J&K&L High Court Permits the Appointment of an Independent Arbitrator Instead of the Sole Arbitrator Appointed Under Section 12(5) of the Arbitration and Conciliation Act.
The High Court of Jammu & Kashmir and Ladakh has permitted the appointment of an Independent Arbitrator instead of a Sole Arbitrator, despite the restrictions in Section 12(5) of the Arbitration and Conciliation Act, 1996. The Company (Petitioner) filed a petition under Sections 14 and 15 of the J&K Arbitration and Conciliation Act, 1997, seeking this change. Chief Justice Tashi Rabstan stated, “Considering the case’s facts and relevant Supreme Court judgments, along with the amended Section 12(5) of the Arbitration and Conciliation Act, I believe keeping the previous arbitrator would violate the applicable law. Therefore, this petition is granted, and the previous Arbitrator’s mandate and proceedings are terminated.”
Advocate I H Bhat represented the Petitioner, while Senior AAG Monika Kohli represented the Respondents. The Executive Engineer from the Irrigation and Food Control Department issued a Notice Inviting Tender (NIT) for Canal construction. The State Level Contract Committee approved the bid and awarded the tender to the Petitioner for Rs.23.68 Crore on a turnkey basis. After the work was assigned, delays occurred due to issues like a perennial stream, a militancy-prone area, the Amar Nath Land dispute, and other shortcomings from the Respondents. The Petitioner filed an application under Section 12 of the Arbitration and Conciliation Act, 1997, asking the Sole Arbitrator to refer the dispute to a new Independent Arbitrator, but the application was dismissed without a fair hearing.
The Petition stated that an independent arbitrator needed to be appointed because keeping the Chief Engineer of Irrigation as the arbitrator violated Section 12(5) of the Act and its Seventh Schedule. The High Court cited the Supreme Court case of Haryana Space Application Centre (HARSAC) v. M/s Pan India Consultants Pvt. Ltd. (2021), which ruled that appointing the Principal Secretary of Haryana as the nominee arbitrator for HARSAC was invalid under Section 12(5) of the Arbitration and Conciliation Act, 1996, along with the Seventh Schedule. This section indicates that, regardless of any prior agreements, anyone with a relationship to the parties or their counsel that falls into the specified categories in the Seventh Schedule cannot be appointed as an arbitrator. It is a mandatory rule. In this case, the Principal Secretary was deemed ineligible to serve as an arbitrator due to his significant influence over the Appellant Company, as he was a nodal agency of the State.
As a result, the Court appointed a sole Arbitrator and instructed him to proceed according to the Act’s provisions to issue an award within the specified timeframe, with the required fees and expenses to be shared by the parties. Thus, the High Court approved the Petition.
Cause Title: M/s Mir Associates Construction Company v. Superintending Engineer Hydraulic Circle Doda & Anr.
Appearances:
Petitioner: Advocates I H Bhat and Mohd. Akeel Wani
Respondents: Senior AAG Monika Kohli
