SC junks Rinfra petition against appointment of sole arbitrator
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.