Arbitrator by designation and pending arbitration amendment rules upheld, but termination for non-filing of claim was set aside.

A contract permitting sole arbitration by a person appointed by designation was upheld, because Clause 65 contemplated appointment and substitution by office rather than by personal identity; the objection that the arbitrator was a departmental officer failed. The 2015 Arbitration Amendment did not apply to proceedings commenced in 2013, as Section 26 excluded pending arbitrations absent clear party agreement, so the Section 12(5) challenge also failed. However, termination under Section 25(a) for non-filing of the statement of claim was set aside where no adequate warning had been given and justice required restoration of the arbitral opportunity. The matter was directed to proceed before a new arbitrator under the contractual mechanism.

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Issues: (i) Whether the appointment of the Superintendent Engineer as sole arbitrator by designation was valid under the contract and the Arbitration and Conciliation Act, 1996; (ii) whether the Arbitration and Conciliation (Amendment) Act, 2015 applied to arbitral proceedings commenced in 2013; (iii) whether the termination of arbitral proceedings for non-filing of the statement of claim under Section 25(a) was liable to be set aside and the matter remitted for fresh arbitration.

Issue (i): Whether the appointment of the Superintendent Engineer as sole arbitrator by designation was valid under the contract and the Arbitration and Conciliation Act, 1996

Analysis: Clause 65 of the contract permitted reference of disputes to the sole arbitration of a person appointed by the Chief Engineer and contemplated substitution if the incumbent was transferred, vacated office, or became unable to act. This showed that the contract envisaged appointment by designation, not only by personal name. The fact that the arbitrator was a government servant or departmental officer did not by itself render the appointment invalid.

Conclusion: The appointment by designation was valid and the objection to the appointment failed.

Issue (ii): Whether the Arbitration and Conciliation (Amendment) Act, 2015 applied to arbitral proceedings commenced in 2013

Analysis: Section 26 of the Amendment Act provides that the amended provisions do not apply to arbitral proceedings commenced before the amendment unless the parties otherwise agree. The contractual reference to statutory modification or re-enactment did not amount to an agreement to apply the 2015 amendment to proceedings already commenced in 2013. The amended disqualification under Section 12(5) therefore could not be invoked in this case.

Conclusion: The 2015 amendment did not apply to the pending arbitration and the challenge based on Section 12(5) failed.

Issue (iii): Whether the termination of arbitral proceedings for non-filing of the statement of claim under Section 25(a) was liable to be set aside and the matter remitted for fresh arbitration

Analysis: The claimant had repeatedly sought adjournments and had not filed the statement of claim, leading to termination under Section 25(a). However, the record showed that no warning was issued that no further adjournment would be granted, and the Court considered it appropriate in the interests of justice to restore the claimant's opportunity to pursue the claim before a duly appointed arbitrator.

Conclusion: The termination order was set aside and the matter was directed to proceed before a new arbitrator to be appointed under Clause 65.

Final Conclusion: The appeals succeeded only to the extent that the termination of the arbitral proceedings was annulled and fresh arbitral proceedings were directed under the contractual mechanism, while the challenge to the contractual mode of appointment and the applicability of the 2015 amendment was rejected.

Ratio Decidendi: Where the contract expressly authorises appointment of an arbitrator by designation and the arbitration commenced before the 2015 amendment, the amended disqualification regime does not apply unless the parties clearly agree otherwise; a termination for non-filing of the claim may be set aside where the claimant was not adequately warned and justice requires restoration of the arbitral opportunity.

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