Aravali Power Company Pvt. Ltd. vs Era Infra Engineering Ltd. - Supreme Court Important Judgment

 Aravali Power Company Pvt. Ltd. vs Era Infra Engineering Ltd. - Supreme Court Important Judgment 2017 - 

 

On 12th September, 2017, in the case of Aravali Power Company Pvt. Ltd. v. Era Infra Engineering Ltd. [Civil Appeal Nos.12627-28 of 2017], it was held that in cases governed by the Arbitration and Conciliation Act, 1996 as it stood before the Arbitration and Conciliation (Amendment) Act, 2015 came into force, the fact “that the named arbitrator is an employee of one of the parties is not ipso facto a ground to raise a presumption of bias or partiality or lack of independence on his part. There can however be a justifiable apprehension about the independence or impartiality of an employee arbitrator, if such person was the controlling or dealing authority in regard to the subject contract or if he is a direct subordinate to the officer whose decision is the subject-matter of the dispute.” It was further held that in such cases “unless the cause of action for invoking jurisdiction under Clauses (a), (b) or (c) of sub-section (6) of Section 11 of 1996 Act arises, there is no question of the Chief Justice or his designate exercising power under sub-section (6) of Section 11; that the Chief Justice or his designate while exercising power under sub-section (6) of Section 11 shall endeavour to give effect to the appointment procedure prescribed in the arbitration clause and while exercising such power under sub section (6) of Section 11, If circumstances exist, giving rise to justifiable doubts as to the independence and impartiality of the person nominated, or if other circumstances warrant appointment of an independent arbitrator by ignoring the procedure prescribed, the Chief Justice or his designate may, for reasons to be recorded ignore the designated arbitrator and appoint someone else.”

The Supreme Court further held that in cases governed by 1996 Act after the Amendment Act has come into force “if the arbitration clause finds foul with the amended provisions, the appointment of the Arbitrator even if apparently in conformity with the arbitration clause in the agreement, would be illegal and thus the Court would be within its powers to appoint such arbitrator(s) as may be permissible.”

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