of therespondent would act as an arbitrator. In a case where only oneparty has a right to appoint sole arbitrator, its choice will alwayshave an element of exclusivity in determining or charting thecourse for dispute resolution. Naturally, the person who has anGinterest in the outcome or decision of the dispute must not havethe power to appoint a sole arbitrator. That has to be taken asthe essence of the amendments brought in by the Arbitrationand Conciliation (Amendment) Act, 2015 (Act 3 of 2016) andrecognised by the decision of this Court in *TRF Limited. [ParasH13 and 16] [289-E-F; 295-B-D]

3.2 If there are justifiable doubts as to the independenceand impartiality of the person nominated, and if othercircumstances warrant appointment of an independent arbitratorby ignoring the procedure prescribed, such appointment can bemade by the Court. On the issue of necessity and desirability ofimpartial and independent arbitrators the matter was consideredby the Law Commission in its Report No.246 Paragraphs 53 to60 under the heading “Neutrality of Arbitrators”. Theimperatives of creating healthy arbitration environment demandthat the instant application deserves acceptance. [Paras 18 and20] [297-C-E; 300-B-C]

*TRF Limited v. Energo Engineering Projects Limited(2017) 8 SCC 377 : [2017] 7 SCR 409 ; Indian OilCorpn. Ltd. v. Raja Transport (P) Ltd. (2009) 8 SCC520 : [2009] 13 SCR 510 ; Voestapline Schienen Gmbhv. Delhi Metro Rail Corpn. Ltd. (2017) 4 SCC 665 –relied on.

Bharat Broadband Network Limited v. United TelecomsLimited (2019) 5 SCC 755 – referred to.

4. In the circumstances of the present case, a case is madeout to entertain the instant application preferred by theApplicants. Therefore, the application is accepted and the effectof the letter dated 30.07.2019 issued by the respondent and ofthe appointment of the arbitrator is annulled. In exercise of thepower conferred by Section 11(6) of the Act, Dr. Justice A.K.Sikri, former Judge of Supreme Court is appointed as the solearbitrator to decide all the disputes arising out of the Agreementdated 22.05.2017, between the parties, subject to the mandatorydeclaration made under the amended Section 12 of the Act withrespect to independence and impartiality and the ability todevote sufficient time to complete the arbitration within theperiod as per Section 29A of the Act. [Para 25] [302-E-G]

Walter Bau AG, Legal Successor of the OriginalContraCtor, Dyckerhoff And Widmann, A.G. v.MunicipAl Corporation of Greater Mumbai Andanother (2015) 3 SCC 800 : [2015] 2 SCR 37 ; TRFLimited v. Energo Engineering Projects Limited (2017)8 SCC 377 : [2017] 7 SCR 409 – relied on.

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CIVIL ORIGINAL JURISDICTION : Arbitration ApplicationCNo. 32 of 2019.

Application under Sections 11(6) read with Section 11(12)(a) ofthe Arbitration and Conciliation Act, 1996 and the Appointment ofArbitrators by the Chief Justice of India Scheme, 1996.

DWith

Arbitration Application Nos. 34 and 35 of 2019.

Amar Dave, Pranaya Goyal, Chiranjivi Sharma, Ms. PratyashiMehta, Advs. for the Appellants.

EGuru Krishna Kumar, Sr. Adv., Saurabh Mishra, Abhishek Singh,Ms. Samridhi Pal, Ms. Aashnaa Bhatia, Advs. for the Respondent.

The Judgment of the Court was delivered by UDAY UMESH LALIT, J.F1. This application under Section 11(6) read with Section11(12)(a) of Act[1] and under the Scheme[2] prays for the followingprincipal relief:

“(a) appoint a sole Arbitrator, in accordance with clause 24 ofthe Contract dated 22[nd] May, 2017 executed between the partiesGand the sole Arbitrator so appointed may adjudicate the disputesand differences between the parties arising from the saidContract.”

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1 The Arbitration and Conciliation Act, 1996

2 The Appointment of Arbitrators by the Chief Justice of India Scheme, 1996

2. The application has been filed with following assertions: - (A) As an executing agency of Ministry of Health andFamily Welfare, the respondent was desirous ofcomprehensive architectural planning and designing forthe works provided under Pradhan Mantri SwasthyaSuraksha Yojna (PMSSY). Therefore a request forProposals bearing RFP No.HSCC/3-AIIMS/Guntur/2016 was issued on 15.07.2016 for appointment ofDesign Consultants for the “comprehensive planning anddesigning, including preparation and development ofconcepts, master plan for the campus, preparation of allpreliminary and working drawings for various buildings/structures, including preparation of specifications andschedule of quantities’ for the proposed All India Instituteof Medical Sciences at Guntur, Andhra Pradesh”.

(B) In response to the RFP, the consortium of the Applicants,namely, (i) Perkins Eastman Architects DPC, anArchitectural firm having its registered office in NewYork and (ii) Edifice Consultants Private Limited, havingits office in Mumbai submitted their bid on 28.09.2016.Letter of Intent was issued on 31.01.2017 awarding theproject to the Applicants, the consideration beingRs.15.63 crores. A letter of award was issued in favourof the Applicants on 22.02.2017 and a contract wasentered into between the Applicants and the respondenton 22.05.2017, which provided inter alia for disputeresolution in Clause 24. The relevant portion of saidClause was as under:

“24.0 DISPUTE RESOLUTION

24.1 Except as otherwise provided in the contract all questionsand disputes relating to the meaning of the specifications, design,drawings and instructions herein before mentioned and as to thequality of services rendered for the works or as to any otherquestion, claim, right, matter or thing whatsoever in any wayarising out of or relating to the contract, design, drawings,specifications estimates instructions, orders or these conditionsor otherwise concerning the works or the execution or failure toexecute the same whether arising during the progress of the work A

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or after the cancellation, termination, completion or abandonmentthereof thereof shall be dealt with as mentioned hereinafter:

(i) If the Design Consultant considers any work demandedof him to be outside the requirements of the contract ordisputes on any drawings, record or decision given inwriting by HSCC on any matter in connection witharising out of the contract or carrying out of the work,to be unacceptable, he shall promptly within 15 daysrequest CGM, HSCC in writing for written instructionor decision. There upon, the CGM, HSCC shall give hiswritten instructions or decision within a period of onemonth from the receipt of the Design Consultant’s letter.If the CGM, HSCC fails to give his instructions ordecision in writing within the aforesaid period or if theDesign Consultant(s) is dissatisfied with the instructionsor decision of the CGM, HSCC, the DesignConsultants(s) may, within 15 days of the receipt ofdecision, appeal to the Director (Engg.) HSCC who shalloffer an opportunity to the Design Consultant to beheard, if the latter so desires, and to offer evidence insupport of his appeal. The Director (Engg.), HSCC shallgive his decision within 30 days of receipt of DesignConsultant’s appeal. If the Design Consultant isdissatisfied with the decision, the Design Consultantshall within a period of 30 days from receipt of thisdecision, give notice to the CMD, HSCC for appointmentof arbitrator failing which the said decision shall be final,binding and conclusive and not referable to adjudicationby the arbitrator.

