Panel Consisting Of 23 Names Cannot Be Considered Broad-Based If It Lacks Arbitrators From Different Backgrounds: Delhi High Court

The bench of Justice Dinesh Kumar Sharma held that a panel must not only be broad in terms of numbers but should also reflect diversity by having arbitrators from diverse backgrounds.

Facts

The parties entered into an agreement dated 20.06.2016. A dispute arose between the parties which led to the petitioner issuing the notice invoking arbitration dated 13.03.2023.

In response thereof, the respondent asked the petitioner to choose its nominee from the panel nominated by the respondent. Upon the failure of the parties to mutually appoint the arbitrator, the petitioner approached the Court under Section 11(6) of the A&C Act.

Submissions of the Parties

The petitioner sought the appointment of the arbitrator on the following grounds:

• That the procedure provided under the agreement cannot be followed as the panel is not broad-based and diverse. It contains mostly the retired employees of the respondent/government from technical background except for only one person from legal background, moreover the same is prepared by the CMD of the respondent.
• That the CMD of the respondent is not only ineligible to be appointed as an arbitrator but is also not permitted to act as the appointing authority.

The respondent made the following counter-submissions:

• That the panel is a broad-based panel consisting of 23 names of experienced retired government employees. The people are maintained on the panel due to the technical nature of the respondent's contracts.
• The Supreme Court in its judgment in CORE has held appointment from such panels is valid.

Analysis by the Court

The Court observed that though the panel provided by the respondent consists of 23 names, however, most of the people on the panel are retired employees of the government. Moreovever, these people are only from the technical background.

The Court held that the panel provided by the respondent cannot be considered broad-based since it lacks arbitrators from diverse backgrounds.

The Court held that a panel must not only be broad in terms of numbers but should also reflect diversity by having arbitrators from diverse backgrounds. It held that if the panel is not broad based, it would be incumbent on the Court in the exercise of its jurisdiction under Section 11 to constitute an independent and impartial arbitral tribunal.

Accordingly, the Court allowed the petition and appointed Justice (Retd.) Kurian Joseph as the sole arbitrator.

Case Title: Techno Compact Builders v. Railtel Corporation of India Limited

Citation: 2024 LiveLaw (Del) 360

Date: 22.03.2024

Counsel for the Petitioner: Mr.Susmit Pushkar, Mr.Gaurav Sharma, Ms.Naina Agarwal and Mr.Rab Hussain, Advts.

Counsel for the Respondent: Mr.Jitendra Kumar Singh, Ms.Anjali Kumari and Ms.Harshita Singh, Advts.

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