M/s Braham Prakash Modi & Ors. @APPELLANT@Hash Public Works Department

Delay in filing the appeal is condoned. The application u/s 5 of the Limitation Act stands allowed.

By way of this appeal, the appellant has assailed the judgment and order of the learned Single Judge whereby learned Single Judge has dismissed

the writ petition filed by the petitioner-

appellant herein and declined to exercise powers under 226 of the Constitution of India relying the judgment of Supreme Court in the case of A.

Ayyasamy vs. A. Paramasivam & ors. (2016) 10 SCC 386.

The facts of the case are that pursuant to the agreement entered between the parties, the dispute was referred to the Adjudicatory who had

decided it vide order dt. 20.5.2012. As per the terms of the agreement either of the party was at liberty to seek reference of the dispute to the sole

arbitrator within a period of 28 days from the date of passing of the order by Adjudicator. If the reference is not made within time framed, the order of

Adjudicator become final and the present case the arbitrator has been appointed after a lapse of five years in ignorance of terms and conditions of the

agreement.

Counsel for the appellant has taken us to the provisions of Section 12 & 13 of the Arbitration and Conciliation Act, 1996 (in short the ‘Act of

1996’) which reads as under:-

Grounds for challenge.â€"2 [(1) When a person is approached in connection with his possible appointment as an arbitrator, he shall disclose in

writing any circumstances,â€" (a) such as the existence either direct or indirect, of any past or present relationship with or interest in any of the

parties or in relation to the subject-matter in dispute, whether financial, business, professional or other kind, which is likely to give rise to justifiable

doubts as to his independence or impartiality; and

(b) which are likely to affect his ability to devote sufficient time to the arbitration and in particular his ability to complete the entire arbitration within a

period of twelve months.

Explanation 1.â€"The grounds stated in the Fifth Schedule shall guide in determining whether circumstances exist which give rise to justifiable doubts

as to the independence or impartiality of an arbitrator.

[Explanation 2.â€"The disclosure shall be made by such person in the form specified in the Sixth Schedule.]

(2) An arbitrator, from the time of his appointment and throughout the arbitral proceedings, shall, without delay, disclose to the parties in writing any

circumstances referred to in sub-section (1) unless they have already been informed of them by him.

(3) An arbitrator may be challenged only if--

(a) circumstances exist that give rise to justifiable doubts as to his independence or impartiality, or (b) he does not possess the qualifications agreed to

by the parties.

(4) A party may challenge an arbitrator appointed by him, or in whose appointment he has participated, only for reasons of which he becomes aware

after the appointment has been made.

(5) Notwithstanding any prior agreement to the contrary, any person whose relationship, with the parties or counsel or the subject-matter of the

dispute, falls under any of the categories specified in the Seventh Schedule shall be ineligible to be appointed as an arbitrator:

[Provided that parties may, subsequent to disputes having arisen between them, waive the applicability of this sub-section by an express agreement in

writing.]

Challenge procedure.â€"(1) Subject to sub-section (4), the parties are free to agree on a procedure for challenging an arbitrator.

(2) Failing any agreement referred to in sub-section (1), a party who intends to challenge an arbitrator shall, within fifteen days after becoming aware

of the constitution of the arbitral tribunal or after becoming aware of any circumstances referred to in sub-section

(3) of section 12, send a written statement of the reasons for the challenge to the arbitral tribunal.

(3) Unless the arbitrator challenged under sub-section (2) withdraws from his office or the other party agrees to the challenge, the arbitral tribunal

shall decide on the challenge.

(4) If a challenge under any procedure agreed upon by the parties or under the procedure under sub-section (2) is not successful, the arbitral tribunal

shall continue the arbitral proceedings and make an arbitral award.

(5) Where an arbitral award is made under sub-section (4), the party challenging the arbitrator may make an application for setting aside such an

arbitral award in accordance with section 34.

(6) Where an arbitral award is set aside on an application made under sub-section (5), the Court may decide as to whether the arbitrator who is

challenged is entitled to any fees.

