The Delhi High Court recently in Oyo Hotels & Homes Pvt. Ltd. v. Rajan Tewari & Anrwhile deciding a petition under Section 11(6) of the Arbitration & Conciliation Act, 1996, held that a Court has the power to set aside the appointment of an arbitrator, if the appointment is ex-facie contrary to the arbitration clause, and thus is non est in law.

It has so been said in view of pertinent observations of the Hon’ble Supreme Court in Perkins Eastman Architects DPC & Anr. vs. HSCC (India) Ltd. 2019 SCC Online SC 1517 wherein it has been categorically stated that “in cases where one party has a right to appoint a 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.”

The afore-noted dictum of Hon’ble Supreme Court in Perkins Eastman (Supra), has been followed by Coordinate Benches of this Court in Proddatur Cable Tv Digi Services Vs. Siti Cable Network Limited 2020 SCC OnLine Del 350 and VSK Technologies Private Limited and Others Vs. Delhi Jal Board 2021 SCC OnLine Del 3525 in unequivocal terms.

 

 Important Supreme Court Judgments

  1. Perkins Eastman Architects DPC & Anr. Vs. HSCC (India) Ltd. 2019 SCC Online SC 1517
  2. TRF LimitedVs. Energo Engineering Projects Limited(2017) 8 SCC 377

There is no dispute to the ratio of law laid down by the Hon’ble Supreme Court in Union of India Vs. Pradeep Vinod Construction Company (2020) 2 SCC 464, wherein it is held that when the agreement specifically provides for appointment of a named Arbitrator, the appointment should be done in terms of the Agreement unless there are exceptional reasons. However, the said decision does not deal with the provisions of Section 12(5) of the Act.

Also, decision in Central Organization for Railway Electrification vs. M/s. ECI-SPIC-SMO-MCML (JV) A Joint Venture Company 2020(14) SCC 712 has been referred to the Larger Bench and is thus, not applicable to the present case.

Section 12(5) read with Schedule VII of the Arbitraiton and Concilaition Act deals with the impartiality and independence of arbitrator and prescribes ineligibility of a person to be appointed as an arbitrator.

 

   

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