Holding

The Supreme Court held that the arbitration is international commercial, the delay does not alone merit intervention, but the doubts about independence and the fact that the appointing authority had a vested interest permit the Court to appoint an independent sole arbitrator under Section 11(6).

Summary

Perkins Eastman Architects DPC & Anr (applicants) entered into a design‑consultancy contract with HSCC (India) Ltd (respondent) that contained Clause 24 for dispute resolution by a sole arbitrator appointed by the Chairman and Managing Director (CMD) of HSCC. The applicants invoked arbitration on 28 June 2019; the respondent was required to appoint an arbitrator within 30 days but appointed Major General K.T. Gajria on 30 July 2019, two days late and through the Chief General Manager instead of the CMD. The applicants challenged the appointment on the grounds of procedural delay, lack of authority, and doubts about the independence and impartiality of the appointed arbitrator, filing an application under Sections 11(6) and 11(12)(a) of the Arbitration and Conciliation Act, 1996. The Supreme Court held that the dispute qualified as an International Commercial Arbitration because the lead member of the consortium, Perkins Eastman, is a foreign entity, making the application maintainable. While the delay was not sufficient to invoke Section 11 on its own, the Court found justifiable doubts about the independence of an arbitrator appointed by a party with a vested interest and therefore exercised its power under Section 11(6) to appoint an independent sole arbitrator, former Supreme Court Judge Dr. A.K. Sikri. The Court annulled the respondent’s appointment and ordered the new arbitrator, also disposing of two similar applications (Nos. 34 and 35 of 2019) in the same manner.

Issues considered

The dispute is an International Commercial Arbitration within the meaning of Section 2(1)(f) of the Arbitration and Conciliation Act, 1996.
Whether the delay in appointing the sole arbitrator by the respondent justifies the Court’s intervention under Section 11 of the Act.
Whether the appointment of a sole arbitrator by the CMD (or a person acting on his behalf) raises justifiable doubts about independence and impartiality, warranting Court‑appointed arbitrator under Section 11(6) read with Section 11(12)(a).

Legislation cited

Arbitration and Conciliation Act, 1996s. 11(12)(a), s. 11(6), s. 12(5), s. 2(1)(f), s. 29A

Subjects

ArbitrationInternational Commercial ArbitrationSection 11 Arbitration ActAppointment of Sole ArbitratorIndependence and ImpartialityConsortium Lead MemberDelay in AppointmentLaw Commission Report 246Section 2(1)(f) definitionSection 12(5) ineligibility

Judgment

[2019] 17 S.C.R. 275 275

PERKINS EASTMAN ARCHITECTS DPC & ANR. A
v.
HSCC (INDIA) LTD.
(Arbitration Application No. 32 of 2019)
NOVEMBER 26, 2019 B
[UDAY UMESH LALIT AND INDU MALHOTRA, JJ.]
Arbitration and Conciliation Act, 1996 :
ss. 2(1)(f), 11(12)(a) and 11(6) – Termination of contract –
Appointment of sole Arbitrator – Application u/ss. 11(12)(a) C
and 11(6) by the contraCtor company on the grounds that sole
Arbitrator waS not appointed by Competent Authority; that such
appointment was beyond the period prescribed and that an
independent and impartial arbitrator was required to be appointed
– Objection to maintainability of the application – Held : In the
D
facts of the present case, the arbiration is an International
Commercial Arbitration and hence the application is maintainable
– However, the delay in appointing the Arbitrator cannot be said
to be of such magnitude to attract exercise of power u/s 11 – If
there are justifiable doubts as to the independence and impartiality
of the sole arbitrator, and if other circumstances warrant E
appointment of an independent Arbitrator by ignoring the
procedure prescribed, such appointment can be made by the Court
– In the facts of the present case, the application is entertainable
– Retired Judge of Supreme Court appointed as the sole Arbitrator.
Arbitration: F
Appointment of sole Arbitrator – Held : Where only one
party has a right to appoint sole Arbitrator, its choice will always
have an element of exclusivity in determining or charting the
course for dispute resolution – The person having interest in the
outcome or decision of the dispute, must not have the power to G
appoint sole arbitrator and in such case appointment can be made
by the Court.
Allowing the arbitration applications, the Court
HELD: 1. It is not disputed by the respondent that it was
a requisite condition to declare a lead member of the Consortium H
275
276 SUPREME COURT REPORTS [2019] 17 S.C.R.

A and the applicant No.1 was shown to be the lead member of the
Consortium. Even if the liability of both the applicants was stated
in Clause 9 of the Consortium Agapplicant No.1 to be the lead
member. The lead member of the Consortium company i.e.
applicant No.1 being an Architectural Firm having its registered
office in New York, requirements of Section 2(1)(f) of the
B
Arbitration and Conciliation Act, 1996 are satisfied and the
arbitration in the present case would be an “International
Commercial Arbitration” [Paras 8 and 10] [286-A-B; 289-A-B]
Larsen and Toubro Limited SCOMI Engineering BHD
C v. Mumbai Metropolitan Region Development Authority
(2019) 2 SCC 271 : [2018] 14 SCR 22 – relied on.
2. The communication invoking arbitration in terms of
Clause 24 was sent by the Applicants on 28.06.2019 and the
period within which the respondent was to make the necessary
D appointment expired on 28.07.2019. The next day was a working
day but the appointment was made on Tuesday, the 30 th July,
2019. Technically, the appointment was not within the time
stipulated but such delay on part of the respondent could not
be said to be an infraction of such magnitude that exercise of
power by the Court under Section 11 of the Act merely on that
E
ground is called for. [Para 12] [289-C-E]
3.1. In the present case, Clause 24 of the Agreement
empowers the Chairman and Managing Director of the
respondent to make the appointment of a sole arbitrator and said
F Clause also stipulates that no person other than a person
appointed by such Chairman and Managing Director of the
respondent would act as an arbitrator. In a case where only one
party has a right to appoint sole arbitrator, its choice will always
have an element of exclusivity in determining or charting the
course for dispute resolution. Naturally, the person who has an
G interest in the outcome or decision of the dispute must not have
the power to appoint a sole arbitrator. That has to be taken as
the essence of the amendments brought in by the Arbitration
and Conciliation (Amendment) Act, 2015 (Act 3 of 2016) and
recognised by the decision of this Court in *TRF Limited. [Paras
H 13 and 16] [289-E-F; 295-B-D]
PERKINS EASTMAN ARCHITECTS DPC & ANR. v. 277
HSCC (INDIA) LTD.

