Bar in appointing arbitrator who is in relationship with the parties or with the counsel or with the subject matter of the dispute: High Court of Uttarakhand.
Section 12(5) of the Arbitration and Conciliation Act, 1996 creates a bar with regard to the appointment of an Arbitrator who is in relationship with the parties or with the counselor with the subject matter of the dispute. However, the proviso contains an exception which states that, after disputes have arisen between the parties, if both the parties agree by ‘an express agreement in writing’, only then the bar contained in Section 12(5) of the Act can be waived by the parties. A single Judge bench comprising Hon’ble chief Justice Sri Raghvendra Singh Chauhan, in the matter of Virendra Singh Rawat Vs. Cantonment Board, Dehradun (ARBITRATION APPLICATION NO. 19 OF 2020), dealt with an issue where the petitioner filed the present Arbitration Application under Section 11(6) the Arbitration and Conciliation Act, 1996 (‘’the Act’ for short), for appointment of the sole Arbitrator.
In the present case, according to counsel of the applicant, the applicant was the contractor who undertakes government contracts for supplying material/goods in relation to contracts entered with the Government and the Semi-Government Organization. The respondent had invited tenders for “repair and maintenance of roads” in the year 2016. Consequently, the applicant had submitted his rates for the work, and his tender was accepted by the respondent. It was agreed on the work contract that the respondent will make payments within the stipulated time agreed upon. Moreover, the respondent was under the duty to clear all the bills of the applicant within 18 days after which the amounts had become due. The applicant submitted that all the work were duly completed within the time but the payment was not received by the applicant and the respondent owed Rs 1,06,75,158.61/-.
Further, the applicant sent a legal notice to the respondent informing them to pay the dues and also appoint the sole Arbitrator, ‘the Garrison Engineer’, as was agreed by both the parties in their agreement. The counsel further submitted that the respondent remained silent with regard to the appointment of the sole Arbitrator and, merely directed the applicant to submit further documents including photographs of the construction work carried out by the applicant. Thereby the applicant approached the court with the present petition.
The counsel for the respondent submitted that since the request to appoint ‘the Garrison Engineer’ as the sole Arbitrator was made by the applicant, the applicant has waived the bar contained in Section 12(5) of the Act. Therefore, the applicant is not entitled to pray to this Court for the appointment of the sole Arbitrator. The counsel also submitted before the court that only ‘the Garrison Engineer’ can be appointed as the sole Arbitrator.
The counsel for the applicant submitted that the court can appoint a sole arbitrator as, the period for appointment ‘the Garrison Engineer’ as the sole Arbitration was clearly stated ‘within thirty days’ in the legal notice. Further, the counsel submitted that if there was any waiver of the bar contained in Section 12(5) of the Act, the waiver extended only for a period of thirty days and not beyond. The counsel also pointed out that silence on the part of the respondent made it clear that they rejected the request of the applicant for appointing ‘the Garrison Engineer’ as the sole Arbitrator. Hence the applicant had no option but to approach this Court under Section 11(6) of the Act for appointment of the sole Arbitrator.
The court observed- “Even after the filing of the present application, the respondent sat quietly over the request of the applicant for appointing ‘the Garrison Engineer’ as the sole Arbitrator till 15.10.2020. Therefore, the learned counsel for the respondent is not justified in claiming that the respondent is legally justified in appointing ‘the Garrison Engineer’ as the sole Arbitrator in accordance with the arbitral clause.” Therefore, the court appointed the sole arbitrator and disposed of the arbitration application accordingly.