(ii) Except where the decision has become final, binding andconclusive in terms of sub-Para (i) above disputes ordifference shall be referred for adjudication througharbitration by a sole arbitrator appointed by the CMDHSCC within 30 days form the receipt of request fromthe Design Consultant. If the arbitrator so appointed isunable or unwilling to act or resigns his appointment orvacates his office due to any reason, whatsoeveranother sole arbitrator shall be appointed in the manneraforesaid. Such person shall be entitled to proceed with

the reference from the reference from the stage atwhich it was left by his predecessor. It is a term ofthis contract that the party invoking arbitration shall givea list of disputes with amounts claimed in respect of eachsuch dispute along with the notice for appointment ofarbitrator and giving reference to the rejection by theCMD, HSCC of the appeal. It is also a term of thiscontract that no person other than a person appointedby such CMD, HSCC as aforesaid should act asarbitrator. It is also a term of the contract that if theDesign Consultant does not make any demand forappointment of arbitrator in respect of any claims inwriting as aforesaid within 120 days of receiving theintimation from HSCC that the final bill is ready forpayment, the claim of the Design Consultant shall bedeemed to have been waived and absolutely barred andHSCC shall be discharged and released of all liabilitiesunder the contract and in respect of these claims. Thearbitration shall be conducted in accordance with theprovisions of the Arbitration and Conciliation Act, 1996(26 of 1996) or any statutory modifications or re-enactment thereof and the rules made thereunder andfor the time being in force shall apply to the arbitrationproceeding under this clause.”

(C) Within six days of the signing of the said contract, in letterdated 26.5.2017 the respondent alleged failure on part of the Applicantswhich was followed by stop work notice dated 03.11.2017. It is thecase of the Applicants that officials of the respondents were deliberatelytrying to stall the project and were non-co-operative right from the initialstages.

(D) Later, a termination notice was issued by the respondent on11.01.2019 alleging non-compliance of contractual obligations on partof the Applicants, which assertions were denied. However, terminationletter was issued on 20.02.2019.On 11.04.2019 a notice was issued bythe Advocate for the applicants invoking the dispute resolution Clausenamely Clause 24 as aforesaid raising a claim of Rs.20.95 crores.According to the Applicants, a decision in respect of the notice dated11.04.2019 was required to be taken within one month in terms ofClause 24 of the contract but a communication was sent by the AB

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Arespondent on 10.05.2019 intimating that a reply to the notice wouldbe sent within 30 days.

(E) An appeal was filed by the Applicants before the Director(Engineering) in terms of said Clause 24 but there was complete failureon part of the Director (Engineering) to discharge the obligations inBterms of said Clause 24. Therefore, by letter dated 28.06.2019 the ChiefManaging Director of the respondent was called upon to appoint a solearbitrator in terms of said Clause 24. However, no appointment of anarbitrator was made within thirty days but a letter was addressed byChief General Manager of the respondent on 30.07.2019 purportedlyappointing one Major General K.T. Gajria as the sole arbitrator.

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(F) The relevant averments in para 3 of the application are:- “z. The 30 (thirty) day time period for appointment of a solearbitrator stood expired on 28[th] July, 2019 and yet the CMD ofthe respondent failed to appoint a sole arbitrator or even respondto the letter dated 28[th] June, 2019 (received on 29[th] June, 2019).

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aa. Shockingly, in continuance of its highhanded approach andin contravention to its own letter dated 24[th] June, 2019, the CGMof the Respondent addressed the Purported Appointment Letterdated 30[th] July, 2019 to one Major General K.T. Gajria therebypurportedly appointing him as a sole arbitrator in the matter. Onthe same date, the CGM of the Respondent also addressed aletter to the Applicants inter alia informing about the purportedappointment of Mr. Gajria”

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(a) The Applicants had duly invoked the arbitration clause; (b) The Chairman and Managing Director was thecompetent authority to appoint a sole arbitrator;

(c) But the Chief General Manager of the respondentwrongfully appointed the sole arbitrator; G

(d) Such appointment was beyond the period prescribed; (e) In any case, an independent and impartial arbitrator isrequired to be appointed.

4. In response to the application, an affidavit-in-reply has beenHfiled by the respondent denying all material allegations. It is accepted

that the contract entered into between the parties contains Clause 24regarding dispute resolution. It is, however, disputed that there wasany inaction on part of the respondent in discharging their obligationsin terms of Clause 24. It is submitted, inter alia, that (a) The appointment of Major General K.T. Gajria was inconsonance with Clause 24 of the contract; (b) Such appointment could not in any way be said to beillegal;

(c) There was no occasion to file an application seekingappointment of any other person under the provisionsof Section 11(6) read with Section 11(12)(a) of the Act;and (d) In any case, the arbitration in the present matter wouldnot be an International Commercial Arbitration withinthe meaning of Section 2(1)(f) of the Act.

5. We heard Mr. Amar Dave, learned Advocate for theApplicants and Mr. Guru Krishna Kumar, learned Senior Advocate forthe respondent.

It was submitted by Mr. Dave, learned Advocate that on accountof failure on part of the respondent in discharging its obligations in termsof Clause 24, the applicants would be entitled to maintain the presentApplication and seek appointment of an arbitrator as prayed for. It wasfurther submitted that the appointment process contemplated in Clause24 gave complete discretion to the Chairman and Managing Directorof the respondent to make an appointment of an arbitrator of his choice,the Chairman and Managing Director of the respondent would naturallybe interested in the outcome or decision in respect of the dispute, thepre-requisite of element of impartiality would, therefore, beconspicuously absent in such process; and as such it would be desirablethat this Court makes an appropriate appointment of an arbitrator.Reliance was placed on the decisions of this Court in Walter Bau AG,Legal Successor of the Original Contractor, Dyckerhoff andWidmann, A.G. v. Municipal Corporation of Greater Mumbai andanother[3] and TRF Limited v. Energo Engineering Projects Limited[4]

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4 (2017) 8 SCC 377

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Ain support of the submissions. Mr. Dave, learned Advocate also reliedupon the decision of this Court in Larsen and Toubro Limited SCOMIEngineering BHD v. Mumbai Metropolitan Region DevelopmentAuthority[5]to bring home the point that the arbitration in the presentmatter would be an International Commercial Arbitration.