3.2 If there are justifiable doubts as to the independence A
and impartiality of the person nominated, and if other
circumstances warrant appointment of an independent arbitrator
by ignoring the procedure prescribed, such appointment can be
made by the Court. On the issue of necessity and desirability of
impartial and independent arbitrators the matter was considered
B
by the Law Commission in its Report No.246 Paragraphs 53 to
60 under the heading “Neutrality of Arbitrators”. The
imperatives of creating healthy arbitration environment demand
that the instant application deserves acceptance. [Paras 18 and
20] [297-C-E; 300-B-C]
*TRF Limited v. Energo Engineering Projects Limited C
(2017) 8 SCC 377 : [2017] 7 SCR 409 ; Indian Oil
Corpn. Ltd. v. Raja Transport (P) Ltd. (2009) 8 SCC
520 : [2009] 13 SCR 510 ; Voestapline Schienen Gmbh
v. Delhi Metro Rail Corpn. Ltd. (2017) 4 SCC 665 –
relied on. D
Bharat Broadband Network Limited v. United Telecoms
Limited (2019) 5 SCC 755 – referred to.
4. In the circumstances of the present case, a case is made
out to entertain the instant application preferred by the
Applicants. Therefore, the application is accepted and the effect E
of the letter dated 30.07.2019 issued by the respondent and of
the appointment of the arbitrator is annulled. In exercise of the
power conferred by Section 11(6) of the Act, Dr. Justice A.K.
Sikri, former Judge of Supreme Court is appointed as the sole
arbitrator to decide all the disputes arising out of the Agreement F
dated 22.05.2017, between the parties, subject to the mandatory
declaration made under the amended Section 12 of the Act with
respect to independence and impartiality and the ability to
devote sufficient time to complete the arbitration within the
period as per Section 29A of the Act. [Para 25] [302-E-G]
G
Walter Bau AG, Legal Successor of the Original
Contra C tor, Dyckerhoff A nd Widmann, A.G. v.
Municip A l Corporation of Greater Mumbai A nd
another (2015) 3 SCC 800 : [2015] 2 SCR 37 ; TRF
Limited v. Energo Engineering Projects Limited (2017)
8 SCC 377 : [2017] 7 SCR 409 – relied on. H
278 SUPREME COURT REPORTS [2019] 17 S.C.R.

A Case Law Reference
[2018] 14 SCR 22 Para 5 relied on
[2017] 7 SCR 409 Para 5 relied on
[2015] 2 SCR 37 Para 5 relied on
B
[2009] 13 SCR 510 Para 17 relied on
(2017) 4 SCC 665 Para 18 relied on
(2019) 5 SCC 755 Para 18 referred to
CIVIL ORIGINAL JURISDICTION : Arbitration Application
C
No. 32 of 2019.
Application under Sections 11(6) read with Section 11(12)(a) of
the Arbitration and Conciliation Act, 1996 and the Appointment of
Arbitrators by the Chief Justice of India Scheme, 1996.
D With
Arbitration Application Nos. 34 and 35 of 2019.
Amar Dave, Pranaya Goyal, Chiranjivi Sharma, Ms. Pratyashi
Mehta, Advs. for the Appellants.
E Guru Krishna Kumar, Sr. Adv., Saurabh Mishra, Abhishek Singh,
Ms. Samridhi Pal, Ms. Aashnaa Bhatia, Advs. for the Respondent.
The Judgment of the Court was delivered by
UDAY UMESH LALIT, J.
F 1. This application under Section 11(6) read with Section
11(12)(a) of Act1 and under the Scheme2 prays for the following
principal relief:
“(a) appoint a sole Arbitrator, in accordance with clause 24 of
the Contract dated 22nd May, 2017 executed between the parties
G and the sole Arbitrator so appointed may adjudicate the disputes
and differences between the parties arising from the said
Contract.”

1
The Arbitration and Conciliation Act, 1996
2
H The Appointment of Arbitrators by the Chief Justice of India Scheme, 1996
PERKINS EASTMAN ARCHITECTS DPC & ANR. v. 279
HSCC (INDIA) LTD. [UDAY UMESH LALIT, J.]

2. The application has been filed with following assertions: - A
(A) As an executing agency of Ministry of Health and
Family Welfare, the respondent was desirous of
comprehensive architectural planning and designing for
the works provided under Pradhan Mantri Swasthya
Suraksha Yojna (PMSSY). Therefore a request for B
Proposals bearing RFP No.HSCC/3-AIIMS/Guntur/
2016 was issued on 15.07.2016 for appointment of
Design Consultants for the “comprehensive planning and
designing, including preparation and development of
concepts, master plan for the campus, preparation of all
preliminary and working drawings for various buildings/ C
structures, including preparation of specifications and
schedule of quantities’ for the proposed All India Institute
of Medical Sciences at Guntur, Andhra Pradesh”.
(B) In response to the RFP, the consortium of the Applicants,
namely, (i) Perkins Eastman Architects DPC, an D
Architectural firm having its registered office in New
York and (ii) Edifice Consultants Private Limited, having
its office in Mumbai submitted their bid on 28.09.2016.
Letter of Intent was issued on 31.01.2017 awarding the
project to the Applicants, the consideration being E
Rs.15.63 crores. A letter of award was issued in favour
of the Applicants on 22.02.2017 and a contract was
entered into between the Applicants and the respondent
on 22.05.2017, which provided inter alia for dispute
resolution in Clause 24. The relevant portion of said
Clause was as under: F

“24.0 DISPUTE RESOLUTION
24.1 Except as otherwise provided in the contract all questions
and disputes relating to the meaning of the specifications, design,
drawings and instructions herein before mentioned and as to the G
quality of services rendered for the works or as to any other
question, claim, right, matter or thing whatsoever in any way
arising out of or relating to the contract, design, drawings,
specifications estimates instructions, orders or these conditions
or otherwise concerning the works or the execution or failure to
execute the same whether arising during the progress of the work H
280 SUPREME COURT REPORTS [2019] 17 S.C.R.

A or after the cancellation, termination, completion or abandonment
thereof thereof shall be dealt with as mentioned hereinafter:
(i) If the Design Consultant considers any work demanded
of him to be outside the requirements of the contract or
disputes on any drawings, record or decision given in
B writing by HSCC on any matter in connection with
arising out of the contract or carrying out of the work,
to be unacceptable, he shall promptly within 15 days
request CGM, HSCC in writing for written instruction
or decision. There upon, the CGM, HSCC shall give his
written instructions or decision within a period of one
C month from the receipt of the Design Consultant’s letter.
If the CGM, HSCC fails to give his instructions or
decision in writing within the aforesaid period or if the
Design Consultant(s) is dissatisfied with the instructions
or decision of the CGM, HSCC, the Design
D Consultants(s) may, within 15 days of the receipt of
decision, appeal to the Director (Engg.) HSCC who shall
offer an opportunity to the Design Consultant to be
heard, if the latter so desires, and to offer evidence in
support of his appeal. The Director (Engg.), HSCC shall
give his decision within 30 days of receipt of Design
E Consultant’s appeal. If the Design Consultant is
dissatisfied with the decision, the Design Consultant
shall within a period of 30 days from receipt of this
decision, give notice to the CMD, HSCC for appointment
of arbitrator failing which the said decision shall be final,
binding and conclusive and not referable to adjudication
F
by the arbitrator.
(ii) Except where the decision has become final, binding and
conclusive in terms of sub-Para (i) above disputes or
difference shall be referred for adjudication through
arbitration by a sole arbitrator appointed by the CMD
G HSCC within 30 days form the receipt of request from
the Design Consultant. If the arbitrator so appointed is
unable or unwilling to act or resigns his appointment or
vacates his office due to any reason, whatsoever
another sole arbitrator shall be appointed in the manner
H aforesaid. Such person shall be entitled to proceed with
PERKINS EASTMAN ARCHITECTS DPC & ANR. v. 281
HSCC (INDIA) LTD. [UDAY UMESH LALIT, J.]

