Arbitrator Appointment Cannot Be Called Unilateral When Respondent Consented To Appointment From Panel Of 5 Names: Delhi High Court

The Bench of Justice Prathiba M.Singh held that appointment of arbitrator from a panel of 5 names consisting of retired govt. officials would be valid in terms of the judgment of the Supreme Court in Central Organisation for Railways which continues to hold the field despite pending before a larger bench in absence of a stay on the judgment.

The Court allowed an application under Section 29A seeking extension of time for completion of arbitration proceedings after considering that the respondent consented to the appointment, also consented to earlier extension under Section 29A and fully participated in the arbitration proceedings.

Facts

The parties entered into an agreement dated 13.08.2013, for the 'Redevelopment of C-block of the Delhi High Court,' which included work on certain RCC framed structure buildings, water supply, and sanitary & electrical installations.

The Petitioner, Roshan Real Estate, submitted the successful bid for the project on 12.05.2013. The work was fully completed by 10.07.2017. The final bill was raised on 06.06.2018, but remained unpaid.

On 03.07.2020, the matter was referred to the Disputes Redressal Committee under the Chairmanship of the Chief Engineer, but the Petitioner's claims were rejected. On 29.09.2020, the Petitioner invoked the arbitration.

The Respondent, PWD, suggested a list of three Arbitrators to be picked by the Petitioner for appointment as the sole arbitrator from a panel consisting of 5 names. On 17.08.2020, the arbitrator was appointed from the three names chosen by the respondent.

Pleadings were completed by the parties, and a schedule for the hearing was fixed. On 14.03.2023, both parties agreed to extend the time for making the award for a further period of six months under Section 29A(3) of the Act.

Due to personal reasons of travel, the Arbitrator asked the parties to seek a further extension of six months from the Court under Section 29A (4). The mandate of the Arbitrator expired on 28.08.2023, and the petitioner filed a petition under Section 29A (4) of the seeking extension of the mandate of the arbitrator.

Submissions by the Parties

The respondent made following objections:

• That the constitution of the tribunal was void ab initio, as the appointment was made by the Chief Engineer without a written agreement between the parties, ergo, the appointment was hit by Section 12(5) of the Act.
• That the appointment was a nullity and did not depend on any declaration or determination. They claimed that the ld. Sole Arbitrator's appointment was void from the beginning, and proceedings cannot be legitimized by absence of objections from one of the parties.

The petitioner made the following submissions:

• The appointment was made with the consent of the parties and therefore would not be affected by the ineligibility of the appointing authority, as claimed by the Respondent.

Analysis by the Court

The court noted that the parties had previously agreed to the first extension under section 29A(3) of the 1996 Act, which expired on 28.08.2023.

The court considered the Respondent's objection regarding the constitution of the tribunal, arguing that the appointment was void ab initio due to the absence of a written agreement between the parties. The court observed that this objection did not directly relate to the extension of the mandate of the arbitrator under Section 29A. The court reasoned that the objection could be addressed separately, but it did not preclude the extension of the arbitrator's mandate.

The Court held that the appointment of the arbitrator cannot be called unilateral when the tribunal was constituted pursuant to the consent by the petitioner to the appointment from a panel of 5 names.

The Court held that appointment of arbitrator from a panel of 5 names consisting of retired govt. officials would be valid in terms of the judgment of the Supreme Court in Central Organisation for Railways which continues to hold the field despite pending before a larger bench in absence of a stay on the judgment.

Considering the circumstances, including the progress of the arbitration proceedings and the parties' agreement to the first extension, the court found that there was sufficient cause to grant the extension of the arbitrator's mandate. The court also noted that denying the extension would cause inconvenience to both parties and delay the resolution of the dispute.

Case Title: Roshan Real Estates Pvt Ltd v. Public Work Development Delhi

Citation: 2024 LiveLaw (Del) 478

Date: 10.04.2024

Counsel for the Petitioner: Ms. Anusuya Salwan, ld. Counsel with Mr. Parth Kaushik, Adv

Counsel for the Respondent: Mr. Satyakam, ASC.

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