BMr. Guru Krishna Kumar, learned Senior Advocate appearing forthe respondent submitted that no case was made out to maintain theinstant application. He submitted that two basic submissions were raisedin para 3 in sub-para (z) and (aa) of the application that the Chairmanand Managing Director failed to appoint the sole arbitrator within 30days of the requisition dated 28.06.2019 and that it was the ChiefCGeneral Manager of the respondent who purportedly made theappointment of a sole arbitrator on 30.07.2019. The infirmities thusprojected were on two counts, namely, for over-stepping the limit of30 days; and secondly the appointment was not made by the Chairmanand Managing Director of the respondent. He pointed out that the periodin terms of requisition dated 28.06.2019 expired on Friday and theDappointment was made on the first available working day. Secondly,the appointment was actually made by the Chairman and ManagingDirector but was conveyed by the Chief General Manager, and as suchthe alleged infirmities were completely non-existent. He further submittedthat arbitration, if any, in the instant matter would not be an InternationalECommercial Arbitration.

6. The present application, therefore, raises two basic issues; firstwhether the arbitration in the present case would be an InternationalCommercial Arbitration or not. In case, it is not, then this Court cannotdeal with the application under Section 11(6) read with Section 11(12)(a)of the Act. The second issue is whether a case is made out for exerciseFof power by the Court to make an appointment of an arbitrator.

7. During the course of hearing, reliance was placed by theApplicants on the Consortium Agreement entered into between theApplicant No.1 and the Applicant No.2 on 20.09.2016 which describedthe Applicant No.1 as the lead member of the Consortium. The relevantGrecital and the Clause of the Agreement were as under:

“1. WHEREAS all the Parties agree that Perkins Eastman willbe the focal point for the agreement and interaction with theclient.”

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“9. Perkins Eastman and M/s. Edifice Consultants are jointlyand severally responsible for the execution of the project”

In terms of requirements of the bid documents and RFP a“Declaration for Lead Member of the Consortium (Form E)” was alsosubmitted. The declaration was as under:

“WHEREAS M/s. HSCC (India) Ltd. (HSCC) (the Client) hasinvited Bids/Bids from the interested parties for providingComprehensive Planning and Designing of the Proposed All IndiaInstitute of Medical Sciences at Mangalagiri, Guntur (AP).

AND WHEREAS, the members of the Consortium areinterested in bidding for the Project and implementing the Projectin accordance with the terms and conditions of the Request forBid (RFP) document, Terms of Reference, Client’s Requirement,Notice Inviting Bid, Instructions to Bidders, Conditions of Contractand other connected documents in respect of the Project, and AND WHEREAS, it is necessary under the RFP document forthe members of the Consortium Bidder to designate one of themas the Lead Manager with all necessary power and authority todo for and on behalf of the Consortium bidder, all acts, deedsand things as may be necessary in connection with the ConsortiumBidder’s proposal for the Project.

NOW THIS DECLARATION WITNESSETH THAT;

We, Perkins Eastman Architects DPC, and having its registeredoffice at 115 5[th] Ave Floor 3, New York, NY 10003-10004, USAand M/s. Edifice Consultants Private Limited having its registeredoffice at Srirams Arcade, 3[rd] Floor, Opp. Govandi P.O., OffGovandi Station Road, Govandi East, Mumbai, Maharashtra400088 do hereby designate Perkins Eastman Architects DPCbeing one of the members of the Consortium, as the LeadMember of the Consortium, to do on behalf of the Consortium,all or any of the acts, deeds of things necessary or incidental tothe Consortium’s Application/Bid for the Project, includingsubmission of Application/Bid, participating in conferences,responding to queries, submission of information/documents andgenerally to represent the Consortium in all its dealings withHSCC, any other Government Agency or any person, inconnection with the Project until culmination of the process ofbidding and thereafter till the completion of the Contract.”

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A8. It is not disputed by the respondent that it was a requisitecondition to declare a lead member of the Consortium and that byaforesaid declaration the applicant No.1 was shown to be the leadmember of the Consortium. The reliance is however placed by therespondent on Clause 9 of the Consortium Agreement by virtue of whichboth the Applicants would be jointly and severely responsible for theBexecution of the project. It is clear that the declaration shows that theApplicant No.1 was accepted to be the lead member of the Consortium.Even if the liability of both the Applicants was stated in Clause 9 to bejoint and several, that by itself would not change the status of theApplicant No.1 to be the lead member. We shall, therefore, proceedCon the premise that Applicant No.1 is the lead member of theConsortium.

9. In Larsen and Toubro Limited SCOMI Engineering BHD[5]more or less similar fact situation came up for consideration. The onlydistinction was that the lead member in the consortium was an entityDregistered in India. Paragraphs 2, 3, 4, 15, 17, 18 and 19 of the decisionare as under:

“2. Since disputes arose between the parties to the agreement,various interim claims had been made by the Consortium of M/s Larsen and Toubro, an Indian company, together with ScomiEEngineering Bhd, a company incorporated in Malaysia, for whichthe Consortium has filed this petition under Section 11 of the Actto this Court, since according to them, one of the parties to thearbitration agreement, being a body corporate, incorporated inMalaysia, would be a body corporate, which is incorporated in acountry other than India, which would attract Section 2(1)(f)(ii)Fof the Act.

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3. Shri Gopal Jain, learned Senior Counsel appearing on behalfof the Consortium, has taken us through the agreement, in whichhe strongly relies upon the fact that the two entities, that is, theIndian company and the Malaysian company, though stated tobe a Consortium, are jointly and severally liable, to the employer.The learned Senior Counsel has also relied upon the fact thatthroughout the working of the contract, separate claims have beenmade, which have been rejected by the Mumbai MetropolitanRegion Development Authority (hereinafter referred to as“MMRDA”). He has also further relied upon the fact that by at G

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least three letters, during the working of the agreement, theclaims have in fact been rejected altogether and that, therefore,there is no impediment in invoking the arbitration Clause underSection 20.4 of the general conditions of contract (hereinafterreferred to as “GCC”), as the procedure outlined by Clauses 20.1to 20.3 had already been exhausted.

4. On the other hand, Mr Shyam Divan, learned Senior Counselappearing on behalf of MMRDA, the respondent, has relied uponboth the contract dated 9-1-2009 as well as the actual consortiumagreement dated 4-6-2008 between the Indian company and theMalaysian company, which, when read together, would show thatthey are really an unincorporated association and would, therefore,fall within Section 2(1)(f)(iii) as being an association or a bodyof individuals, provided the central management and control isexercised in any country other than India.