the reference from the reference from the stage at A
which it was left by his predecessor. It is a term of
this contract that the party invoking arbitration shall give
a list of disputes with amounts claimed in respect of each
such dispute along with the notice for appointment of
arbitrator and giving reference to the rejection by the
B
CMD, HSCC of the appeal. It is also a term of this
contract that no person other than a person appointed
by such CMD, HSCC as aforesaid should act as
arbitrator. It is also a term of the contract that if the
Design Consultant does not make any demand for
appointment of arbitrator in respect of any claims in C
writing as aforesaid within 120 days of receiving the
intimation from HSCC that the final bill is ready for
payment, the claim of the Design Consultant shall be
deemed to have been waived and absolutely barred and
HSCC shall be discharged and released of all liabilities
D
under the contract and in respect of these claims. The
arbitration shall be conducted in accordance with the
provisions of the Arbitration and Conciliation Act, 1996
(26 of 1996) or any statutory modifications or re-
enactment thereof and the rules made thereunder and
for the time being in force shall apply to the arbitration E
proceeding under this clause.”
(C) Within six days of the signing of the said contract, in letter
dated 26.5.2017 the respondent alleged failure on part of the Applicants
which was followed by stop work notice dated 03.11.2017. It is the
case of the Applicants that officials of the respondents were deliberately F
trying to stall the project and were non-co-operative right from the initial
stages.
(D) Later, a termination notice was issued by the respondent on
11.01.2019 alleging non-compliance of contractual obligations on part
of the Applicants, which assertions were denied. However, termination G
letter was issued on 20.02.2019.On 11.04.2019 a notice was issued by
the Advocate for the applicants invoking the dispute resolution Clause
namely Clause 24 as aforesaid raising a claim of Rs.20.95 crores.
According to the Applicants, a decision in respect of the notice dated
11.04.2019 was required to be taken within one month in terms of
Clause 24 of the contract but a communication was sent by the H
282 SUPREME COURT REPORTS [2019] 17 S.C.R.

A respondent on 10.05.2019 intimating that a reply to the notice would
be sent within 30 days.
(E) An appeal was filed by the Applicants before the Director
(Engineering) in terms of said Clause 24 but there was complete failure
on part of the Director (Engineering) to discharge the obligations in
B terms of said Clause 24. Therefore, by letter dated 28.06.2019 the Chief
Managing Director of the respondent was called upon to appoint a sole
arbitrator in terms of said Clause 24. However, no appointment of an
arbitrator was made within thirty days but a letter was addressed by
Chief General Manager of the respondent on 30.07.2019 purportedly
appointing one Major General K.T. Gajria as the sole arbitrator.
C
(F) The relevant averments in para 3 of the application are:-
“z. The 30 (thirty) day time period for appointment of a sole
arbitrator stood expired on 28th July, 2019 and yet the CMD of
the respondent failed to appoint a sole arbitrator or even respond
D to the letter dated 28th June, 2019 (received on 29th June, 2019).
aa. Shockingly, in continuance of its highhanded approach and
in contravention to its own letter dated 24th June, 2019, the CGM
of the Respondent addressed the Purported Appointment Letter
dated 30th July, 2019 to one Major General K.T. Gajria thereby
E purportedly appointing him as a sole arbitrator in the matter. On
the same date, the CGM of the Respondent also addressed a
letter to the Applicants inter alia informing about the purported
appointment of Mr. Gajria”
3. In the aforesaid premises the Applicants submit:-
F (a) The Applicants had duly invoked the arbitration clause;
(b) The Chairman and Managing Director was the
competent authority to appoint a sole arbitrator;
(c) But the Chief General Manager of the respondent
wrongfully appointed the sole arbitrator;
G
(d) Such appointment was beyond the period prescribed;
(e) In any case, an independent and impartial arbitrator is
required to be appointed.
4. In response to the application, an affidavit-in-reply has been
H filed by the respondent denying all material allegations. It is accepted
PERKINS EASTMAN ARCHITECTS DPC & ANR. v. 283
HSCC (INDIA) LTD. [UDAY UMESH LALIT, J.]

that the contract entered into between the parties contains Clause 24 A
regarding dispute resolution. It is, however, disputed that there was
any inaction on part of the respondent in discharging their obligations
in terms of Clause 24. It is submitted, inter alia, that
(a) The appointment of Major General K.T. Gajria was in
consonance with Clause 24 of the contract; B
(b) Such appointment could not in any way be said to be
illegal;
(c) There was no occasion to file an application seeking
appointment of any other person under the provisions
of Section 11(6) read with Section 11(12)(a) of the Act; C
and
(d) In any case, the arbitration in the present matter would
not be an International Commercial Arbitration within
the meaning of Section 2(1)(f) of the Act.
D
5. We heard Mr. Amar Dave, learned Advocate for the
Applicants and Mr. Guru Krishna Kumar, learned Senior Advocate for
the respondent.
It was submitted by Mr. Dave, learned Advocate that on account
of failure on part of the respondent in discharging its obligations in terms
E
of Clause 24, the applicants would be entitled to maintain the present
Application and seek appointment of an arbitrator as prayed for. It was
further submitted that the appointment process contemplated in Clause
24 gave complete discretion to the Chairman and Managing Director
of the respondent to make an appointment of an arbitrator of his choice,
the Chairman and Managing Director of the respondent would naturally F
be interested in the outcome or decision in respect of the dispute, the
pre-requisite of element of impartiality would, therefore, be
conspicuously absent in such process; and as such it would be desirable
that this Court makes an appropriate appointment of an arbitrator.
Reliance was placed on the decisions of this Court in Walter Bau AG,
G
Legal Successor of the Original Contractor, Dyckerhoff and
Widmann, A.G. v. Municipal Corporation of Greater Mumbai and
another3 and TRF Limited v. Energo Engineering Projects Limited4

3
(2015) 3 SCC 800
4
(2017) 8 SCC 377 H
284 SUPREME COURT REPORTS [2019] 17 S.C.R.

