Haryana Space Application Centre (HARSAC) & Anr. V. M/S Pan India Consultants Pvt. Ltd.
Civil Appeal No. 131 Of 2021 (Arising Out Of Special Leave Petition (Civil) No. 13503 Of 2020)
Decided on January 20, 2021.
Counsel for the appellants: Additional Advocate General
Counsel for the Respondent: Mr. Angad Mehta
The current case was decided by a three-judge bench of the Supreme Court consisting of Justice L. Nageswara Rao, Justice Indu Malhotra and Justice Ajay Rastogi.
The appellant, HARSAC invited Request for Proposal in September 2010 from qualified vendors for the modernisation of Land. HARSAC vide Letter dated 28.02.2011 awarded the contract to the Respondent – Pan India Consultants Pvt. Ltd, and three other vendors for works specified in the allotment letter. In pursuance thereof, Service Level Agreements were executed between the parties. As per HARSAC, the Respondent failed to complete the work assigned within the period specified i.e. 31.12.2011, and was delaying the entire project. This led to the invocation of the Performance Bank Guarantee by HARSAC vide letter dated 18.03.2014.
The Respondent challenged this action by filing Civil Suit before the Delhi High Court. The High Court disposed of the Suit. HARSAC invoked the arbitration clause contained in the Service Level Agreement and appointed Shri. Anurag Rastogi, IAS, Principal Secretary to Government of Haryana as their nominee arbitrator. The Respondent appointed Justice Rajive Bhalla (Retd.) as their nominee arbitrator on 14.09.2016.. On 14.09.2016, the arbitral tribunal stood constituted. On 03.08.2018, the arbitral tribunal in its 28th sitting, recorded in the proceedings that the arguments were heard, and the matter was reserved for passing the Award. However, since, the arbitral proceedings were not completed within the statutory period of 1 year as prescribed by the Arbitration and Conciliation Act, 1996 or the extended period of 6 months, the mandate of the arbitral tribunal would stand terminated.
The Respondent filed an Application under Section 29A(4) of the Arbitration Act before the Additional District Judge, Chandigarh for extension of time for passing the Award. The District Judge vide its Order dated 08.11.2019 granted an extension of time of 3 months to the tribunal to conclude the arbitration proceedings, and pronounce the Award. The Appellant filed Civil Revision Petition under Article 227 of the Constitution before the Punjab and Haryana High Court for setting aside the Order dated 08.11.2019 passed by the Additional District Judge. The learned Single Judge of the High Court passed an Interim Order dated 31.07.2020 wherein it was observed that since the period of 3 months granted by the District Court had already elapsed, both parties were directed to obtain instructions for grant of a period of 3 months on account of the prevailing Pandemic.
The Petition was heard on 24.08.2020, when the learned Additional Advocate General, Haryana opposed the extension of time. The High Court, in light of the current Pandemic, granted an extension of 4 months to enable the parties to conclude their arguments within 3 months, and a period of 1 month for the tribunal to pass the Award. Aggrieved by the said Order, HARSAC has filed the present Special Leave Petition.
The Court heard the Counsels for both parties.
The Court observed:
We find that even though a period of over 4 years has elapsed since the constitution of the tribunal on 14.09.2016, the Award has not been pronounced so far, even though the tribunal had on two occasions i.e. 03.08.2018 in its 28th sitting, and thereafter in the letter dated 08.02.2019 addressed by the arbitrators, recorded that the tribunal was ready to pronounce the Award forthwith. (Para 16)
The Court stated that the Principal Secretary to the Government of Haryana would be ineligible to be appointed as an arbitrator in the present case:
We are of the view that the appointment of the Principal Secretary, Government of Haryana as the nominee arbitrator of HARSAC which is a Nodal Agency of the Government of Haryana, would be invalid under Section 12(5) of the Arbitration and Conciliation Act, 1996 read with the Seventh Schedule. Section 12(5) of the Arbitration Act, 1996 (as amended by the 2015 Amendment Act) provides that notwithstanding any prior agreement to the contrary, any person whose relationship with the parties, or counsel, falls within any of the categories specified in the Seventh Schedule, shall be ineligible to be appointed as an arbitrator. (Para 17)
The Counsel for both parties consented to the substitution of the existing tribunal, by the appointment of a Sole Arbitrator to complete the arbitral proceedings. The Court directed the appointment of a Sole Arbitrator and that both parties share the fees payable to him:
In exercise of our power under Section 29A(6) of the Arbitration and Conciliation Act, 1996 (as amended), we hereby appoint Justice Kurian Joseph (Retd.), former judge of this Court, as the substitute arbitrator, who will conduct the proceedings in continuation from the stage arrived at, and pass the Award within a period of 6 months from the date of receipt of this Order. (Para 18)
The Court disposed the appeals.
View/Download judgment: Haryana Space Application Centre (HARSAC) & Anr. V. M/S Pan India Consultants Pvt. Ltd.
Jhanavi M
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