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15. Section 2(1)(f)(iii) of the Act refers to two different sets ofpersons: an “association” as distinct and separate from a “bodyof individuals”. For example, under Section 2(31) of the IncomeTax Act, 1961, “person” is defined as including, under sub-clause(v), an association of persons, or body of individuals, whetherincorporated or not. It is in this sense, that an association isreferred to in Section 2(1)(f)(iii) which would therefore includea consortium consisting of two or more bodies corporate, at leastone of whom is a body corporate incorporated in a country otherthan India.

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17. Law Commission Report No. 246 of August 2014, whichmade several amendments to the Arbitration and Conciliation Act,1996, gave the following reason for deleting the words “acompany or”:

“(iii) In sub-section (1), clause (f), sub-clause (iii), delete thewords “a company or” before the words “an association or abody of individuals”.

[Note.—The reference to “a company” in sub-section (iii) hasbeen removed since the same is already covered under sub- A

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section (ii). The intention is to determine the residence of acompany based on its place of incorporation and not the placeof central management/control. This further re-enforces the“place of incorporation” principle laid down by the Supreme Courtin TDM Infrastructure (P) Ltd. v. UE Development India (P)Ltd.[6], and adds greater certainty in case of companies having adifferent place of incorporation and place of exercise of centralmanagement and control.]”

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It would become clear that prior to the deletion of the expression“a company or”, there were three sets of persons referred to inSection 2(1)(f)(iii) as separate and distinct persons who wouldCfall within the said sub-clause. This does not change due to thedeletion of the phrase “a company or” for the reason given bythe Law Commission. This is another reason as to why “anassociation” cannot be read with “body of individuals” whichfollows it but is a separate and distinct category by itself, as isDunderstood from the definition of “person” as defined in theIncome Tax Act referred to above.

18. This being the case, coupled with the fact, as correctly arguedby Shri Divan, that the Indian company is the lead partner, andthat the Supervisory Board constituted under the consortiumagreement makes it clear that the lead partner really has theEdetermining voice in that it appoints the Chairman of the saidBoard (undoubtedly, with the consent of other members); andthe fact that the Consortium’s office is in Wadala, Mumbai asalso that the lead member shall lead the arbitration proceedings,would all point to the fact that the central management andFcontrol of this Consortium appears to be exercised in India andnot in any foreign nation.

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19. This being the case, we dismiss the petition filed underSection 11 of the Act, as there is no “international commercialarbitration” as defined under Section 2(1)(f) of the Act for thepetitioner to come to this Court. We also do not deem it necessaryto go into whether the appropriate stage for invoking arbitrationhas yet been reached.”

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10. It was thus held that “Association” and “Body of individuals”referred to in Section 2(1)(f) of the Act would be separate categories.

However, the lead member of the Association in that case being anIndian entity, the “Central Management and Control” of the Associationwas held to be in a country other than India. Relying on said decisionwe conclude that the lead member of the Consortium company i.e.Applicant No.1 being an Architectural Firm having its registered officein New York, requirements of Section 2(1)(f) of the Act are satisfiedand the arbitration in the present case would be an “InternationalCommercial Arbitration”.

11. That takes us to the second issue, namely, whether a casehas been made out for exercise of power by the Court for anappointment of an arbitrator.

12. The communication invoking arbitration in terms of Clause24 was sent by the Applicants on 28.06.2019 and the period within whichthe respondent was to make the necessary appointment expired on28.07.2019. The next day was a working day but the appointment wasmade on Tuesday, the 30[th] July, 2019. Technically, the appointment wasnot within the time stipulated but such delay on part of the respondentcould not be said to be an infraction of such magnitude that exerciseof power by the Court under Section 11 of the Act merely on that groundis called for.

13. However, the point that has been urged, relying upon thedecision of this Court in Walter Bau AG[3]and TRF Limited[4], requiresconsideration. In the present case Clause 24 empowers the Chairmanand Managing Director of the respondent to make the appointment ofa sole arbitrator and said Clause also stipulates that no person otherthan a person appointed by such Chairman and Managing Director ofthe respondent would act as an arbitrator. In TRF Limited[4 ], a Benchof three Judges of this Court, was called upon to consider whether theappointment of an arbitrator made by the Managing Director of therespondent therein was a valid one and whether at that stage anapplication moved under Section 11(6) of the Act could be entertainedby the Court. The relevant Clause, namely, Clause 33 which providedfor resolution of disputes in that case was under:

“33. Resolution of dispute/arbitration

(a) In case any disagreement or dispute arises between thebuyer and the seller under or in connection with the PO,both shall make every effort to resolve it amicably bydirect informal negotiation.

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(b) If, even after 30 days from the commencement of suchinformal negotiation, seller and the buyer have not beenable to resolve the dispute amicably, either party mayrequire that the dispute be referred for resolution to theformal mechanism of arbitration.

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(c) All disputes which cannot be settled by mutualnegotiation shall be referred to and determined byarbitration as per the Arbitration and Conciliation Act,1996 as amended.

(d) Unless otherwise provided, any dispute or differencebetween the parties in connection with this agreementshall be referred to sole arbitration of the ManagingDirector of buyer or his nominee. Venue of arbitrationshall be Delhi, and the arbitration shall be conducted inEnglish language.

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(e) The award of the Tribunal shall be final and binding onboth, buyer and seller.”

14. In TRF Limited[4], the Agreement was entered into beforethe provisions of the Amending Act (Act No.3 of 2016) came into force.It was submitted by the appellant that by virtue of the provisions of theEAmending Act and insertion of the Fifth and Seventh Schedules in theAct, the Managing Director of the respondent would be a person havingdirect interest in the dispute and as such could not act as an arbitrator.The extension of the submission was that a person who himself wasdisqualified and disentitled could also not nominate any other person toact as an arbitrator. The submission countered by the respondent thereinFwas as under: - E

“7.1. The submission to the effect that since the ManagingDirector of the respondent has become ineligible to act as anarbitrator subsequent to the amendment in the Act, he could alsonot have nominated any other person as arbitrator is absolutelyunsustainable, for the Fifth and the Seventh Schedulesfundamentally guide in determining whether circumstances existwhich give rise to justifiable doubts as to the independence andimpartiality of the arbitrator. To elaborate, if any person whoserelationship with the parties or the counsel or the subject-matterof dispute falls under any of the categories specified in the G

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Seventh Schedule, he is ineligible to be appointed as an arbitratorbut not otherwise.

