PERKINS EASTMAN ARCHITECTS DPC & ANOTHERS V. HSCC( INDIA) LTD.
Facts of the case
The consortium of the applicants (Perkins Eastman Architects DPC and Edifice Consultants Pvt limited) entered into an agreement with Respondent ( HSCC India Ltd.)
According to the agreement, the applicants were to do some architectural & planning work for the HSCC India Ltd. The letter of award was issued in the favor of the applicants and a contract was entered between the applicants and the respondent. According to the clause 24 of the entered contract, the respondent company (HSCC India Ltd) shall appoint a sole arbitrator to adjudicate the dispute between the parties.
The respondent issued the notice against the applicants for the failure of the contractual obligations and later the termination letter was sent to applicants.
In reply to that a notice was issued by the Advocate of the applicants for invoking clause 24 of the dispute resolution.
According to the clause 24 of the contract, the respondent was required to take decision within one month, in regard to the mentioned notice dated 11.04.2019 but a reply to it was sent after thirty days i.e. on 10.05.2019.
The applicants filed an appeal before Director (Engineering) in respect to the clause 24, but due to complete failure in discharge of the obligations. The Chief Managing Director of the respondent was called upon through letter dated 28.06.2019, to appoint a sole arbitrator.
The Chief General Manager of the respondent appointed Major General K.T Gajaria as the sole arbitrator, but after 30 days (i.e. 30.07.2019
Contention raised by the Applicants
- In respect to the clause 24 of the contract, only the Chairman and the Managing Director were having the competent jurisdiction to appoint a sole arbitrator.
- The respondent failed to appoint an arbitrator within the prescribed period.
- An independent and impartial arbitrator was required to be appointed.
- The matter was an International Commercial Arbitration as the applicant 1 (Perkins Eastman Architects DPC) was the lead member of the consortium.
Contention raised by the respondent
- The appointment of the sole arbitrator (Major General K.T Gajaria) was done in accordance with clause 24 of the contract.
- The appointment of an arbitrator was done within the period prescribed. So the appointment made is not illegal in anyway.
- The matter was not an International Commercial Arbitration as both the applicants were jointly and severally liable for the implementation of the project.
Issue raised before the Supreme Court
- Whether the arbitration in the present case would be an International Commercial Arbitration or not?
- Whether the court had the power to appoint an arbitrator, in this case?
Supreme Court Verdict
In regard to issue 1 the honorable Court held that in this case the contents of section 2(1)(f) of the act are satisfied. As the lead member of the consortium agreement had its registered office in New York therefore the matter was of an International Commercial Arbitration.
In regard to issue 2 , the SC relied on the decision of TRF Limited v Energy Engineering Projects Limited(2017), observed that where the party who has interest in the result of the dispute must not have the power to appoint sole arbitrator.
Also the SC referred to the decision made in Indian Oil case, it was held the competent court can appoint an impartial and independent arbitrators if there are reasonable doubts as to the impartiality of the nominated arbitrator.
In this case, the SC had held that the court of competent jurisdiction has the right to appoint the arbitrator subject to mandatory declaration under the amended section 12 of the Act.