Punjab & Haryana High Court Disapproves Of State Authorities Often Raising "Frivolous Objections" To Pleas For Appointment Of Arbitrator

The Punjab and Haryana High Court recently expressed dismay over State instrumentalities for strongly contesting applications for appointment of Arbitrator, often by raising frivolous objections.

While overruling the objections raised by Punjab Heritage and Tourism Promotion Board in a plea for appointment of arbitrator, Justice Suvir Sehgal said,

"... all the objections raised by the respondent are overruled. At this stage, the Court deems it necessary to express its disapproval over the fact that the petitions for appointment of Arbitrator are generally strongly contested by the respondents, moreso by State instrumentalities or authorities, sometimes by raising frivolous objections."

Such an approach would defeat the intent and objective behind the incorporation of the Act of 1996, which provides for a speedy and efficacious resolution of disputes, the Court added.

The Court was hearing the petition filed under Section 11 (6) of the Arbitration and Conciliation Act, 1996 for appointment of an Arbitrator to adjudicate the dispute between the parties.

M/s Knight Frank (India) Pvt. Ltd, an International Property Consultant had moved the Court seeking appointment of the arbitrator in terms of the Arbitration & Conciliation Act, 1996 to adjudicate all the dispute that have arisen between the petitioner and Punjab Heritage and Tourism Promotion Board.

The counsel for the petitioner argued that the appointment of the sole arbitrator by the Principal Secretary, Tourism, Punjab as provided in the arbitration clause is violative of the Arbitration & Conciliation Act, 1996 as he is the interested party.

Justice Sehgal noted that the Secretary was also one of the trustees of the respondent and was therefore interested in the result of the arbitration. "In such a scenario, the said official is himself ineligible as also cannot appoint an arbitrator on behalf of the respondent, as has been settled by the Supreme Court in Perkins's case supra. In M/s Glock Asia – Pacific Limited Versus Union of India ..."

The Board raised various objections to the plea including that Arbitrator has to be appointed under Section 55 of the Punjab Cooperative Societies Act of 1961.

Calling the objection, "frivolous", the Court said that , "There is no material on the record to show that the respondent is registered as a co-operative society under the Act of 1961. Rather, as is evident from the Punjab Heritage and Tourism Promotion Board Byelaws, 2008, respondent was set up by the Government of Punjab by notification dated 14.08.2002 and was subsequently registered as a Public Charitable Trust on 05.12.2002."

Consequently, the Court opined that the authority of the arbitrator appointed by the Secretary stands negated due to ineligibility of such arbitrator arising out of Section 12 (5) of the Act of 1996 as the Secretary is statutorily incapacitated to nominate any person as an arbitrator.

In the light of the above above the Court appointed Justice Tejinder Singh Dhindsa, a former Judge of the Punjab & Haryana Court, to act as the sole Arbitrator to adjudicate the dispute between the parties, subject to declaration to be made under Section 12 of the Arbitration & Conciliation Act, 1996 with regard to his independence and impartiality to adjudicate the dispute.

Advocates Abhinav Sood, Advocate and Anmol Gupta for the petitioner

Sr.Advocate Dharam Vir Sharma, with Advocate Pooja Yadav for the respondent

Citation: 2023 LiveLaw (PH) 61

Title: M/s Knight Frank (India) Pvt. Ltd. v. Punjab Heritage and Tourism Promotion Board

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