A in support of the submissions. Mr. Dave, learned Advocate also relied
upon the decision of this Court in Larsen and Toubro Limited SCOMI
Engineering BHD v. Mumbai Metropolitan Region Development
Authority5 to bring home the point that the arbitration in the present
matter would be an International Commercial Arbitration.
B Mr. Guru Krishna Kumar, learned Senior Advocate appearing for
the respondent submitted that no case was made out to maintain the
instant application. He submitted that two basic submissions were raised
in para 3 in sub-para (z) and (aa) of the application that the Chairman
and Managing Director failed to appoint the sole arbitrator within 30
days of the requisition dated 28.06.2019 and that it was the Chief
C General Manager of the respondent who purportedly made the
appointment of a sole arbitrator on 30.07.2019. The infirmities thus
projected were on two counts, namely, for over-stepping the limit of
30 days; and secondly the appointment was not made by the Chairman
and Managing Director of the respondent. He pointed out that the period
D in terms of requisition dated 28.06.2019 expired on Friday and the
appointment was made on the first available working day. Secondly,
the appointment was actually made by the Chairman and Managing
Director but was conveyed by the Chief General Manager, and as such
the alleged infirmities were completely non-existent. He further submitted
that arbitration, if any, in the instant matter would not be an International
E Commercial Arbitration.
6. The present application, therefore, raises two basic issues; first
whether the arbitration in the present case would be an International
Commercial Arbitration or not. In case, it is not, then this Court cannot
deal with the application under Section 11(6) read with Section 11(12)(a)
F of the Act. The second issue is whether a case is made out for exercise
of power by the Court to make an appointment of an arbitrator.
7. During the course of hearing, reliance was placed by the
Applicants on the Consortium Agreement entered into between the
Applicant No.1 and the Applicant No.2 on 20.09.2016 which described
the Applicant No.1 as the lead member of the Consortium. The relevant
G
recital and the Clause of the Agreement were as under:
“1. WHEREAS all the Parties agree that Perkins Eastman will
be the focal point for the agreement and interaction with the
client.”
5
H (2019) 2 SCC 271
PERKINS EASTMAN ARCHITECTS DPC & ANR. v. 285
HSCC (INDIA) LTD. [UDAY UMESH LALIT, J.]

“9. Perkins Eastman and M/s. Edifice Consultants are jointly A
and severally responsible for the execution of the project”
In terms of requirements of the bid documents and RFP a
“Declaration for Lead Member of the Consortium (Form E)” was also
submitted. The declaration was as under:
“WHEREAS M/s. HSCC (India) Ltd. (HSCC) (the Client) has B
invited Bids/Bids from the interested parties for providing
Comprehensive Planning and Designing of the Proposed All India
Institute of Medical Sciences at Mangalagiri, Guntur (AP).
AND WHEREAS, the members of the Consortium are
interested in bidding for the Project and implementing the Project C
in accordance with the terms and conditions of the Request for
Bid (RFP) document, Terms of Reference, Client’s Requirement,
Notice Inviting Bid, Instructions to Bidders, Conditions of Contract
and other connected documents in respect of the Project, and
AND WHEREAS, it is necessary under the RFP document for D
the members of the Consortium Bidder to designate one of them
as the Lead Manager with all necessary power and authority to
do for and on behalf of the Consortium bidder, all acts, deeds
and things as may be necessary in connection with the Consortium
Bidder’s proposal for the Project.
E
NOW THIS DECLARATION WITNESSETH THAT;
We, Perkins Eastman Architects DPC, and having its registered
office at 115 5th Ave Floor 3, New York, NY 10003-10004, USA
and M/s. Edifice Consultants Private Limited having its registered
office at Srirams Arcade, 3 rd Floor, Opp. Govandi P.O., Off
F
Govandi Station Road, Govandi East, Mumbai, Maharashtra
400088 do hereby designate Perkins Eastman Architects DPC
being one of the members of the Consortium, as the Lead
Member of the Consortium, to do on behalf of the Consortium,
all or any of the acts, deeds of things necessary or incidental to
the Consortium’s Application/Bid for the Project, including G
submission of Application/Bid, participating in conferences,
responding to queries, submission of information/documents and
generally to represent the Consortium in all its dealings with
HSCC, any other Government Agency or any person, in
connection with the Project until culmination of the process of
bidding and thereafter till the completion of the Contract.” H
286 SUPREME COURT REPORTS [2019] 17 S.C.R.

A 8. It is not disputed by the respondent that it was a requisite
condition to declare a lead member of the Consortium and that by
aforesaid declaration the applicant No.1 was shown to be the lead
member of the Consortium. The reliance is however placed by the
respondent on Clause 9 of the Consortium Agreement by virtue of which
both the Applicants would be jointly and severely responsible for the
B
execution of the project. It is clear that the declaration shows that the
Applicant No.1 was accepted to be the lead member of the Consortium.
Even if the liability of both the Applicants was stated in Clause 9 to be
joint and several, that by itself would not change the status of the
Applicant No.1 to be the lead member. We shall, therefore, proceed
C on the premise that Applicant No.1 is the lead member of the
Consortium.
9. In Larsen and Toubro Limited SCOMI Engineering BHD5
more or less similar fact situation came up for consideration. The only
distinction was that the lead member in the consortium was an entity
D registered in India. Paragraphs 2, 3, 4, 15, 17, 18 and 19 of the decision
are as under:
“2. Since disputes arose between the parties to the agreement,
various interim claims had been made by the Consortium of M/
s Larsen and Toubro, an Indian company, together with Scomi
E Engineering Bhd, a company incorporated in Malaysia, for which
the Consortium has filed this petition under Section 11 of the Act
to this Court, since according to them, one of the parties to the
arbitration agreement, being a body corporate, incorporated in
Malaysia, would be a body corporate, which is incorporated in a
country other than India, which would attract Section 2(1)(f)(ii)
F
of the Act.
3. Shri Gopal Jain, learned Senior Counsel appearing on behalf
of the Consortium, has taken us through the agreement, in which
he strongly relies upon the fact that the two entities, that is, the
Indian company and the Malaysian company, though stated to
G
be a Consortium, are jointly and severally liable, to the employer.
The learned Senior Counsel has also relied upon the fact that
throughout the working of the contract, separate claims have been
made, which have been rejected by the Mumbai Metropolitan
Region Development Authority (hereinafter referred to as
H “MMRDA”). He has also further relied upon the fact that by at
PERKINS EASTMAN ARCHITECTS DPC & ANR. v. 287
HSCC (INDIA) LTD. [UDAY UMESH LALIT, J.]