The issue was discussed and decided by this Court as under:-50. First, we shall deal with Clause (d). There is no quarrel thatby virtue of Section 12(5) of the Act, if any person who fallsunder any of the categories specified in the Seventh Scheduleshall be ineligible to be appointed as the arbitrator. There is nodoubt and cannot be, for the language employed in the SeventhSchedule, the Managing Director of the Corporation has becomeineligible by operation of law. It is the stand of the learned SeniorCounsel for the appellant that once the Managing Directorbecomes ineligible, he also becomes ineligible to nominate.Refuting the said stand, it is canvassed by the learned SeniorCounsel for the respondent that the ineligibility cannot extend toa nominee if he is not from the Corporation and more so whenthere is apposite and requisite disclosure. We think it appropriateto make it clear that in the case at hand we are neither concernedwith the disclosure nor objectivity nor impartiality nor any suchother circumstance. We are singularly concerned with the issue,whether the Managing Director, after becoming ineligible byoperation of law, is he still eligible to nominate an arbitrator. Atthe cost of repetition, we may state that when there are twoparties, one may nominate an arbitrator and the other may appointanother. That is altogether a different situation. If there is a clauserequiring the parties to nominate their respective arbitrator, theirauthority to nominate cannot be questioned. What really in thatcircumstance can be called in question is the proceduralcompliance and the eligibility of their arbitrator depending uponthe norms provided under the Act and the Schedules appendedthereto. But, here is a case where the Managing Director is the“named sole arbitrator” and he has also been conferred with thepower to nominate one who can be the arbitrator in his place.Thus, there is subtle distinction. In this regard, our attention hasbeen drawn to a two-Judge Bench decision in State of Orissav. Commr. of Land Records & Settlement[7]. In the said case,the question arose, can the Board of Revenue revise the orderpassed by its delegate. Dwelling upon the said proposition, theCourt held: (SCC p. 173, para 25)

7 (1998) 7 SCC 162

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“25. We have to note that the Commissioner when he exercisespower of the Board delegated to him under Section 33 of theSettlement Act, 1958, the order passed by him is to be treatedas an order of the Board of Revenue and not as that of theCommissioner in his capacity as Commissioner. This position isclear from two rulings of this Court to which we shall presentlyrefer. The first of the said rulings is the one decided by theConstitution Bench of this Court in Roop Chand v. State ofPunjab[8]. In that case, it was held by the majority that wherethe State Government had, under Section 41(1) of the East PunjabHoldings (Consolidation and Prevention of Fragmentation) Act,1948, delegated its appellate powers vested in it under Section21(4) to an “officer”, an order passed by such an officer wasan order passed by the State Government itself and “not an orderpassed by any officer under this Act” within Section 42 and wasnot revisable by the State Government. It was pointed out thatfor the purpose of exercise of powers of revision by the Stateunder Section 42 of that Act, the order sought to be revised mustbe an order passed by an officer in his own right and not as adelegate of the State. The State Government was, therefore, notentitled under Section 42 to call for the records of the case whichwas disposed of by an officer acting as its delegate.”

(emphasis in original)

(emphasis in original)

51. Be it noted in the said case, reference was made to BehariKunj Sahkari Awas Samiti v. State of U.P.[9], which followedthe decision in Roop Chand v. State of Punjab[8]. It is seemlyto note here that the said principle has been followed in IndoreVikas Pradhikaran[10].

52. Mr Sundaram has strongly relied on Pratapchand Nopaji[11].In the said case, the three-Judge Bench applied the maxim “quifacit per alium facit per se”. We may profitably reproduce thepassage: (SCC p. 214, para 9)

8 AIR 1963 SC 1503

9 (1997) 7 SCC 37

10 Indore Vikas Pradhikaran v. Pure Industrial Coke & Chemicals Ltd., (2007) 8 SCC705

H11 Pratapchand Nopaji v. Kotrike Venkata Setty & Sons, (1975) 2 SCC 208

“9. … The principle which would apply, if the objects arestruck by Section 23 of the Contract Act, is embodied in themaxim: “qui facit per alium facit per se” (what one doesthrough another is done by oneself). To put it in another form,that which cannot be done directly may not be done indirectlyby engaging another outside the prohibited area to do theillegal act within the prohibited area. It is immaterial whether,for the doing of such an illegal act, the agent employed is giventhe wider powers or authority of the “pucca adatia”, or, asthe High Court had held, he is clothed with the powers of anordinary commission agent only.”

53. The aforesaid authorities have been commended to us toestablish the proposition that if the nomination of an arbitratorby an ineligible arbitrator is allowed, it would tantamount tocarrying on the proceeding of arbitration by himself. Accordingto the learned counsel for the appellant, ineligibility strikes at theroot of his power to arbitrate or get it arbitrated upon by anominee.

54. In such a context, the fulcrum of the controversy would be,can an ineligible arbitrator, like the Managing Director, nominatean arbitrator, who may be otherwise eligible and a respectableperson. As stated earlier, we are neither concerned with theobjectivity nor the individual respectability. We are only concernedwith the authority or the power of the Managing Director. Byour analysis, we are obligated to arrive at the conclusion that oncethe arbitrator has become ineligible by operation of law, he cannotnominate another as an arbitrator. The arbitrator becomesineligible as per prescription contained in Section 12(5) of the Act.It is inconceivable in law that person who is statutorily ineligiblecan nominate a person. Needless to say, once the infrastructurecollapses, the superstructure is bound to collapse. One cannothave a building without the plinth. Or to put it differently, oncethe identity of the Managing Director as the sole arbitrator is lost,the power to nominate someone else as an arbitrator isobliterated. Therefore, the view expressed by the High Court isnot sustainable and we say so.”

15. It was thus held that as the Managing Director becameineligible by operation of law to act as an arbitrator, he could not nominate AB

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Aanother person to act as an arbitrator and that once the identity of theManaging Director as the sole arbitrator was lost, the power to nominatesomeone else as an arbitrator was also obliterated. The relevant Clausein said case had nominated the Managing Director himself to be thesole arbitrator and also empowered said Managing Director to nominateanother person to act as an arbitrator. The Managing Director thus hadBtwo capacities under said Clause, the first as an arbitrator and the secondas an appointing authority. In the present case we are concerned withonly one capacity of the Chairman and Managing Director and that isas an appointing authority.

We thus have two categories of cases. The first, similar to theCone dealt with in TRF Limited[4] where the Managing Director himselfis named as an arbitrator with an additional power to appoint any otherperson as an arbitrator. In the second category, the Managing Directoris not to act as an arbitrator himself but is empowered or authorised toappoint any other person of his choice or discretion as an arbitrator.DIf, in the first category of cases, the Managing Director was foundincompetent, it was because of the interest that he would be said to behaving in the outcome or result of the dispute. The element of invaliditywould thus be directly relatable to and arise from the interest that hewould be having in such outcome or decision. If that be the test, similarinvalidity would always arise and spring even in the second categoryEof cases. If the interest that he has in the outcome of the dispute, istaken to be the basis for the possibility of bias, it will always be presentirrespective of whether the matter stands under the first or secondcategory of cases. We are conscious that if such deduction is drawnfrom the decision of this Court in TRF Limited[4], all cases having clausesFsimilar to that with which we are presently concerned, a party to theagreement would be disentitled to make any appointment of an Arbitratoron its own and it would always be available to argue that a party or anofficial or an authority having interest in the dispute would be disentitledto make appointment of an Arbitrator.

