TaxTMI 
TaxTMI 
TaxTMI 
2022 (3) TMI 1649
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.... 1996 (hereinafter referred to as "the Arbitration Act"). 2. The Petitioner, Panipat Jalandhar NH-1 Tollway Private Limited entered into a Concession Agreement dated 9th May 2008 with the Respondent, National Highways Authority of India (NHAI) for Six-Laning of 291.10 km of the Panipat Jalandhar Section of NH-1 (National Highway-1) from 96.00 km to 387.10 km in the States of Haryana and Punjab. The duration of the Concession Agreement was 15 years from 11th May 2009. 3. The relevant provisions of the Concession Agreement are as follows:- "44.1 Dispute resolution 44.1.1. Any dispute, difference or controversy of whatever nature howsoever arising under or out of or in relation to this Agreement (including its interpretation) between the Parties, and so notified in writing by either Party to the other Party (the "Dispute") shall, in the first instance, be attempted to be resolved amicably in accordance with the conciliation procedure set forth in Clause 44.2. 44.1.2. The Parties agree to use their best efforts for resolving all Disputes arising under or in respect of this Agreement promptly, equitably and in good faith, and further agree to provide eac....
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....he Parties as from the date it is made, and the Concessionaire and the Authority agree and undertake to carry out such Award without delay. 47.1 Governing law and jurisdiction This Agreement shall be construed and interpreted in accordance with and governed by the laws of India, and the courts at Delhi shall have jurisdiction over matters arising out of or relating to this Agreement." 4. Pursuant to the said Concession Agreement, the Petitioner commenced work. However, disputes arose between the parties pertaining to the work done in the year 2013 which were referred to arbitration before an Arbitral Tribunal, referred to, for convenience as the first Arbitral Tribunal. 5. The Petitioner claims that after work was completed in respect of 269 km of the road out of 291.1 km required to be relaid, the Respondent took the decision to delink 22.1 km which, according to the Petitioner, was due to delay and failure on the part of the Respondent to hand over the stretch to the Petitioner. 6. The Petitioner claims that due to this delinking, the Petitioner suffered severe loss to the tune of more than Rs.2,000 crores. Accordingly, the Petitioner sent a Notice of D....
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....ts nominee Arbitrator within 30 days. The Petitioner claims that the disputes giving rise to the notice dated 4th June 2021 were distinct, separate and independent disputes not connected to the disputes under arbitration by the first and second Arbitral Tribunals. 14. By a letter dated 17th June 2021, written in response to the said notice dated 4th June 2021, the Respondent pointed out that the Petitioner had just initiated the second Arbitration for which the second Arbitral Tribunal had been constituted in May 2021. The Respondent suggested that since the disputes pertained to the same project, they might be referred to the same Arbitral Tribunal, that is, the second Arbitral Tribunal to avoid duplication of hearing and to save time. 15. By a notice dated 2nd July 2021, the Respondent appointed Justice G.P. Mathur (Retd.) as its nominee Arbitrator, without prejudice to its contention that the disputes be referred to the second Arbitral Tribunal, to avoid multiplicity of proceedings. 16. By letter dated 6th July 2021, the Petitioner objected to reference of the disputes to the second Arbitral Tribunal, inter alia, contending that the three arbitrations were different and....
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....ndependence or impartiality of an arbitrator. Explanation 2.-The disclosure shall be made by such person in the form specified in the Sixth Schedule. (2) An arbitrator, from the time of his appointment and throughout thearbitral proceedings, shall, without delay, disclose to the parties in writing any circumstances referred to in sub-section (1) unless they have already been informed of them by him. (3) An arbitrator may be challenged only if- (a) circumstances exist that give rise to justifiable doubts as to hisindependence or impartiality; or (b) he does not possess the qualifications agreed to by the parties. (4) A party may challenge an arbitrator appointed by him, or in whoseappointment he has participated, only for reasons of which he becomes aware after the appointment has been made. (5) Notwithstanding any prior agreement to the contrary, any personwhose relationship, with the parties or counsel or the subject-matter of the dispute, falls under any of the categories specified in the Seventh Schedule shall be ineligible to be appointed as an arbitrator: Provided that parties may, subsequent to disputes h....
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....e case. 14. The arbitrator regularly advises the appointing party or an affiliate of the appointing party, and the arbitrator or his or her firm derives a significant financial income therefrom. Relationship of the arbitrator to the dispute 15. The arbitrator has given legal advice or provided an expert opinion on the dispute to a party or an affiliate of one of the parties. 16. The arbitrator has previous involvement in the case. Arbitrator's direct or indirect interest in the dispute 17. The arbitrator holds shares, either directly or indirectly, in one of the parties or an affiliate of one of the parties that is privately held. 18. A close family member of the arbitrator has a significant financial interest in the outcome of the dispute. 19. The arbitrator or a close family member of the arbitrator has a close relationship with a third party who may be liable to recourse on the part of the unsuccessful party in the dispute. Previous services for one of the parties or other involvement in the case 20. The arbitrator has within the past three years served as counsel for one of the parties....
