PERKINS EASTMAN ARCHITECTS DPC & ANR.C (INDIA) LTD. versus HSCC (INDIA) LTD

Citation: [2019] 17 S.C.R. 275 · Decided: 26-11-2019 · Supreme Court of India · Bench: UDAY UMESH LALIT, INDU MALHOTRA

Cited by 3 judgment(s) · cites 4 · see the full citation network in Lexace

Judgment (excerpt)

A
B
C
D
E
F
G
H
275
PERKINS EASTMAN ARCHITECTS DPC & ANR.
v.
HSCC (INDIA) LTD.
(Arbitration Application No. 32 of 2019)
NOVEMBER 26, 2019
[UDAY UMESH LALIT AND INDU MALHOTRA, JJ.]
Arbitration and Conciliation Act, 1996 :
ss. 2(1)(f), 11(12)(a) and 11(6) – Termination of contract –
Appointment of sole  Arbitrator  –  Application  u/ss.  11(12)(a)
and  11(6)  by  the  contraCtor company on the grounds that sole
Arbitrator waS not appointed by Competent Authority; that such
appointment was beyond the period prescribed and that an
independent and impartial arbitrator was required to be appointed
– Objection  to  maintainability of the application – Held : In  the
facts  of  the present  case, the arbiration is an International
Commercial Arbitration and hence the application is maintainable
–  However,  the delay in appointing the Arbitrator cannot be said
to be of such magnitude to attract exercise of power u/s 11 – If
there are justifiable doubts as to the independence and impartiality
of the sole arbitrator, and if other circumstances warrant
appointment of an independent Arbitrator by ignoring the
procedure prescribed, such appointment can be made by the Court
–  In the facts of the present  case, the application is entertainable
– Retired Judge of Supreme Court appointed as the sole Arbitrator.
Arbitration:
Appointment of sole Arbitrator  –  Held  :  Where  only  one
party has a right to appoint sole Arbitrator, its choice will always
have an element of exclusivity in determining or charting the
course for dispute resolution – The person having interest in the
outcome or decision of the dispute, must not have the power to
appoint sole arbitrator and in such case appointment can be made
by the Court.
Allowing the arbitration applications, the Court
HELD: 1. It is not disputed by the respondent that it was
a requisite condition to declare a lead member of the Consortium
   [2019] 17 S.C.R. 275
275
A
B
C
D
E
F
G
H
276
SUPREME COURT REPORTS
[2019] 17 S.C.R.
and the applicant No.1 was shown to be the lead member of the
Consortium. Even if the liability of both the applicants was stated
in Clause 9 of the Consortium Agapplicant No.1 to be the lead
member. The lead member of the Consortium company i.e.
applicant No.1 being an Architectural Firm having its registered
office in New York, requirements of Section 2(1)(f) of the
Arbitration and Conciliation Act, 1996 are satisfied and the
arbitration in the present case would be an “International
Commercial Arbitration” [Paras 8 and 10] [286-A-B; 289-A-B]
Larsen and Toubro Limited SCOMI Engineering BHD
v. Mumbai Metropolitan Region Development Authority
(2019) 2 SCC 271 : [2018] 14 SCR 22 – relied on.
2. The communication invoking arbitration in terms of
Clause 24 was sent by the Applicants on 28.06.2019 and the
period within which the respondent was to make the necessary
appointment expired on 28.07.2019. The next day was a working
day but the appointment was made on Tuesday, the 30th July,
2019. Technically, the appointment was not within the time
stipulated but such delay on part of the respondent could not
be said to be an infraction of such magnitude that exercise of
power by the Court under Section 11 of the Act merely on that
ground is called for. [Para 12] [289-C-E]
3.1. In the present case, Clause 24 of the Agreement
empowers the Chairman and Managing Director of the
respondent to make the appointment of a sole arbitrator and said
Clause also stipulates that no person other than a person
appointed by such Chairman and Managing Director of the
respondent would act as an arbitrator. In a case where only one
party has a right to appoint sole arbitrator, its choice will always
have an element of exclusivity in determining or charting the
course for dispute resolution. Naturally, the person who has an
interest in the outcome or decision of the dispute must not have
the power to appoint a sole arbitrator. That has to be taken as
the essence of the amendments brought in by the Arbitration
and Conciliation (Amendment) Act, 2015 (Act 3 of 2016) and
recognised by the decision of this Court in *TRF Limited. [Paras
13 and 16] [289-E-F; 295-B-D]
A
B
C
D
E
F
G
H
277
3.2 If there are justifiable doubts as to the independence
and impartiality of the person nominated, and if other
circumstances warrant appointment of an independent arbitrator
by ignoring the procedure prescribed, such appointment can be
made by the Court. On the issue of necessity and desirability of
impartial and inde

Excerpt shown. Read the full judgment & AI analysis in Lexace.