The Punjab and Haryana High Court stated that Section 12(5) of the A&C Act applies to arbitration cases that started before the 2015 Amendment Act.
The Punjab and Haryana High Court noted that Section 12(5) of the Arbitration and Conciliation Act, 1996, applies to arbitration cases started before the 2015 Amendment Act. This was highlighted in a petition by a company seeking the formation of an independent and fair Arbitral Tribunal under Section 11 of the Act. Justice Suvir Sehgal, in a Single Bench, stated that the Supreme Court’s decisions in the cases of Aravali Power Company Pvt. Ltd. and SP Singla Constructions Pvt. Ltd. were referenced by the Madhya Pradesh High Court in the Ellora Paper Mills Limited case. However, the Supreme Court later overturned the Madhya Pradesh High Court’s ruling. Thus, the main issue in the current case is directly related to the Ellora Paper Mills Limited case. Section 12(5) of the Arbitration Act applies to arbitration proceedings that began before October 23, 2015, and continued afterward.
The lawyer for the Petitioner-Company explained that the Petitioner was awarded a bid for building a four-lane railway overbridge through a letter. Although the project was supposed to be finished in 15 months, there were ongoing delays. The Petitioner sent several letters to the Respondent Authorities asking for an increase in the contract price and compensation. They also requested the appointment of a Conciliator for a friendly resolution, but the Respondents informed them that the conciliation request was not approved.
The Petitioner later chose O.P. Goyal as its Arbitrator, while the Respondents selected H.R. Raheja as a serving officer and appointed R.K. Aggarwal as the Presiding Officer. Doubting the Tribunal’s fairness, the Petitioner went to the High Court, but their Petition was rejected. Both the Special Leave Petition and the Review were also dismissed, allowing the Tribunal to proceed with the case. Subsequently, the A&C Act was updated, prompting the Petitioner to file a Petition with the District Judge. While this Petition was pending, the District Judge denied the Application under Sections 14 and 15 of the A&C Act, which the Petitioner then contested in the High Court.
In this context, the High Court stated, “It cannot be said that the petitioner had joined the proceedings and is debarred from questioning the impartiality of the Tribunal. This court is therefore of the firm view that the participation in the arbitral proceedings and raising an objection by the petitioner does not amount to acquiescence.” The Court also recognized that the Petitioner had consistently shown interest in the proceedings, only seeking delays to clarify the eligibility of the Arbitrators, especially after the addition of Section 12(5) in the Arbitration Act. “As noted by the Delhi High Court, with the conclusion of the proceedings by the Arbitral Tribunal, everything has ended. According to Section 12(5) and the Seventh Schedule of the Arbitration Act, two of the Arbitrators cannot continue in their roles. Therefore, sending the petitioner back to the Arbitral Tribunal to request a review or recall of its order would be like reversing time, which is not allowed due to the statute’s amendment,” it concluded.
The Court decided that it can appoint a new Arbitrator(s) to replace the Arbitral Tribunal, which has ended its proceedings. As a result, the High Court chose former Judge Justice (Retd.) H.S. Sidhu as the Sole Arbitrator to resolve the disputes between the parties.
Cause Title: SP Singla Constructions Pvt. Ltd. v. State of Haryana and Others (Neutral Citation: 2024:PHHC:150047)
Appearance:
Petitioner: Advocates Anirudh Wadhwa, Gurmohan Singh Bedi, Pawandeep Singh, Anand Vardhan Khanna, Kartik Gupta, and Rahul Rohilla.
Respondents: Addl. A.G. Aman Bahri, Advocates Vicky Chauhan, and Deepak Balyan.
