Bhayana Builders Pvt Ltd v. Oriental Structural Engineers Pvt Ltd

NAVIN CHAWLA, J FEBRUARY 21, 2018/Arya

Page 1 * IN THE HIGH COURT OF DELHI AT NEW DELHI + O.M.P. (T) (COMM.) 101/2017 & I.A. No.14596/2017 (stay) + O.M.P. (T) (COMM.) 105/2017 & I.A. Nos.14787-88/2017 Reserved on: 6th February,2018 Date of decision: 21st February, 2018 BHAYANA BUILDERS PVT LTD ..... Petitioner Through Mr. Gaurav Mitra with Ms. Simran Brar, Ms. Devina Sehgal, Ms. Medhavi Singh, Ms. Deveshi Mishra, Ms. Shriya Ray Chaudhuri & Ms. Anjali Dwivedi, Advs. versus ORIENTAL STRUCTURAL ENGINEERS PVT LTD.....Respondent CENTRAL PARK INFRASTRUCTURE DEVELOPMENT PVT.LTD ..... Respondents Through Mr.Anil K.Airi, Sr. Adv. with Mr.Sunil Chandwani, Mr.Ravi Chandna, Ms.Bindiya Logawney, Ms.Sadhna Sharma, Ms.Sukanya Lal and Ms.Satyam Bhatia, Advs. CORAM: HON'BLE MR. JUSTICE NAVIN CHAWLA 1. These petitions have been filed under Section 14(2) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the 'Act') praying for termination of the mandate of the Sole Arbitrator appointed by the Managing Director of the respondent. 2. Learned counsel for the petitioner, relying upon the judgment of the Supreme Court in TRF Limited v. Energo Engineering Projects Ltd., (2017) 8 SCC 377 has submitted that the Arbitration Agreement between Page 2 the parties in so far as that it provides that the Sole Arbitrator shall be nominated by the Managing Director of the respondent, would no longer be enforceable in view of the Section 12(5) of the Act. Though, various other pleas have also been raised in the petition to challenge the Arbitrator so appointed, the learned counsel for the petitioner fairly submits that as these are not relatable to Section 12(5) of the Act, in view of the judgment of the Supreme Court in HRD Corporation v. GAIL (India) Limited, MANU/SC/1066/2017, the petitioner would not press the same in the present petition, reserving its right to agitate the same in its application under Section 34 of the Act, if required. 3. I may at the outset note that the plea that has been raised by the petitioner is no longer res-integra and recently a Coordinate Bench of this Court in D.K. Gupta & Anr. v. Renu Munjal, 2017 SCC Online Del 12385, considering the effect of Section 12(5) of the Act and the judgment of the Supreme Court in TRF (supra) has held as under: "8. However the arbitration clause pertaining to this case is on a different note. Here an arbitrator so appointed is not an employee of a party to the agreement. The arbitration clause herein rather gives a choice to one of the parties viz a lender to appoint an arbitrator. Thus perhaps is a striking difference between the two arbitration clauses viz., clause 33 of TRF Ltd. (supra) and clause 8.9.4 of the agreement dated 02.09.2013 herein. In TRF Ltd. (supra) the Managing Director of the buyer, being an employee of the buyer in a way represents the buyer itself, which is not the case here. Admittedly there exist no bar under the Act which restrains a party to appoint an Arbitrator. Rather section 11(2) of the Arbitration and Conciliation Page 3 Act, 1996 empowers the parties to agree on a procedure for appointment of an arbitrator, which exactly is the situation here. Section 11(2) is reproduced as under:- "11. Appointment of arbitrators - … (2) Subject to sub-section (6), the parties are free to agree on a procedure for appointing the arbitrator or arbitrators." 9. When there exists no prohibition in the Act for a party to appoint an arbitrator, then a lender or a buyer, per any agreement, may have a right to choose an arbitrator, as even noted in para 17 of TRF (supra) as under : - "17. First we shall address the issue whether the Court can enter into the arena of controversy at this stage. It is not in dispute that the Managing Director, by virtue of the amended provision that has introduced sub- section (5) to Section 12, had enumerated the disqualification in the Seventh Schedule. It has to be clarified here that the agreement had been entered into before the amendment came into force. The procedure fo