Court Finds Prima Facie Disqualification of District Collector as Arbitrator in National Highways Project Dispute
In a significant decision, the Kerala High Court has stayed the arbitration order issued by the District Collector acting as an arbitrator in a dispute related to National Highways projects. The court's intervention came in response to a writ petition filed by Hashim C.K., challenging the appointment of the District Collector as the arbitrator due to a potential conflict of interest under the Arbitration and Conciliation Act, 1996.
The issue arose under the National Highways Act, where the District Collector was appointed as the arbitrator for disputes concerning compensation for land acquisition. The petitioner, represented by a team of advocates, argued that the District Collector is disqualified under Section 12(5) of the Arbitration and Conciliation Act, 1996, read with Schedule VII, due to the State Government's 25% financial stake in the National Highway projects. Given that the District Collector is a state employee, this relationship potentially compromises the impartiality required for arbitration.
Justice C. Jayachandran, presiding over the case, agreed with the petitioner's submissions, highlighting that the provisions of the Arbitration and Conciliation Act apply to all arbitrations under the National Highways Act, as per Section 3G(6). The court noted that the District Collector's dual role as a state employee and arbitrator raises questions about impartiality, especially since the State Government has a vested interest in the project.
The court further emphasized the strong prima facie case presented by the petitioner, which necessitated staying the arbitration proceedings. It directed the 8th respondent to keep the arbitration reference in abeyance until further orders, ensuring that any continuation of proceedings would not result in a precarious situation if the writ petition is ultimately allowed.
This decision underscores the judiciary's role in ensuring fairness and impartiality in arbitration proceedings, particularly when potential conflicts of interest are evident. The case has been posted for further hearing on July 6, 2026.
Bottom line:-
Arbitration and Conciliation Act, 1996 - Section 12(5), read with Schedule VII - Disqualification of District Collector as Arbitrator under National Highways Act due to relationship as an employee with State Government, which has a 25% stake in National Highway projects - Held, prima facie, such appointment is hit by disqualification.
Statutory provision(s): Arbitration and Conciliation Act, 1996 - Section 12(5), Schedule VII, Section 2(4); National Highways Act - Section 3G(5), Section 3G(6).
Hashim C.K. v. Union of India, (Kerala) : Law Finder Doc id # 2925252