Counsel for the appellant has contended that the appointment of the arbitrator itself is without complying with the procedure u/s 12 & 13 of the Act

and he relied on clause 24, 24.1, 25.1, 25.2 & 25.4 which reads as under:-

Disputes

24.1 If the Contractor believes that a decision taken by the Engineer was either outside the authority given to the Engineer by the Contractor or that

the decision was wrongly taken, the decision shall be referred to the Adjudicator within 14 days of notification of the Engineer’s decision.

Performance under the contract shall continue nothwithstanding the reference to the Adjudicator, and payments by the Employer to the Contractor

will not be withheld unless they are the subject matter of dispute.

25.1 The Adjudicator shall give a decision in writing within 28 days of receipt of a notification of a dispute.

25.2 The Adjudicator shall be paid daily at the rate specified in the Contract Data together with reimbursable expenses to the types specified in the

Contract Data and the cost shall be divided equally between the Employer and the Contractor, whatever decision is reached by the Adjudicator. Either

party may refer a decision of the Adjudicator to Arbitrator within 28 days of the Adjudicator’s written decision. Arbitration shall be under the

Arbitration and Conciliation Act 1996. If neither party refers the disputes to Arbitration within the above 28 days, the Adjudicator’s decision will

be final and binding.

25.4 Where the Initial Contract Price as mentioned in the Acceptance Letter is Rs.5 Crore and below, disputes or differences in which an Adjudicator

has given a decision shall be referred to a sole Arbitrator. The Sole Arbitrator would be appointed by the agreement between the parties; failing such

agreement within 15 days of the reference to arbitration, by the appointing authority, namely the Chairman of the Executive Committee of the Indian

Roads Congress.

He also contended that 14 days period is contemplated after 28 days and as per agreement dt. 28.5.2012 within 28 days, the dispute has to be

referred which was not complied with and for the first time after one and a half year notice dt. 11.12.2013 came to be issued and final appointment

came to be made almost four years on 2.6.2017.

In that view of the matter, the basic appointment is contrary to clause 25.1, 25.2, 25.4 as reproduced above and same is required to be interfered at

this stage.

While considering the case, the learned Single Judge has observed as under:-

“The appointment of Arbitrator was made by India Roads Congress on a request by the PWD. It was vide order dt. 2nd June, 2017. The petitioner

firm has objection regarding appointment of Arbitrator, however, without taking remedy as provided under the Arbitration and Conciliation Act, 1996,

the extra ordinary jurisdiction of this Court has been invoked. If the matter could not have been referred to the Arbitration and for that appointment of

the Arbitrator is illegal then the petitioner firm is at liberty to raise objection under Section 13 of the Act of 1996 immediately after knowing about

appointment of Arbitrator or constitution of Arbitration Tribunal. Despite availability of the remedy, it has not been availed and the present writ petition

has been filed, though, the Apex Court in the case of A. Ayyasamy vs. A Paramasivam & ors. reported in (2016) 10 SCC 386 has deprecated the

practice to approach the High Court during the course of arbitration proceedings.â€​

In our considered opinion, it is well settled proposition of law that once the learned Single Judge has declined to exercise his discretionary powers

under Article 226 of the Constitution of India in view of the decision of Supreme Court, it will not be appropriate for us to interfere in intra court

appeal. It is always discretion of the learned Single Judge to exercise powers unless it is found that discretion has been wrongly exercised this court

cannot interfere.

In our considered opinion, in the present case, non exercising powers by the learned Single Judge is just and proper in view of the decision of the

Supreme Court in A. Ayyasamy (supra).

Even on merits, we are protecting the appellant inasmuch as, he was never called upon but if he is aggrieved of the appointment of arbitrator, it

will be open for him to raise all contentions before the arbitrator as well as in the appeal, if the award is passed against him. It is made clear that the

arbitrator as well as the appellate authority will consider all the objections and will decide the dispute in accordance with law.

With the above observations, the appeal stands disposed of.