Author: Shrijeta Pratik, 1st year student at KPMSOL, NMIMS, Mumbai.
Essential details of the case
Citation– 2021 IIAD (Delhi)304
Appellant– City Lifelines Travels Private
Respondent – Delhi Jal Board
Bench – Vibhu Bakhru
Date of Judgment– 27 January, 2021
Original copy: N/A
Background of the case
- The petitioner has filed this application under Section 11(6) of the Arbitration and Conciliation Act, 1996 (henceforth referred to as the “A&C Act”), requesting, among other things, that a Sole Arbitrator should be assigned to resolve the disputes that emerged between the parties in relation to an agreement dated 27.08.2012 and entered by the parties for the performance of Water Tanker Supply Services.
- The respondent published a request for proposal, asking competitive offers from agencies to operate Stainless Steel Water Tanker Services on a hire basis for the sake of supplying water through vehicle mounted water tankers to various areas in Delhi. The offer of the petitioner was accepted, and the respondent submitted a Letter of Intent (LoI) on July 16, 2012.
- Following that, the respondent issued a Work Order under the cover of its letter dated August 21, 2012, and the parties signed a formal agreement on August 27, 2012, for the performance of the work “Water Tanker Supply Services.” The petitioner alleges that it has been faithfully carrying out the contract; nonetheless, the respondent has neglected to pay the petitioner’s invoices.
- The petitioner states that it addressed a notification to the respondent requesting that the payments for the months of August, September, and October 2012 be released, as well as making arguments in this respect. The petitioner also alleges that the respondent has failed to address the points it has presented. The petitioner sent a notification dated November 20, 2012 invoking the Arbitration Agreement in light of the parties’ disagreements.
- It further suggested that an arbitrator be chosen in the name of a preceding Chief Justice of the Delhi High Court. The petitioner’s proposed name for the sole arbitrator was rejected by the respondent. The respondent, on the other hand, responded to the petitioner’s notice of 20.11.2020, in which the petitioner had claimed the Arbitration Clause, with a letter dated 15.12.2020.
- The respondent requested the appointment of two arbitrators, one of whom was a former Chief Justice of the Patna High Court and the other a former Judge of the Delhi High Court. The petitioner, on the other hand, did not find them acceptable. As a result, the petitioner filed this request for the appointment of an arbitrator on December 24, 2020.
Issue at hand
- Whether the respondent’s request of appointing two arbitrators is acceptable or not?
Judgment of the case
- It is not essential for the Court to consider whether the names of the Arbitrators suggested were added to the respondent’s panel of arbitrators after they were offered to the petitioner. The Arbitration Clause does not allow for the appointment of arbitrators from any forum, in this case. Examining the extent of the circular dated 25.08.2020, it is, therefore, superfluous because the extent of examination in these hearings is restricted.
- Arbitration’s effectiveness as an alternative conflict resolution method is predicated on the fact that conflicts are adjudicated by independent and impartial arbitrators. In this case, the Clause does not provide any such method for recommending names from the respondent’s panel of arbitrators. As a result, the respondent’s decision to appoint an arbitrator must be upheld since the arbitrator chosen was from an internal panel is unconvincing. It is up to the respondent to decide whether or not to keep a panel of arbitrators.
- The selection of any Arbitrator from the respondent’s panel of arbitrators is not contemplated by the Arbitration Clause. As a result of the foregoing, the petition was granted, and Justice BS Chauhan, a senior judge, was appointed to hear the case. A former Supreme Court of India judge has been designated as the sole arbitrator to resolve any conflicts that have emerged between the parties over the contract. This is contingent on the arbitrator making the required disclosure under Section 12(1) of the A&C Act and not being unqualified under Section 12(5).
The pending appeal has also been dropped. The parties are free to seek additional information from the Arbitral Tribunal.
- Any dispute arising out of or in connection with this agreement will be resolved in the first instance in line with the governance schedule’s arbitration procedure. Any dispute or disparity arising out of or relating to this contract’s construction, meaning, extent, procedure, or effect, or the validity of a breach thereof, which cannot be settled through the proposal of the governance schedule’s provisions, shall be referred to a sole arbitrator, assigned by mutual consent of both disputants.
- The respondent had nominated a former Chief Justice of the Patna High Court as an arbitrator from its panel of arbitrators, the subject of an arbitrator seeming to be unqualified under Section 12(5) of the A&C Act did not arise in this matter.