least three letters, during the working of the agreement, the A
claims have in fact been rejected altogether and that, therefore,
there is no impediment in invoking the arbitration Clause under
Section 20.4 of the general conditions of contract (hereinafter
referred to as “GCC”), as the procedure outlined by Clauses 20.1
to 20.3 had already been exhausted.
B
4. On the other hand, Mr Shyam Divan, learned Senior Counsel
appearing on behalf of MMRDA, the respondent, has relied upon
both the contract dated 9-1-2009 as well as the actual consortium
agreement dated 4-6-2008 between the Indian company and the
Malaysian company, which, when read together, would show that
C
they are really an unincorporated association and would, therefore,
fall within Section 2(1)(f)(iii) as being an association or a body
of individuals, provided the central management and control is
exercised in any country other than India.
… … …
D
15. Section 2(1)(f)(iii) of the Act refers to two different sets of
persons: an “association” as distinct and separate from a “body
of individuals”. For example, under Section 2(31) of the Income
Tax Act, 1961, “person” is defined as including, under sub-clause
(v), an association of persons, or body of individuals, whether
E
incorporated or not. It is in this sense, that an association is
referred to in Section 2(1)(f)(iii) which would therefore include
a consortium consisting of two or more bodies corporate, at least
one of whom is a body corporate incorporated in a country other
than India.
F
… … …
17. Law Commission Report No. 246 of August 2014, which
made several amendments to the Arbitration and Conciliation Act,
1996, gave the following reason for deleting the words “a
company or”:
G
“(iii) In sub-section (1), clause (f), sub-clause (iii), delete the
words “a company or” before the words “an association or a
body of individuals”.
[Note.—The reference to “a company” in sub-section (iii) has
been removed since the same is already covered under sub- H
288 SUPREME COURT REPORTS [2019] 17 S.C.R.

A section (ii). The intention is to determine the residence of a
company based on its place of incorporation and not the place
of central management/control. This further re-enforces the
“place of incorporation” principle laid down by the Supreme Court
in TDM Infrastructure (P) Ltd. v. UE Development India (P)
Ltd.6, and adds greater certainty in case of companies having a
B
different place of incorporation and place of exercise of central
management and control.]”
It would become clear that prior to the deletion of the expression
“a company or”, there were three sets of persons referred to in
Section 2(1)(f)(iii) as separate and distinct persons who would
C fall within the said sub-clause. This does not change due to the
deletion of the phrase “a company or” for the reason given by
the Law Commission. This is another reason as to why “an
association” cannot be read with “body of individuals” which
follows it but is a separate and distinct category by itself, as is
D understood from the definition of “person” as defined in the
Income Tax Act referred to above.
18. This being the case, coupled with the fact, as correctly argued
by Shri Divan, that the Indian company is the lead partner, and
that the Supervisory Board constituted under the consortium
agreement makes it clear that the lead partner really has the
E
determining voice in that it appoints the Chairman of the said
Board (undoubtedly, with the consent of other members); and
the fact that the Consortium’s office is in Wadala, Mumbai as
also that the lead member shall lead the arbitration proceedings,
would all point to the fact that the central management and
F control of this Consortium appears to be exercised in India and
not in any foreign nation.
19. This being the case, we dismiss the petition filed under
Section 11 of the Act, as there is no “international commercial
arbitration” as defined under Section 2(1)(f) of the Act for the
G petitioner to come to this Court. We also do not deem it necessary
to go into whether the appropriate stage for invoking arbitration
has yet been reached.”
10. It was thus held that “Association” and “Body of individuals”
referred to in Section 2(1)(f) of the Act would be separate categories.
H 6
(2008) 14 SCC 271
PERKINS EASTMAN ARCHITECTS DPC & ANR. v. 289
HSCC (INDIA) LTD. [UDAY UMESH LALIT, J.]

However, the lead member of the Association in that case being an A
Indian entity, the “Central Management and Control” of the Association
was held to be in a country other than India. Relying on said decision
we conclude that the lead member of the Consortium company i.e.
Applicant No.1 being an Architectural Firm having its registered office
in New York, requirements of Section 2(1)(f) of the Act are satisfied
B
and the arbitration in the present case would be an “International
Commercial Arbitration”.
11. That takes us to the second issue, namely, whether a case
has been made out for exercise of power by the Court for an
appointment of an arbitrator.
C
12. The communication invoking arbitration in terms of Clause
24 was sent by the Applicants on 28.06.2019 and the period within which
the respondent was to make the necessary appointment expired on
28.07.2019. The next day was a working day but the appointment was
made on Tuesday, the 30th July, 2019. Technically, the appointment was
not within the time stipulated but such delay on part of the respondent D
could not be said to be an infraction of such magnitude that exercise
of power by the Court under Section 11 of the Act merely on that ground
is called for.
13. However, the point that has been urged, relying upon the
decision of this Court in Walter Bau AG3 and TRF Limited4, requires E
consideration. In the present case Clause 24 empowers the Chairman
and Managing Director of the respondent to make the appointment of
a sole arbitrator and said Clause also stipulates that no person other
than a person appointed by such Chairman and Managing Director of
the respondent would act as an arbitrator. In TRF Limited4 , a Bench
of three Judges of this Court, was called upon to consider whether the F
appointment of an arbitrator made by the Managing Director of the
respondent therein was a valid one and whether at that stage an
application moved under Section 11(6) of the Act could be entertained
by the Court. The relevant Clause, namely, Clause 33 which provided
for resolution of disputes in that case was under: G
“33. Resolution of dispute/arbitration
(a) In case any disagreement or dispute arises between the
buyer and the seller under or in connection with the PO,
both shall make every effort to resolve it amicably by
direct informal negotiation. H
290 SUPREME COURT REPORTS [2019] 17 S.C.R.

A (b) If, even after 30 days from the commencement of such
informal negotiation, seller and the buyer have not been
able to resolve the dispute amicably, either party may
require that the dispute be referred for resolution to the
formal mechanism of arbitration.
B (c) All disputes which cannot be settled by mutual
negotiation shall be referred to and determined by
arbitration as per the Arbitration and Conciliation Act,
1996 as amended.
(d) Unless otherwise provided, any dispute or difference
C between the parties in connection with this agreement
shall be referred to sole arbitration of the Managing
Director of buyer or his nominee. Venue of arbitration
shall be Delhi, and the arbitration shall be conducted in
English language.
D (e) The award of the Tribunal shall be final and binding on
both, buyer and seller.”
14. In TRF Limited4, the Agreement was entered into before
the provisions of the Amending Act (Act No.3 of 2016) came into force.
It was submitted by the appellant that by virtue of the provisions of the
E Amending Act and insertion of the Fifth and Seventh Schedules in the
Act, the Managing Director of the respondent would be a person having
direct interest in the dispute and as such could not act as an arbitrator.
The extension of the submission was that a person who himself was
disqualified and disentitled could also not nominate any other person to
act as an arbitrator. The submission countered by the respondent therein
F
was as under: -
“7.1. The submission to the effect that since the Managing
Director of the respondent has become ineligible to act as an
arbitrator subsequent to the amendment in the Act, he could also
not have nominated any other person as arbitrator is absolutely
G
unsustainable, for the Fifth and the Seventh Schedules
fundamentally guide in determining whether circumstances exist
which give rise to justifiable doubts as to the independence and
impartiality of the arbitrator. To elaborate, if any person whose
relationship with the parties or the counsel or the subject-matter
H of dispute falls under any of the categories specified in the
PERKINS EASTMAN ARCHITECTS DPC & ANR. v. 291
HSCC (INDIA) LTD. [UDAY UMESH LALIT, J.]

