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Issues: (i) Whether the Arbitration and Conciliation (Amendment) Act, 2015 applied to the pending arbitral proceedings by virtue of the contractual stipulation that statutory modifications and re-enactments would govern the arbitration; (ii) whether a serving General Manager of the respondent could continue as arbitrator in view of the amended disqualification under Section 12(5) and whether a fresh arbitrator was required to be appointed by the Court.
Issue (i): Whether the Arbitration and Conciliation (Amendment) Act, 2015 applied to the pending arbitral proceedings by virtue of the contractual stipulation that statutory modifications and re-enactments would govern the arbitration.
Analysis: The arbitration clause, as amended, provided that statutory modifications and re-enactments of the 1940 Act would apply to the arbitration. That stipulation was sufficient to satisfy the requirement in Section 26 of the Amendment Act that the parties otherwise agree to the amended regime. No further fresh agreement after 23 October 2015 was necessary. The distinction sought to be drawn between the expressions used in the contract and in Section 26 was rejected.
Conclusion: The amended Act applied to the pending arbitral proceedings.
Issue (ii): Whether a serving General Manager of the respondent could continue as arbitrator in view of the amended disqualification under Section 12(5) and whether a fresh arbitrator was required to be appointed by the Court.
Analysis: Once the amended Act applied, Section 12(5) operated to disqualify an employee of one of the parties from acting as arbitrator. A serving General Manager of the respondent was therefore ineligible. The respondent's unilateral appointment of such an officer could not sustain the mandate. In the circumstances, the Court appointed an independent arbitrator to proceed with the disputes from the stage already reached.
Conclusion: The respondent's nominee was ineligible and his mandate stood terminated; the Court appointed a fresh sole arbitrator.
Final Conclusion: The petition succeeded, the amended arbitration regime governed the pending proceedings, and the disputes were directed to continue before an independent sole arbitrator.
Ratio Decidendi: A contractual clause extending arbitration to statutory modifications or re-enactments can amount to the parties' agreement for the purposes of Section 26 of the 2015 Amendment Act, and once the amended regime applies, Section 12(5) disqualifies a serving employee of a party from acting as arbitrator.
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