https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=314256 https://www.taxtmi.com/caselaws?id=314256 Arbitral proceedings - Validity of an Arbitral award - Neutrality of the Arbitrator - Ineligibility of the Arbitrator u/s 12(5) of the 1996 Act - Mandatory declaration u/s 12(3) of the 1996 Act - Merits of the Arbitrator s decision regarding the proof of submission for escalation - Indian Railway Arbitration Rules - construction contract - HELD THAT:- A reading of Section 12 would indicate that as soon as a person is approached with a request to act as an Arbitrator, he is bound to disclose any circumstances which in his opinion would affect his neutrality and which he has to disclose to the parties. With the amendment of the 1996 Act by Act 3 of 2016, the Arbitrator is also bound to make a mandatory disclosure as per the form specified in the VI schedule of the Act. The V schedule to the Act would narrate the circumstances which could give rise to a justifiable doubt about the Arbitrator s neutrality. The further amendment which has been introduced by the Amending Act 3 of 2016 to Section 12 is the introduction of sub section 5. Sub section 5 opens with a non obstante clause which stipulates that although parties have entered into an agreement giving right to one party to appoint an Arbitrator, even in such cases, the relationship of the Arbitrator with any of the parties or counsel or subject matter of the dispute comes within the VII Schedule, he becomes ineligible for being appointed as a Arbitrator. Unlike Section 12 Sub section 1 (a), Sub section 5 is a clear bar. However the proviso to this sub section makes an exception. In the case on hand the clauses of the General Conditions of the Contract continue to remain the same and has not been modified as per the amended Section 12 (5) of the 1996 Act. Therefore, the Judgement in TRF LTD v. Energo Engg. Projects Ltd. [ 2017 (7) TMI 1288 - SUPREME COURT ] and Perkins Eastman Architects DPC v. HSCC (India) Ltd. [ 2019 (11) TMI 1154 - SUPREME COURT ] would apply to the instant case. Therefore, the Chief Engineer who had appointed the arbitrator was clearly ineligible to nominate the arbitrator. Thus, it is amply clear that neutrality of the Arbitrator is the touchstone of the arbitral proceedings. It is this concept that had led to the amendment of Section 12 in the 1996 Act particularly with the insertion of Section 12 (5) read with the VII Schedule. It is clearly evident that the Arbitrator who had entered the reference in the instant case is ineligible on three grounds: a) The general conditions of the contract does not contain the amendments which have been brought about to clauses 64 (3) (a) (ii) and 64(3)(b) as contemplated in the Judgement in Central Organisation for Railway Electrification v. ECI-SPIC-SMO-MCML [ 2019 (12) TMI 841 - SUPREME COURT ] and therefore the authority appointing the arbitrator was also ineligible. b) The arbitrator is an employee of the respondent Railways and therefore falling within the bar contemplated u/s 12 (5) read with schedule VII (1) of the 1996 Act. c) There is no express waiver in writing by the petitioner of the bar imposed u/s 12 (5) of the 1996 Act. The arbitral awards were set aside due to the ineligibility of the Arbitrator, and the court did not traverse into the merits of the case. The O.P. Nos. 446 to 449 of 2019 were allowed, and the arbitral awards were set aside with no costs. Case-Laws Indian Laws Mon, 10 Feb 2020 00:00:00 +0530