Seventh Schedule, he is ineligible to be appointed as an arbitrator A
but not otherwise.
The issue was discussed and decided by this Court as under:-
50. First, we shall deal with Clause (d). There is no quarrel that
by virtue of Section 12(5) of the Act, if any person who falls
under any of the categories specified in the Seventh Schedule B
shall be ineligible to be appointed as the arbitrator. There is no
doubt and cannot be, for the language employed in the Seventh
Schedule, the Managing Director of the Corporation has become
ineligible by operation of law. It is the stand of the learned Senior
Counsel for the appellant that once the Managing Director C
becomes ineligible, he also becomes ineligible to nominate.
Refuting the said stand, it is canvassed by the learned Senior
Counsel for the respondent that the ineligibility cannot extend to
a nominee if he is not from the Corporation and more so when
there is apposite and requisite disclosure. We think it appropriate
to make it clear that in the case at hand we are neither concerned D
with the disclosure nor objectivity nor impartiality nor any such
other circumstance. We are singularly concerned with the issue,
whether the Managing Director, after becoming ineligible by
operation of law, is he still eligible to nominate an arbitrator. At
the cost of repetition, we may state that when there are two
parties, one may nominate an arbitrator and the other may appoint E
another. That is altogether a different situation. If there is a clause
requiring the parties to nominate their respective arbitrator, their
authority to nominate cannot be questioned. What really in that
circumstance can be called in question is the procedural
compliance and the eligibility of their arbitrator depending upon F
the norms provided under the Act and the Schedules appended
thereto. But, here is a case where the Managing Director is the
“named sole arbitrator” and he has also been conferred with the
power to nominate one who can be the arbitrator in his place.
Thus, there is subtle distinction. In this regard, our attention has
been drawn to a two-Judge Bench decision in State of Orissa G
v. Commr. of Land Records & Settlement7. In the said case,
the question arose, can the Board of Revenue revise the order
passed by its delegate. Dwelling upon the said proposition, the
Court held: (SCC p. 173, para 25)
7
(1998) 7 SCC 162 H
292 SUPREME COURT REPORTS [2019] 17 S.C.R.

A “25. We have to note that the Commissioner when he exercises
power of the Board delegated to him under Section 33 of the
Settlement Act, 1958, the order passed by him is to be treated
as an order of the Board of Revenue and not as that of the
Commissioner in his capacity as Commissioner. This position is
B clear from two rulings of this Court to which we shall presently
refer. The first of the said rulings is the one decided by the
Constitution Bench of this Court in Roop Chand v. State of
Punjab8. In that case, it was held by the majority that where
the State Government had, under Section 41(1) of the East Punjab
Holdings (Consolidation and Prevention of Fragmentation) Act,
C 1948, delegated its appellate powers vested in it under Section
21(4) to an “officer”, an order passed by such an officer was
an order passed by the State Government itself and “not an order
passed by any officer under this Act” within Section 42 and was
not revisable by the State Government. It was pointed out that
D for the purpose of exercise of powers of revision by the State
under Section 42 of that Act, the order sought to be revised must
be an order passed by an officer in his own right and not as a
delegate of the State. The State Government was, therefore, not
entitled under Section 42 to call for the records of the case which
was disposed of by an officer acting as its delegate.”
E
(emphasis in original)
51. Be it noted in the said case, reference was made to Behari
Kunj Sahkari Awas Samiti v. State of U.P.9, which followed
the decision in Roop Chand v. State of Punjab8. It is seemly
F to note here that the said principle has been followed in Indore
Vikas Pradhikaran 10.
52. Mr Sundaram has strongly relied on Pratapchand Nopaji11.
In the said case, the three-Judge Bench applied the maxim “qui
facit per alium facit per se”. We may profitably reproduce the
G passage: (SCC p. 214, para 9)

8
AIR 1963 SC 1503
9
(1997) 7 SCC 37
10
Indore Vikas Pradhikaran v. Pure Industrial Coke & Chemicals Ltd., (2007) 8 SCC
705
11
H Pratapchand Nopaji v. Kotrike Venkata Setty & Sons, (1975) 2 SCC 208
PERKINS EASTMAN ARCHITECTS DPC & ANR. v. 293
HSCC (INDIA) LTD. [UDAY UMESH LALIT, J.]

“9. … The principle which would apply, if the objects are A
struck by Section 23 of the Contract Act, is embodied in the
maxim: “qui facit per alium facit per se” (what one does
through another is done by oneself). To put it in another form,
that which cannot be done directly may not be done indirectly
by engaging another outside the prohibited area to do the
B
illegal act within the prohibited area. It is immaterial whether,
for the doing of such an illegal act, the agent employed is given
the wider powers or authority of the “pucca adatia”, or, as
the High Court had held, he is clothed with the powers of an
ordinary commission agent only.”
C
53. The aforesaid authorities have been commended to us to
establish the proposition that if the nomination of an arbitrator
by an ineligible arbitrator is allowed, it would tantamount to
carrying on the proceeding of arbitration by himself. According
to the learned counsel for the appellant, ineligibility strikes at the
root of his power to arbitrate or get it arbitrated upon by a D
nominee.
54. In such a context, the fulcrum of the controversy would be,
can an ineligible arbitrator, like the Managing Director, nominate
an arbitrator, who may be otherwise eligible and a respectable
person. As stated earlier, we are neither concerned with the E
objectivity nor the individual respectability. We are only concerned
with the authority or the power of the Managing Director. By
our analysis, we are obligated to arrive at the conclusion that once
the arbitrator has become ineligible by operation of law, he cannot
nominate another as an arbitrator. The arbitrator becomes
F
ineligible as per prescription contained in Section 12(5) of the Act.
It is inconceivable in law that person who is statutorily ineligible
can nominate a person. Needless to say, once the infrastructure
collapses, the superstructure is bound to collapse. One cannot
have a building without the plinth. Or to put it differently, once
the identity of the Managing Director as the sole arbitrator is lost, G
the power to nominate someone else as an arbitrator is
obliterated. Therefore, the view expressed by the High Court is
not sustainable and we say so.”
15. It was thus held that as the Managing Director became
ineligible by operation of law to act as an arbitrator, he could not nominate H
294 SUPREME COURT REPORTS [2019] 17 S.C.R.