16. But, in our view that has to be the logical deduction fromGTRF Limited[4]. Paragraph 50 of the decision shows that this Court wasconcerned with the issue, “whether the Managing Director, afterbecoming ineligible by operation of law, is he still eligible to nominatean Arbitrator” The ineligibility referred to therein, was as a result ofoperation of law, in that a person having an interest in the dispute or inHthe outcome or decision thereof, must not only be ineligible to act as an arbitrator but must also not be eligible to appoint anyone else as anarbitrator and that such person cannot and should not have any role incharting out any course to the dispute resolution by having the powerto appoint an arbitrator. The next sentences in the paragraph, furthershow that cases where both the parties could nominate respectivearbitrators of their choice were found to be completely a differentsituation. The reason is clear that whatever advantage a party mayderive by nominating an arbitrator of its choice would get counterbalanced by equal power with the other party. But, in a case whereonly one party has a right to appoint a sole arbitrator, its choice willalways have an element of exclusivity in determining or charting thecourse for dispute resolution. Naturally, the person who has an interestin the outcome or decision of the dispute must not have the power toappoint a sole arbitrator. That has to be taken as the essence of theamendments brought in by the Arbitration and Conciliation (Amendment)Act, 2015 (Act 3 of 2016) and recognised by the decision of this Courtin TRF Limited[4].

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17. We must also at this stage refer to the following observationsmade by this Court in para 48 of its decision in Indian Oil Corpn.Ltd. v. Raja Transport (P) Ltd.[12], which were in the context that wasobtaining before Act 3 of 2016 had come into force: - “48. In the light of the above discussion, the scope of Section11 of the Act containing the scheme of appointment of arbitratorsmay be summarised thus:

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(i) Where the agreement provides for arbitration with threearbitrators (each party to appoint one arbitrator and thetwo appointed arbitrators to appoint a third arbitrator),Fin the event of a party failing to appoint an arbitratorwithin 30 days from the receipt of a request from theother party (or the two nominated arbitrators failing toagree on the third arbitrator within 30 days from the dateof the appointment), the Chief Justice or his designatewill exercise power under sub-section (4) of Section 11Gof the Act.

(ii) Where the agreement provides for arbitration by a solearbitrator and the parties have not agreed upon anyappointment procedure, the Chief Justice or his 12 (2009) 8 SCC 520

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designate will exercise power under sub-section (5) ofSection 11, if the parties fail to agree on the arbitrationwithin thirty days from the receipt of a request by a partyfrom the other party.

(iii) Where the arbitration agreement specifies theappointment procedure, then irrespective of whether thearbitration is by a sole arbitrator or by a three-memberTribunal, the Chief Justice or his designate will exercisepower under sub-section (6) of Section 11, if a partyfails to act as required under the agreed procedure (orthe parties or the two appointed arbitrators fail to reachan agreement expected of them under the agreedprocedure or any person/institution fails to perform anyfunction entrusted to him/it under that procedure).

(iv) While failure of the other party to act within 30 dayswill furnish a cause of action to the party seekingarbitration to approach the Chief Justice or his designatein cases falling under sub-sections (4) and (5), such atime-bound requirement is not found in sub-section (6)of Section 11. The failure to act as per the agreedprocedure within the time-limit prescribed by thearbitration agreement, or in the absence of anyprescribed time-limit, within a reasonable time, willenable the aggrieved party to file a petition under Section11(6) of the Act.

(v) Where the appointment procedure has been agreedbetween the parties, but the cause of action for invokingthe jurisdiction of the Chief Justice or his designate underclauses (a), (b) or (c) of sub-section (6) has not arisen,then the question of the Chief Justice or his designateexercising power under sub-section (6) does not arise.The condition precedent for approaching the ChiefJustice or his designate for taking necessary measuresunder sub-section (6) is that

(i) a party failing to act as required under the agreedappointment procedure; or

(ii) the parties (or the two appointed arbitrators) failingto reach an agreement expected of them under theagreed appointment procedure; or

(iii) a person/institution who has been entrusted with anyfunction under the agreed appointment procedure,failing to perform such function.

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(vi) The Chief Justice or his designate while exercisingpower under sub-section (6) of Section 11 shallendeavour to give effect to the appointmentBprocedure prescribed in the arbitration clause.

(vii) If circumstances exist, giving rise to justifiable doubtsas to the independence and impartiality of the personnominated, or if other circumstances warrantappointment of an independent arbitrator by ignoringthe procedure prescribed, the Chief Justice or hisdesignate may, for reasons to be recorded ignore thedesignated arbitrator and appoint someone else.”

CDEF

18. Sub para (vii) of aforesaid paragraph 48 lays down that ifthere are justifiable doubts as to the independence and impartiality ofthe person nominated, and if other circumstances warrant appointmentof an independent arbitrator by ignoring the procedure prescribed, suchappointment can be made by the Court. It may also be noted that onthe issue of necessity and desirability of impartial and independentarbitrators the matter was considered by the Law Commission in itsreport No.246. Paragraphs 53 to 60 under the heading “Neutrality ofArbitrators” are quoted in the Judgment of this Court in VoestaplineSchienen Gmbh v. Delhi Metro Rail Corpn. Ltd.[13], while paras 59and 60 of the report stand extracted in the decision of this Court inBharat Broadband Network Limited v. United Telecoms Limited[14].For the present purposes, we may rely on paragraph 57, which is tothe following effect:-

“57. The balance between procedural fairness and binding natureof these contracts, appears to have been tilted in favour of thelatter by the Supreme Court, and the Commission believes thepresent position of law is far from satisfactory. Since theprinciples of impartiality and independence cannot be discardedat any stage of the proceedings, specifically at the stage ofconstitution of the Arbitral Tribunal, it would be incongruous tosay that party autonomy can be exercised in complete disregard G

13 (2017) 4 SCC 665

14 (2019) 5 SCC 755

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of these principles — even if the same has been agreed prior tothe disputes having arisen between the parties. There are certainminimum levels of independence and impartiality that shouldbe required of the arbitral process regardless of the parties’apparent agreement. A sensible law cannot, for instance,permit appointment of an arbitrator who is himself a partyto the dispute, or who is employed by (or similarly dependenton) one party, even if this is what the parties agreed. TheCommission hastens to add that Mr P.K. Malhotra, the ex officiomember of the Law Commission suggested having an exceptionfor the State, and allow State parties to appoint employeearbitrators. The Commission is of the opinion that, on this issue,there cannot be any distinction between State and non-Stateparties. The concept of party autonomy cannot be stretched toa point where it negates the very basis of having impartial andindependent adjudicators for resolution of disputes. In fact, whenthe party appointing an adjudicator is the State, the duty toappoint an impartial and independent adjudicator is thatmuch more onerous — and the right to natural justice cannotbe said to have been waived only on the basis of a “prior”agreement between the parties at the time of the contract andbefore arising of the disputes.”

