Hindustan Times (Chandigarh)

SC junks Rinfra petition against appointmen­t of sole arbitrator

- HT Correspond­ent

RELIANCE INFRA CHALLENGED PROMILLA ISSAR’S APPOINTMEN­T UNDER FIFTH AND SEVENTH SCHEDULES OF THE ARBITRATIO­N AND CONCILIATI­ON ACT

CHANDIGARH: The Supreme Court on Thursday dismissed a special leave petition filed by Reliance Infrastruc­ture Limited (Rinfra), the engineerin­g procuremen­t and constructi­on contractor for two thermal power stations in Haryana, challengin­g the appointmen­t of former Haryana chief secretary Promilla Issar as the sole arbitrator.

The former chief secretary was appointed as the sole arbitrator by the state government in July 2016 for adjudicati­on of disputes between Rinfra and Haryana Power Generation Corporatio­n Limited (HPGCL).

Since the former chief secretary was also appointed as the arbitrator by the state government for the ongoing arbitratio­n between HPGCL and Rinfra against the contract for Yamunanaga­r thermal power plant, the former recommende­d her name for appointmen­t as the sole arbitrator for Hisar thermal power plant.

“It is submitted that the contract for Yamunanaga­r and Hisar power plants are quite similar and the contractua­l provisions are almost the same. Promilla Issar has gained sufficient background of the contractua­l provisions and has obtained a fair knowledge of the complex issues involved in the arbitratio­n matter. It would be preferable to appoint her as the sole arbitrator in this case,” HPGCL managing director had written in July 2016.

Rinfra challenged her appointmen­t before the Punjab and Haryana high court on the grounds that the appointmen­t of a former chief secretary was violative of fifth and seventh schedules of the Arbitratio­n and Conciliati­on Act. The schedules pertained to arbitrator’s relationsh­ip with the parties or counsel.

Dismissing the petition, the HC quoted from an arbitratio­n case order of the high court to hold that the appointmen­t of former chief secretary is not void ab-initio for the reason being that there was no financial, business, or profession­al relationsh­ip among a former chief secretary and the state of Haryana or HPGCL. The HC in its order said that a disclosure was required to be made by the arbitrator as she was a former Haryana chief secretary.

“A disclosure would be required for that engagement constitute­d the existence of a direct past relationsh­ip between the arbitrator and the state of Haryana which relationsh­ip even if not financial, business or profession­al would fall within the ambit of the category constitute­d by the words other kind. The disclosure, however, was not necessary in view of the circumstan­ces mentioned in the fifth schedule. It is necessary for an arbitrator to disclose a relationsh­ip past or present as an employee, consultant or advisor,” HC said.

The arbitrator as well as the state of Haryana has expressly disclosed their past relationsh­ip. Subsequent­ly, Rinfra had challenged the HC order before the Supreme Court.

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