Court dismisses petition challenging arbitrator's eligibility and procedural bias, emphasizing post-award grievance redressal
In a recent judgment by the Jammu and Kashmir High Court, presided over by Mr. Sanjay Dhar, the court dismissed a petition filed by the Union Territory of Jammu and Kashmir challenging the mandate of an arbitral tribunal in a contract dispute with M/s SRM Contractors Ltd. The petitioner had sought termination of the tribunal's mandate under Section 14 of the Arbitration and Conciliation Act, 1996, citing alleged bias and procedural improprieties.
The dispute originated from a contract for the upgradation of the Tutan di Khuie to Khada-Madana Road under the Jhelum Tawi Flood Recovery Project. The petitioner objected to the appointment of Engineer Khalid Muzaffar as an arbitrator, citing his previous role as a Director of Jammu and Kashmir Economic Reconstruction Agency (ERA) and alleged lack of impartiality. The petitioner argued that Muzaffar's past employment with the petitioner made him ineligible under Section 12(5) and the Seventh Schedule of the Act.
The court examined the provisions of the Arbitration and Conciliation Act, particularly Sections 12, 14, and 34, and noted that mere past employment does not render an arbitrator ineligible unless additional relationships, such as being a consultant or advisor, exist. The court referenced Supreme Court rulings, including HRD Corporation v. Gail (India) Limited, to emphasize that ineligibility goes to the root of the appointment, but procedural bias must be addressed post-award under Section 34.
The court also dismissed the petitioner's claims of procedural bias, including site inspections conducted by the tribunal without proper notice. It reaffirmed the legal position that grievances related to procedural conduct or bias can only be addressed during the challenge to the arbitral award under Section 34, not during ongoing proceedings.
The judgment underscored the importance of adhering to the procedural framework set by the Arbitration and Conciliation Act, 1996, and reiterated that challenges to an arbitral tribunal's jurisdiction or impartiality dismissed under Section 16 must proceed to award before any grievance can be raised under Section 34.
The dismissal of the petition highlights the judiciary's stance on maintaining the integrity of arbitral proceedings and ensuring that challenges to arbitrator eligibility and procedural bias are addressed within the confines of established legal provisions.
Bottom Line:
Arbitration and Conciliation Act, 1996 - Former employee of a party does not automatically become ineligible to act as an arbitrator unless specific grounds of ineligibility under Section 12(5) read with the Seventh Schedule of the Act are established.
Statutory provision(s): Arbitration and Conciliation Act, 1996 Sections 12(5), 14(1)(a), 16, 34