19. In Voestalpine[3], this Court dealt with independence andimpartiality of the arbitrator as under:

“20. Independence and impartiality of the arbitrator are thehallmarks of any arbitration proceedings. Rule against bias is oneof the fundamental principles of natural justice which applied toall judicial and quasi-judicial proceedings. It is for this reason thatnotwithstanding the fact that relationship between the parties tothe arbitration and the arbitrators themselves are contractual innature and the source of an arbitrator’s appointment is deducedfrom the agreement entered into between the parties,notwithstanding the same non-independence and non-impartialityof such arbitrator (though contractually agreed upon) wouldrender him ineligible to conduct the arbitration. The genesis behindthis rational is that even when an arbitrator is appointed in termsof contract and by the parties to the contract, he is independentof the parties. Functions and duties require him to rise above thepartisan interest of the parties and not to act in, or so as to further,the particular interest of either parties. After all, the arbitrator

has adjudicatory role to perform and, therefore, he must beindependent of parties as well as impartial. The United KingdomSupreme Court has beautifully highlighted this aspect inHashwani v. Jivraj[15] in the following words: (WLR p. 1889, para45)

“45. … the dominant purpose of appointing an arbitrator orarbitrators is the impartial resolution of the dispute betweenthe parties in accordance with the terms of the agreementand, although the contract between the parties and thearbitrators would be a contract for the provision of personalservices, they were not personal services under the directionof the parties.”

21. Similarly, Cour de Cassation, France, in a judgment deliveredin 1972 in Consorts Ury, underlined that:

“an independent mind is indispensable in the exercise of judicialpower, whatever the source of that power may be, and it isone of the essential qualities of an arbitrator.”

22. Independence and impartiality are two different concepts.An arbitrator may be independent and yet, lack impartiality, orvice versa. Impartiality, as is well accepted, is a more subjectiveconcept as compared to independence. Independence, which ismore an objective concept, may, thus, be more straightforwardlyascertained by the parties at the outset of the arbitrationproceedings in light of the circumstances disclosed by thearbitrator, while partiality will more likely surface during thearbitration proceedings.

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30. Time has come to send positive signals to the internationalbusiness community, in order to create healthy arbitrationenvironment and conducive arbitration culture in this country.Further, as highlighted by the Law Commission also in its report,duty becomes more onerous in government contracts, where oneof the parties to the dispute is the Government or public sectorundertaking itself and the authority to appoint the arbitrator restswith it. In the instant case also, though choice is given by DMRCto the opposite party but it is limited to choose an arbitrator from A

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Athe panel prepared by DMRC. It, therefore, becomes imperativeto have a much broadbased panel, so that there is nomisapprehension that principle of impartiality and independencewould be discarded at any stage of the proceedings, specially atthe stage of constitution of the Arbitral Tribunal. We, therefore,direct that DMRC shall prepare a broadbased panel on theBaforesaid lines, within a period of two months from today.”

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20. In the light of the aforestated principles, the report of theLaw Commission and the decision in Voestapline Schienen Gmbh[13,]the imperatives of creating healthy arbitration environment demand thatthe instant application deserves acceptance.

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21. The further question that arises is whether the power canbe exercised by this Court under Section 11 of the Act when theappointment of an arbitrator has already been made by the respondentand whether the appellant should be left to raise challenge at anappropriate stage in terms of remedies available in law. SimilarDcontroversy was gone into by a Designated Judge of this Court inWalter Bau AG[3]and the discussion on the point was as under:- “9. While it is correct that in Antrix[16] and Pricol Ltd.[17], it wasopined by this Court that after appointment of an arbitrator ismade, the remedy of the aggrieved party is not under Section11(6) but such remedy lies elsewhere and under differentEprovisions of the Arbitration Act (Sections 12 and 13), the contextin which the aforesaid view was expressed cannot be lost sightof. In Antrix[16], appointment of the arbitrator, as per the ICCRules, was as per the alternative procedure agreed upon, whereasin Pricol Ltd.[17]., the party which had filed the application underSection 11(6) of the Arbitration Act had already submitted to theFjurisdiction of the arbitrator. In the present case, the situation isotherwise.

10. Unless the appointment of the arbitrator is ex facie valid andsuch appointment satisfies the Court exercising jurisdiction underSection 11(6) of the Arbitration Act, acceptance of suchGappointment as a fait accompli to debar the jurisdiction underSection 11(6) cannot be countenanced in law. In the present case,the agreed upon procedure between the parties contemplated theappointment of the arbitrator by the second party within 30 days 16 (2014) 11 SCC 560H17 (2015) 4 SCC 177

of receipt of a notice from the first party. While the decision inDatar Switchgears Ltd.[18] may have introduced some flexibilityin the time frame agreed upon by the parties by extending it tilla point of time anterior to the filing of the application underSection 11(6) of the Arbitration Act, it cannot be lost sight of thatin the present case the appointment of Shri Justice A.D. Maneis clearly contrary to the provisions of the Rules governing theappointment of arbitrators by ICADR, which the parties hadagreed to abide by in the matter of such appointment. The optiongiven to the respondent Corporation to go beyond the panelsubmitted by ICADR and to appoint any person of its choice wasclearly not in the contemplation of the parties. If that be so,obviously, the appointment of Shri Justice A.D. Mane is non estin law. Such an appointment, therefore, will not inhibit the exerciseof jurisdiction by this Court under Section 11(6) of the ArbitrationAct. It cannot, therefore, be held that the present proceeding isnot maintainable in law. The appointment of Shri Justice A.D.Mane made beyond 30 days of the receipt of notice by thepetitioner, though may appear to be in conformity with the lawlaid down in Datar Switchgears Ltd[18]., is clearly contrary to theagreed procedure which required the appointment made by therespondent Corporation to be from the panel submitted byICADR. The said appointment, therefore, is clearly invalid inlaw.”