A another person to act as an arbitrator and that once the identity of the
Managing Director as the sole arbitrator was lost, the power to nominate
someone else as an arbitrator was also obliterated. The relevant Clause
in said case had nominated the Managing Director himself to be the
sole arbitrator and also empowered said Managing Director to nominate
another person to act as an arbitrator. The Managing Director thus had
B
two capacities under said Clause, the first as an arbitrator and the second
as an appointing authority. In the present case we are concerned with
only one capacity of the Chairman and Managing Director and that is
as an appointing authority.
We thus have two categories of cases. The first, similar to the
C one dealt with in TRF Limited4 where the Managing Director himself
is named as an arbitrator with an additional power to appoint any other
person as an arbitrator. In the second category, the Managing Director
is not to act as an arbitrator himself but is empowered or authorised to
appoint any other person of his choice or discretion as an arbitrator.
D If, in the first category of cases, the Managing Director was found
incompetent, it was because of the interest that he would be said to be
having in the outcome or result of the dispute. The element of invalidity
would thus be directly relatable to and arise from the interest that he
would be having in such outcome or decision. If that be the test, similar
invalidity would always arise and spring even in the second category
E of cases. If the interest that he has in the outcome of the dispute, is
taken to be the basis for the possibility of bias, it will always be present
irrespective of whether the matter stands under the first or second
category of cases. We are conscious that if such deduction is drawn
from the decision of this Court in TRF Limited4, all cases having clauses
F similar to that with which we are presently concerned, a party to the
agreement would be disentitled to make any appointment of an Arbitrator
on its own and it would always be available to argue that a party or an
official or an authority having interest in the dispute would be disentitled
to make appointment of an Arbitrator.
16. But, in our view that has to be the logical deduction from
G
TRF Limited4. Paragraph 50 of the decision shows that this Court was
concerned with the issue, “whether the Managing Director, after
becoming ineligible by operation of law, is he still eligible to nominate
an Arbitrator” The ineligibility referred to therein, was as a result of
operation of law, in that a person having an interest in the dispute or in
H the outcome or decision thereof, must not only be ineligible to act as
PERKINS EASTMAN ARCHITECTS DPC & ANR. v. 295
HSCC (INDIA) LTD. [UDAY UMESH LALIT, J.]

an arbitrator but must also not be eligible to appoint anyone else as an A
arbitrator and that such person cannot and should not have any role in
charting out any course to the dispute resolution by having the power
to appoint an arbitrator. The next sentences in the paragraph, further
show that cases where both the parties could nominate respective
arbitrators of their choice were found to be completely a different
B
situation. The reason is clear that whatever advantage a party may
derive by nominating an arbitrator of its choice would get counter
balanced by equal power with the other party. But, in a case where
only one party has a right to appoint a sole arbitrator, its choice will
always have an element of exclusivity in determining or charting the
course for dispute resolution. Naturally, the person who has an interest C
in the outcome or decision of the dispute must not have the power to
appoint a sole arbitrator. That has to be taken as the essence of the
amendments brought in by the Arbitration and Conciliation (Amendment)
Act, 2015 (Act 3 of 2016) and recognised by the decision of this Court
in TRF Limited4.
D
17. We must also at this stage refer to the following observations
made by this Court in para 48 of its decision in Indian Oil Corpn.
Ltd. v. Raja Transport (P) Ltd.12, which were in the context that was
obtaining before Act 3 of 2016 had come into force: -
“48. In the light of the above discussion, the scope of Section
E
11 of the Act containing the scheme of appointment of arbitrators
may be summarised thus:
(i) Where the agreement provides for arbitration with three
arbitrators (each party to appoint one arbitrator and the
two appointed arbitrators to appoint a third arbitrator),
in the event of a party failing to appoint an arbitrator F
within 30 days from the receipt of a request from the
other party (or the two nominated arbitrators failing to
agree on the third arbitrator within 30 days from the date
of the appointment), the Chief Justice or his designate
will exercise power under sub-section (4) of Section 11 G
of the Act.
(ii) Where the agreement provides for arbitration by a sole
arbitrator and the parties have not agreed upon any
appointment procedure, the Chief Justice or his
12
(2009) 8 SCC 520 H
296 SUPREME COURT REPORTS [2019] 17 S.C.R.

A designate will exercise power under sub-section (5) of
Section 11, if the parties fail to agree on the arbitration
within thirty days from the receipt of a request by a party
from the other party.
(iii) Where the arbitration agreement specifies the
B appointment procedure, then irrespective of whether the
arbitration is by a sole arbitrator or by a three-member
Tribunal, the Chief Justice or his designate will exercise
power under sub-section (6) of Section 11, if a party
fails to act as required under the agreed procedure (or
the parties or the two appointed arbitrators fail to reach
C an agreement expected of them under the agreed
procedure or any person/institution fails to perform any
function entrusted to him/it under that procedure).
(iv) While failure of the other party to act within 30 days
will furnish a cause of action to the party seeking
D arbitration to approach the Chief Justice or his designate
in cases falling under sub-sections (4) and (5), such a
time-bound requirement is not found in sub-section (6)
of Section 11. The failure to act as per the agreed
procedure within the time-limit prescribed by the
arbitration agreement, or in the absence of any
E prescribed time-limit, within a reasonable time, will
enable the aggrieved party to file a petition under Section
11(6) of the Act.
(v) Where the appointment procedure has been agreed
between the parties, but the cause of action for invoking
F the jurisdiction of the Chief Justice or his designate under
clauses (a), (b) or (c) of sub-section (6) has not arisen,
then the question of the Chief Justice or his designate
exercising power under sub-section (6) does not arise.
The condition precedent for approaching the Chief
Justice or his designate for taking necessary measures
G under sub-section (6) is that
(i) a party failing to act as required under the agreed
appointment procedure; or
(ii) the parties (or the two appointed arbitrators) failing
to reach an agreement expected of them under the
H agreed appointment procedure; or
PERKINS EASTMAN ARCHITECTS DPC & ANR. v. 297
HSCC (INDIA) LTD. [UDAY UMESH LALIT, J.]

(iii) a person/institution who has been entrusted with any A
function under the agreed appointment procedure,
failing to perform such function.
(vi) The Chief Justice or his designate while exercising
power under sub-section (6) of Section 11 shall
endeavour to give effect to the appointment B
procedure prescribed in the arbitration clause.
(vii) 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 C
the procedure prescribed, the Chief Justice or his
designate may, for reasons to be recorded ignore the
designated arbitrator and appoint someone else.”
18. Sub para (vii) of aforesaid paragraph 48 lays down that if
there are justifiable doubts as to the independence and impartiality of
D
the person nominated, and if other circumstances warrant appointment
of an independent arbitrator by ignoring the procedure prescribed, such
appointment can be made by the Court. It may also be noted that on
the issue of necessity and desirability of impartial and independent
arbitrators the matter was considered by the Law Commission in its
report No.246. Paragraphs 53 to 60 under the heading “Neutrality of E
Arbitrators” are quoted in the Judgment of this Court in Voestapline
Schienen Gmbh v. Delhi Metro Rail Corpn. Ltd.13, while paras 59
and 60 of the report stand extracted in the decision of this Court in
Bharat Broadband Network Limited v. United Telecoms Limited14.
For the present purposes, we may rely on paragraph 57, which is to
F
the following effect:-
“57. The balance between procedural fairness and binding nature
of these contracts, appears to have been tilted in favour of the
latter by the Supreme Court, and the Commission believes the
present position of law is far from satisfactory. Since the
principles of impartiality and independence cannot be discarded G
at any stage of the proceedings, specifically at the stage of
constitution of the Arbitral Tribunal, it would be incongruous to
say that party autonomy can be exercised in complete disregard
13
(2017) 4 SCC 665
14
(2019) 5 SCC 755 H
298 SUPREME COURT REPORTS [2019] 17 S.C.R.

