This is an arbitration case in which a petition was filed under section 11 of the Arbitration and Conciliation Act.

Facts

The parties entered into a contract for work. Pursuant to disputes having arisen under the Contract, the petitioner invoked the arbitration clause in the Contract. Upon receiving the petitioner's request, the respondent requested the appointment of a Gazetted Officer (JAG/SAG) of the Railways (respondent) as an arbitrator but did not refuse the disputes between the parties. However, the respondent's request required the petitioner to waive its right of objection under section 12(5) of the Arbitration Act. The respondent further submitted before the Court that it is agreeable to arbitration according to clause 64 of the GCC, but the appointment of an arbitrator is held up for want of the requisite waiver from the petitioner.

The petitioner submitted that it had a justifiable doubt in respect to the impartiality of the arbitral proceedings when the respondent's own officer was proposed as sole arbitrator. It was further submitted that once the petitioner is aware of the contravention of section 12(5) of the Arbitration Act, the respondent could not have directed the petitioner to furnish a waiver. Therefore, a prayer was made before the Court to appoint an independent Arbitrator.

Issue 

The issue in the present case was whether the respondent could insist on the appointment of a Gazetted Officer of Railways as an arbitrator in the aforementioned proceedings, particularly in the light of apprehension expressed by the petitioner and the express provision under Section 12(5) of the Arbitration Act.

Judgment

The question was held to be whether the respondent could insist on the appointment of a Gazetted Officer of Railways as an arbitrator in the aforementioned proceedings, particularly in the light of apprehension expressed by the petitioner and the express provision under Section 12(5) of the Arbitration Act.

The Court relied on the decision of the Apex Court in Perkins Eastman Architects DPC v. HSCC (India) Ltd. to hold that a person who is interested in the consequence of the arbitration must be incompetent to not only act as an arbitrator but also to appoint anyone else as an arbitrator. Therefore, the petitioner's prayer for the appointment of an independent arbitrator was granted. The Court dismissed the respondent's arguments for the appointment of Gazetted Officer from the Railways. Furthermore, it was held that a party cannot be compelled to furnish a waiver from the applicability of Section 12(5) of the Arbitration Act.

Before commencing arbitration proceedings, the Arbitrator will ensure compliance of Section 12 of the Act and the fees of the Arbitrator shall be governed by Schedule IV of the Act. The arbitration proceeding will be conducted under the aegis of the Delhi International Arbitration Centre (DIAC). A copy of this order is sent to the Delhi International Arbitration Centre (DIAC) as also the learned Arbitrator, for information and necessary action. The petition stands disposed of.