22. It may be noted here that the aforesaid view of the DesignatedJudge in Walter Bau AG[3]was pressed into service on behalf of theappellant in TRF Limited[4 ]and the opinion expressed by the DesignatedJudge was found to be in consonance with the binding authorities ofthis Court. It was observed:- “32. Mr Sundaram, learned Senior Counsel for the appellant hasalso drawn inspiration from the judgment passed by theDesignated Judge of this Court in Walter Bau AG[3], where thelearned Judge, after referring to Antrix Corpn. Ltd[16]. ,distinguished the same and also distinguished the authority inPricol Ltd. v. Johnson Controls Enterprise Ltd.[17] and cameto hold that: (Walter Bau AG case3, SCC p. 806, para 10)

“10. Unless the appointment of the arbitrator is ex facie validand such appointment satisfies the Court exercising jurisdiction 18 (2000) 8 SCC 151

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under Section 11(6) of the Arbitration Act, acceptance of suchappointment as a fait accompli to debar the jurisdiction underSection 11(6) cannot be countenanced in law. …”

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33. We may immediately state that the opinion expressed in theaforesaid case is in consonance with the binding authorities wehave referred to hereinbefore.”

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23. In TRF Limited[4], the Managing Director of the respondenthad nominated a former Judge of this Court as sole arbitrator in termsof aforesaid Clause 33(d), after which the appellant had preferred anapplication under Section 11(5) read with Section 11(6) of the Act. Theplea was rejected by the High Court and the appeal therefrom on theCissue whether the Managing Director could nominate an arbitrator wasdecided in favour of the appellant as stated hereinabove. As regardsthe issue about fresh appointment, this Court remanded the matter tothe High Court for fresh consideration as is discernible from para 55of the Judgment. In the light of these authorities there is no hindranceDin entertaining the instant application preferred by the Applicants.

24. It is also clear from the Clause in the instant case that nospecial qualifications such as expertise in any technical field arerequired of an arbitrator. This was fairly accepted by the learned SeniorCounsel for the respondent.

E 25. In the aforesaid circumstances, in our view a case is madeout to entertain the instant application preferred by the Applicants. We,therefore, accept the application, annul the effect of the letter dated30.07.2019 issued by the respondent and of the appointment of thearbitrator. In exercise of the power conferred by Section 11(6) of theAct, we appoint Dr. Justice A.K. Sikri, former Judge of this Court asFthe sole arbitrator to decide all the disputes arising out of the Agreementdated 22.05.2017, between the parties, subject to the mandatorydeclaration made under the amended Section 12 of the Act with respectto independence and impartiality and the ability to devote sufficient timeto complete the arbitration within the period as per Section 29A of theAct. A copy of the Order be dispatched to Dr. Justice A. K. Sikri atG144, Sundar Nagar, New Delhi - 110003 (Tel. No.:- 011 - 41802321).The arbitrator shall be entitled to charge fees in terms of the FourthSchedule to the Act. The fees and other expenses shall be shared bythe parties equally.

26. Before we part, we must say that the appointment of anHarbitrator by this Court shall not be taken as any reflection on the competence and standing of the arbitrator appointed by the respondent.We must place on record that not even a suggestion in that respectwas made by the learned counsel for the Applicants. The matter wasargued and has been considered purely from the legal perspective asdiscussed hereinabove.

27. This application is allowed in aforesaid terms.

ARBITRATION APPLICATION NO.34 OF 2019

Perkins Eastman Architects DPC & Anr.…Applicants

VERSUS

HSCC (India) Ltd.

…Respondent

28. The basic facts in this application are more or less identicalexcept that the request for proposal in this case pertains to“comprehensive planning and designing, including preparation anddevelopment of concepts, master plan for the campus, preparation ofall preliminary and working drawings for various buildings/structures,including preparation of specifications and schedule of quantities’ forthe proposed All India Institute of Medical Sciences at Kalyani, WestBengal.”. Clause No.24 titled as “Dispute Resolution” in this case andthe communication addressed by the Applicants are also identical andthe response by the respondent was also similar. In this case also,appointment of a sole arbitrator was made by the respondent videcommunication dated 30.07.2019.

Since the facts are identical and the submissions are common,this application is disposed of in terms similar to the main matter.

29. In the aforesaid circumstances, we accept the application,annul the effect of the letter dated 30.07.2019 issued by the respondentand of the appointment of the arbitrator. In exercise of the powerconferred by Section 11(6) of the Act, we appoint Dr. Justice A.K. Sikri,former Judge of this Court as the sole arbitrator to decide all the disputesarising out of the Agreement dated 22.05.2017, between the parties,subject to the mandatory declaration made under the amended Section12 of the Act with respect to independence and impartiality and theability to devote sufficient time to complete the arbitration within theperiod as per Section 29A of the Act. A copy of the Order be dispatchedto Dr. Justice A. K. Sikri at 144, Sundar Nagar, New Delhi - 110003(Tel. No.:- 011 - 41802321). The arbitrator shall be entitled to chargefees in terms of the Fourth Schedule to the Act. The fees and otherexpenses shall be shared by the parties equally.

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304SUPREME COURT REPORTS

AARBITRATION APPLICATION NO. 35 OF 2019

Perkins Eastman Architects DPC & Anr.VERSUS

…Applicants

HSCC (India) Ltd.

…Respondent

B30. The basic facts in this application are more or less identicalexcept that the request for proposal in this case pertains to“comprehensive planning and designing, including preparation anddevelopment of concepts, master plan for the campus, preparation ofall preliminary and working drawings for various buildings/structures,including preparation of specifications and schedule of quantities’ forCthe proposed All India Institute of Medical Sciences at Nagpur,Maharashtra.” Clause No.24 titled as “Dispute Resolution” in this caseand the communication addressed by the Applicants are also identicaland the response by the respondent was also similar. In this case also,appointment of a sole arbitrator was made by the respondent videcommunication dated 30.07.2019.D

Since the facts are identical and the submissions are common,this application is disposed of in terms similar to the main matter.

31. In the aforesaid circumstances, we accept the application,annul the effect of the letter dated 30.07.2019 issued by the respondentand of the appointment of the arbitrator. In exercise of the powerEconferred by Section 11(6) of the Act, we appoint Dr. Justice A.K. Sikri,former Judge of this Court as the sole arbitrator to decide all the disputesarising out of the Agreement dated 22.05.2017, between the parties,subject to the mandatory declaration made under the amended Section12 of the Act with respect to independence and impartiality and theFability to devote sufficient time to complete the arbitration within theperiod as per Section 29A of the Act. A copy of the Order be dispatchedto Dr. Justice A. K. Sikri at 144, Sundar Nagar, New Delhi - 110003(Tel. No.:- 011 - 41802321). The arbitrator shall be entitled to chargefees in terms of the Fourth Schedule to the Act. The fees and otherexpenses shall be shared by the parties equally.G

Kalpana K. Tripathy

Arbitration applications allowed.

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