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....ute a material holding in one of the parties or an affiliate of one of the parties that is publicly listed. 33. The arbitrator holds a position in an arbitration institution with appointing authority over the dispute. 34. The arbitrator is a manager, director or part of the management, or has a similar controlling influence, in an affiliate of one of the parties, where the affiliate is not directly involved in the matters in dispute in the arbitration. Explanation 1.-The term "close family member" refers to a spouse, sibling, child, parent or life partner. Explanation 2.-The term "affiliate" encompasses all companies in one group of companies including the parent company. Explanation 3.-For the removal of doubts, it is clarified that it may be the practice in certain specific kinds of arbitration, such as maritime or commodities arbitration, to draw arbitrators from a small, specialised pool. If in such fields it is the custom and practice for parties frequently to appoint the same arbitrator in different cases, this is a relevant fact to be taken into account while applying the rules set out above. THE SIXTH SCHEDULE [See Section ....
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....of an entity that is a party in the arbitration. 12. The arbitrator is a manager, director or part of the management, or has a similar controlling influence in one of the parties. 13. The arbitrator has a significant financial interest in one of the parties or the outcome of the case. 14. The arbitrator regularly advises the appointing party or an affiliate of the appointing party, and the arbitrator or his or her firm derives a significant financial income therefrom. Relationship of the arbitrator to the dispute 15. The arbitrator has given legal advice or provided an expert opinion on the dispute to a party or an affiliate of one of the parties. 16. The arbitrator has previous involvement in the case. Arbitrator's direct or indirect interest in the dispute 17. The arbitrator holds shares, either directly or indirectly, in one of the parties or an affiliate of one of the parties that is privately held. 18. A close family member of the arbitrator has a significant financial interest in the outcome of the dispute. 19. The arbitrator or a close family member of the arbitrator has a close rel....
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....ement to the contrary. 25. As held by this Court in Voestalpine Schienen GmbH v. Delhi Metro Rail Corporation Ltd. (2017) 4 SCC 665, independence and impartiality of the Arbitrator are the hallmarks of any arbitration proceedings. Rule against bias is one of the fundamental principles of natural justice, which applies to all judicial and quasijudicial proceedings. 26. As observed by this Court in Voestalpine Schienen GmbH (supra):- "25. Section 12 has been amended with the objective to induce neutrality of arbitrators viz. their independence and impartiality. The amended provision is enacted to identify the "circumstances" which give rise to "justifiable doubts" about the independence or impartiality of the arbitrator. If any of those circumstances as mentioned therein exists, it will give rise to justifiable apprehension of bias. The Fifth Schedule to the Act enumerates the grounds which may give rise to justifiable doubts of this nature. Likewise, the Seventh Schedule mentions those circumstances which would attract the provisions of sub-section (5) of Section 12 and nullify any prior agreement to the contrary. In the context of this case, it is relevant to mention....
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..... 30. As observed by this Court in HRD Corporation (Marcus Oil and Chemical Division) v. Gail (India) Limited (supra):- "14. The enumeration of grounds given in the Fifth and Seventh Schedules have been taken from the IBA Guidelines, particularly from the Red and Orange Lists thereof. The aforesaid guidelines consist of three lists. The Red List, consisting of non-waivable and waivable guidelines, covers situations which are "more serious" and "serious", the "more serious" objections being non-waivable. The Orange List, on the other hand, is a list of situations that may give rise to doubts as to the arbitrator's impartiality or independence, as a consequence of which the arbitrator has a duty to disclose such situations. The Green List is a list of situations where no actual conflict of interest exists from an objective point of view, as a result of which the arbitrator has no duty of disclosure. These Guidelines were first introduced in the year 2004 and have thereafter been amended, after seeing the experience of arbitration worldwide. In Part 1 thereof, general standards regarding impartiality, independence and disclosure are set out." 31. Entry 22 correspond....
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....lication filed by the Petitioner under Section 11(6) of the Arbitration Act was taken up for hearing before the Delhi High Court. In Court, Counsel had, after taking instructions from the representative of the Respondent, suggested the name of Justice G.P. Mathur (Retd.) as the Respondent's nominee. This is not a case where different arbitration references relating to different contracts are being made to the same Arbitrator with any ulterior intent. 38. This Court is of the view that Entry 22 would not apply as a rule to appointment of the same Arbitral Tribunal to adjudicate multiple disputes between the same parties arising out of the same contract, to avoid duplication of arguments and save time. 39. In the considered view of this Court, Entry 22 of the Fifth Schedule would only be attracted in case of multiple references by a party, of disputes relating to different contracts, to the same Arbitrator, in excess of the cap of Entry 22. Reference of a dispute to the same Arbitrator conducting different arbitrations concerning any party attracts the Fifth Schedule. Where the disputes pertain to the same contract and a subsequent reference is made to the same Arbitral Tribuna....