In the realm of legal proceedings, the analysis by courts plays a crucial role in assessing arbitration delays. Understanding the legal intricacies involved is essential for all parties seeking resolution. Explore how the courts navigate such complexities and the impact it has on the arbitration process in our upcoming blog post.
Facts
- HARSAC invited Request for Proposal in September 2010 for the modernisation of Land Record.
- Contract awarded to Pan India Consultants Pvt. Ltd by HARSAC in February 2011.
- Service Level Agreements executed between the parties.
- Arbitration invoked due to failure by Respondent to complete work within specified period.
- Multiple extensions granted but work remained incomplete.
- HARSAC filed Special Leave Petition after extended period expired.
- Respondent challenged HARSAC’s action in Delhi High Court.
- Arbitral tribunal constituted on 14.09.2016.
- Tribunal yet to pronounce Award as of current date.
- The High Court granted an initial extension of 4 months for parties to conclude arguments and for the tribunal to pass the Award.
- Multiple extensions were granted due to delays in concluding the proceedings.
- The tribunal failed to pronounce the Award within a period of over 28 months from its constitution.
- The High Court disposed of the suit directing the Respondent-Contractor to keep bank guarantees alive pending resolution.
- The arbitrator stated the tribunal was ready to pronounce the award.
- The learned Single Judge passed an Interim Order directing parties to seek a further extension due to the Pandemic.
- The tribunal reserved the case for passing the Award after 28 sittings.
- Extensions of the arbitration period were granted but the Award was still not pronounced.
- The Appellant filed a Civil Revision Petition to set aside the extension granted for passing the Award.
Also Read: Upholding Judicial Integrity: Importance of Reasoned Judgments
Arguments
- Over 4 years have passed since the tribunal was constituted on 14.09.2016, but the Award has not been pronounced yet.
- The tribunal had indicated readiness to pronounce the Award on two occasions – 03.08.2018 and in a letter dated 08.02.2019.
- Appointment of the Principal Secretary, Government of Haryana as the nominee arbitrator of HARSAC is deemed invalid under Section 12(5) of the Arbitration and Conciliation Act, 1996.
- Section 12(5) of the Arbitration Act, 1996, along with the Seventh Schedule, outlines the ineligibility criteria for arbitrators based on their relationship with the parties.
- The appointment of the Principal Secretary falls under Item 5 of the Seventh Schedule, making it a mandatory and non-derogable provision of the Act.
Also Read: Analysis of Consent Orders and Appellants’ Rights
Analysis
- Principal Secretary to the Government of Haryana would be ineligible to be appointed as an arbitrator in this case.
- The Principal Secretary would have a controlling influence on the Appellant Company as a nodal agency of the State.
Also Read: Legal Analysis: Appointment of Sole Arbitrator Under 1996 Act
Decision
- Justice Kurian Joseph (Retd.) appointed as substitute arbitrator to continue proceedings
- Deadline of 6 months given for passing the Award
- Arbitrator to make declarations of independence, impartiality, and ability to devote time
- Proceedings to be conducted virtually or at the seat of arbitration in Haryana
- Arbitrator to charge fees as per Fourth Schedule of the Arbitration and Conciliation Act, 1996
- Both parties to equally share fees payable to the Sole Arbitrator
- Consent of Counsel for both parties for appointment of Sole Arbitrator for completing arbitral proceedings
Case Title: HARYANA SPACE APPLICATION CENTRE (HARSAC) Vs. M/S PAN INDIA CONSULTANTS PVT. LTD. (2021 INSC 33)
Case Number: C.A. No.-000131-000131 / 2021
