Raksha Vigyan Karamchari Sahkari Awas Samiti Ltd. Versus Proto Developers and Technology Pvt. Ltd.

Court / Forum : Delhi High Court
Citation : O.M.P. (T) (COMM.) 60/2020
Coram : Justice Sanjeev Narula
Subject : Section 14(2) of the Arbitration and Conciliation Act, 1996
Date of Decision : 2021-03-23

Brief Facts

• In 2017, the Respondent, without serving any notice invoking arbitration, unlawfully and unilaterally appointed a panel of three arbitrators, under the agreement dated February 9, 2010.
• In 2017, the Respondent, without serving any notice invoking arbitration, unlawfully and unilaterally appointed a panel of three arbitrators, under the agreement dated February 9, 2010.
• M/s Antriksh Realtech filed an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 before Delhi High Court seeking appointment of Arbitral Tribunal and termination of the illegal proceedings. The Delhi High Court, vide order dated March 16, 2018, with joint consent, referred the parties to the Delhi International Arbitration Centre (DIAC) with a direction to appoint a Sole Arbitrator for adjudicating the disputes that have arisen between the parties in relation to the Indenture of Collaboration dated February 9, 2010.
• During the pendency of above-noted arbitral proceedings, the Respondent has appointed one Mr. Pradeep Kumar Kaushik, Advocate, as a Sole Arbitrator, again without prior notice or consent of other parties.
• This Sole Arbitrator, vide order dated January 3 , 2020 has freezed the bank account of the Petitioner.
• The Petitioner filed the present petition under Section 14(2) of the Arbitration and Conciliation Act, 1996, seeks termination of the mandate of the Sole Arbitrator appointed unilaterally by the Respondent.
• The Petitioner argued that the appointment of Mr. Pradeep Kumar Kaushik is an abuse of the process of the law, as the Respondent could not have invoked arbitration afresh during the pendency of the arbitral proceedings before the DIAC-appointed Arbitrator.
• The Respondent contended that Petitioner has been participating in the arbitration proceedings initiated by the Respondents before the Sole Arbitrator, without raising any objection challenging the jurisdiction of the Sole Arbitrator within the statutory period of 15 days as provided under the Act, and thus the Petitioner’s silence must be treated as acquiescence.

Issues

1. Whether the appointment of Sole arbitrator Mr. Pradeep Kumar Kaushik was valid or not?

Decision

• The Hon’ble High Court relying upon law laid down by Hon’ble Supreme Court in Perkins Eastman Architects DPC v. HSCC India Ltd., AIR 2020 SC 59, held the appointment as invalid as the unilateral appointment of an Arbitral Tribunal by any one party who is interested in the outcome or decision of the dispute is impermissible.
• The court further observed that the objections made by the Petitioner under Section 13 before the Arbitrator do not hinder the Petitioner in invoking the jurisdiction of this Court to seek termination of the mandate of the Arbitrator, on the ground of his appointment is conflicting with Section 12 of the Act. The scope and ambit of objections under Section 12 (1) read with Section 13 of the Act is distinct from objections under Section 12(5) read with Section 14 of the Act. Therefore, it cannot be said that by not filing objections before the Arbitral Tribunal under Section 13 of the Act, the Petitioner has waived its objections under Section 12(5) of the Act.
• The Hon’ble High Court in view of the aforesaid reasons and judicial pronouncements, allowed the present petition under Section 14(2) of the Arbitration and Conciliation Act, 1996.

Vipul Ganda is a Delhi based Advocate practicing largely at the Delhi High Court. His practice focus is Dispute Resolution and Litigation and his practice areas include Arbitration, Commercial, Civil, Constitutional, Corporate and Criminal Litigation.