ARAVALI POWER COMPANY PVT. LTD. versus MIS. ERA INFRA ENGINEERING LTD.

Citation: [2017] 11 S.C.R. 497 · Decided: 12-09-2017 · Supreme Court of India · Bench: ADARSH KUMAR GOEL, UDAY UMESH LALIT · Disposal: Disposed off

Cited by 1 judgment(s) · cites 3 · see the full citation network in Lexace

Judgment (excerpt)

[2017] l l S.C.R. 497 
ARAVALI POWER COMPANY PVT. LTD. 
v. 
MIS. ERA INFRA ENGINEERING LTD. 
(Civil Appeal Nos. 12627-12628 of2017) 
SEPTEMBER 12,2017 
[ADARSH KUMAR GOEL AND UDAY UM ESH LALIT, JJ.[ 
Arbitration and Conciliation Act. )996 - ss.11(6), 12 and 13 
- Appointment of employee of a parzv as arbitrator - Challenge to 
- Contract between appel/ant-APCPL amt respondent-E!EL for 
cons/ruction work of permanent township for a thermal power 
project - Di.1putes arose between parties - Appel/am appointed its 
Chief Executive Ojjicer (CEO) as the sole Arbitrator - Parties 
appeared bejore Arbitrator - However. later Respondent challenged 
the constitution ofarbitral tribunal - Objection rejected by Arbitrator 
- Petition by respondent before High Cimrl uls.11(6) for appointing 
<Ill independent arbitrator - High Court set aside the appointment 
of the Arbitrator alrea<~V appointed by Appel/an/ - On appeal, held: 
Mere ji1c/ that the arbitrator is a11 employee is nor ipso facto a ground 
to raise any presumption of bias or partiality - In the i11slant case. 
·the Arbitrator was nor the Engineer In-charge or the day-to-day ln-
charge of the work - The appointed Arbitrator was neither the 
Dealing Authorizv in regard to the Contract nor was direct~v sub-
ordinate to the Ojjicer(I) whose decision was the sul~iect ma/11!1" of 
dispute - There is nothing on record which could raise doubts about 
the independence or impartiality of the Arbitrator - Thus, 
appointment of the Arbitrator in question cannot be termed lo be 
illegal or 11nenjiJ1·ceahle - F11rthe1; the respondent itself participated 
in the arbitration proceedings and did not raise any challenge in 
terms of the procedure prescribed under the Act - No cause of action 
A 
B 
c 
D 
E 
F 
for exercise of power u/s.11 (6) had arisen in the present case -
High Court erred in exercising jurisdiction in the present case and G 
it ought not lo have interfered with the process and progress of 
arbitration - Arbitration, in pursuance of the appointment of the 
Arbitrator to proceed in accordance with law. 
Arbitration and Conciliation Act, 1996 - s.12 - Grounds for 
challenging tire appointment of arbitrator-Before 2015 Amendment 
497 
H 
498 
SUPREME COURT REPORTS 
[2017] l l S.C.R. 
A . Act- Contract between appel/ant-APCPL and respondent-El EL -
Disputes arose between parties - As per the contract, appellant 
appointed its Chief Executive Officer (CEO) as the sole Arbitrator 
on 19.08.2015 i.e. before 2015 Amendment came into force -
Questioning the independence of the Arbitrator already appointed, 
B petition ji/ed by respondent before High Court for appointing an 
independent arbitrator - Held: s.12(1) as it stood before the 2015 
Amendment, obliged the person approached in connection with 
possible appointment as an arbitrator. to disclose in writing any 
circwn.!lances likely to give rise to justifiable doubts as to his 
c 
D 
independence or impartiality - It is not the case of the respondent 
that there had not been any fair and correct disclosure - Thus, the 
fi1ct that the already appointed arbitrator happens to be an employee 
of one of the parties to the arbitration agreement does not by itse!t: 
bejiJre the Amendment Act ca111e into force. render such appointment 
invalid and unenforceable - Further, in pre-amendme/l/ cases, the 
terms of the agreement 011gh1 to be adhered to and/or given effect 
to as c/ose(1' as possible - Arbitration and Conciliation( Amendment} 
Act, 2015. 
A1-hitration and Conciliation Act, 1996 - s.l/(6) - Scheme of 
appointment of arbitrators - Exercise of power under - Pre and 
E post 2015 amendment - Princ1/J/es enunciated - Arbitration and 
Conciliation(Amendment) Act, 2015. 
Disposing of the appeals, the Court 
HELD: l.l In the present case, the contract provided for 
arbitration by the Project In-charge of the concerned Project, 
F . and in case such Project In-charge were to be unable or unwilling 
to act, arbitration by any person appointed by the Chairman and 
Managing Director. It further provided inter a/ia that there would 
be no objection even if the Arbitrator had dealt with the matters 
to which the contract related in the course of his duties or had 
G 
H 
expressed views on all or any of the matters in dispute or 
difference. The fact that the named arbitrator happens to be an 
employee of one of the parties to the Arbitration Agreement has 
not by itself, before the Arbitration and Conciliation(Amendment) 
Act, 2015 

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