A of these principles — even if the same has been agreed prior to
the disputes having arisen between the parties. There are certain
minimum levels of independence and impartiality that should
be required of the arbitral process regardless of the parties’
apparent agreement. A sensible law cannot, for instance,
permit appointment of an arbitrator who is himself a party
B to the dispute, or who is employed by (or similarly dependent
on) one party, even if this is what the parties agreed. The
Commission hastens to add that Mr P.K. Malhotra, the ex officio
member of the Law Commission suggested having an exception
for the State, and allow State parties to appoint employee
C arbitrators. The Commission is of the opinion that, on this issue,
there cannot be any distinction between State and non-State
parties. The concept of party autonomy cannot be stretched to
a point where it negates the very basis of having impartial and
independent adjudicators for resolution of disputes. In fact, when
the party appointing an adjudicator is the State, the duty to
D appoint an impartial and independent adjudicator is that
much more onerous — and the right to natural justice cannot
be said to have been waived only on the basis of a “prior”
agreement between the parties at the time of the contract and
before arising of the disputes.”
E 19. In Voestalpine3, this Court dealt with independence and
impartiality of the arbitrator as under:
“20. Independence and impartiality of the arbitrator are the
hallmarks of any arbitration proceedings. Rule against bias is one
of the fundamental principles of natural justice which applied to
all judicial and quasi-judicial proceedings. It is for this reason that
F
notwithstanding the fact that relationship between the parties to
the arbitration and the arbitrators themselves are contractual in
nature and the source of an arbitrator’s appointment is deduced
from the agreement entered into between the parties,
notwithstanding the same non-independence and non-impartiality
G of such arbitrator (though contractually agreed upon) would
render him ineligible to conduct the arbitration. The genesis behind
this rational is that even when an arbitrator is appointed in terms
of contract and by the parties to the contract, he is independent
of the parties. Functions and duties require him to rise above the
partisan interest of the parties and not to act in, or so as to further,
H the particular interest of either parties. After all, the arbitrator
PERKINS EASTMAN ARCHITECTS DPC & ANR. v. 299
HSCC (INDIA) LTD. [UDAY UMESH LALIT, J.]

has adjudicatory role to perform and, therefore, he must be A
independent of parties as well as impartial. The United Kingdom
Supreme Court has beautifully highlighted this aspect in
Hashwani v. Jivraj15 in the following words: (WLR p. 1889, para
45)
“45. … the dominant purpose of appointing an arbitrator or B
arbitrators is the impartial resolution of the dispute between
the parties in accordance with the terms of the agreement
and, although the contract between the parties and the
arbitrators would be a contract for the provision of personal
services, they were not personal services under the direction
of the parties.” C
21. Similarly, Cour de Cassation, France, in a judgment delivered
in 1972 in Consorts Ury, underlined that:
“an independent mind is indispensable in the exercise of judicial
power, whatever the source of that power may be, and it is
one of the essential qualities of an arbitrator.” D

22. Independence and impartiality are two different concepts.
An arbitrator may be independent and yet, lack impartiality, or
vice versa. Impartiality, as is well accepted, is a more subjective
concept as compared to independence. Independence, which is
more an objective concept, may, thus, be more straightforwardly E
ascertained by the parties at the outset of the arbitration
proceedings in light of the circumstances disclosed by the
arbitrator, while partiality will more likely surface during the
arbitration proceedings.
……. ….. …… F
30. Time has come to send positive signals to the international
business community, in order to create healthy arbitration
environment and conducive arbitration culture in this country.
Further, as highlighted by the Law Commission also in its report,
duty becomes more onerous in government contracts, where one G
of the parties to the dispute is the Government or public sector
undertaking itself and the authority to appoint the arbitrator rests
with it. In the instant case also, though choice is given by DMRC
to the opposite party but it is limited to choose an arbitrator from
15
(2011) 1 WLR 1872; 2011 UKSC 40 H
300 SUPREME COURT REPORTS [2019] 17 S.C.R.

A the panel prepared by DMRC. It, therefore, becomes imperative
to have a much broadbased panel, so that there is no
misapprehension that principle of impartiality and independence
would be discarded at any stage of the proceedings, specially at
the stage of constitution of the Arbitral Tribunal. We, therefore,
direct that DMRC shall prepare a broadbased panel on the
B aforesaid lines, within a period of two months from today.”
20. In the light of the aforestated principles, the report of the
Law Commission and the decision in Voestapline Schienen Gmbh13,
the imperatives of creating healthy arbitration environment demand that
the instant application deserves acceptance.
C 21. The further question that arises is whether the power can
be exercised by this Court under Section 11 of the Act when the
appointment of an arbitrator has already been made by the respondent
and whether the appellant should be left to raise challenge at an
appropriate stage in terms of remedies available in law. Similar
D controversy was gone into by a Designated Judge of this Court in
Walter Bau AG3 and the discussion on the point was as under:-
“9. While it is correct that in Antrix16 and Pricol Ltd.17, it was
opined by this Court that after appointment of an arbitrator is
made, the remedy of the aggrieved party is not under Section
11(6) but such remedy lies elsewhere and under different
E provisions of the Arbitration Act (Sections 12 and 13), the context
in which the aforesaid view was expressed cannot be lost sight
of. In Antrix16, appointment of the arbitrator, as per the ICC
Rules, was as per the alternative procedure agreed upon, whereas
in Pricol Ltd.17., the party which had filed the application under
Section 11(6) of the Arbitration Act had already submitted to the
F
jurisdiction of the arbitrator. In the present case, the situation is
otherwise.
10. Unless the appointment of the arbitrator is ex facie valid and
such appointment satisfies the Court exercising jurisdiction under
Section 11(6) of the Arbitration Act, acceptance of such
G appointment as a fait accompli to debar the jurisdiction under
Section 11(6) cannot be countenanced in law. In the present case,
the agreed upon procedure between the parties contemplated the
appointment of the arbitrator by the second party within 30 days
16
(2014) 11 SCC 560
17
H (2015) 4 SCC 177
PERKINS EASTMAN ARCHITECTS DPC & ANR. v. 301
HSCC (INDIA) LTD. [UDAY UMESH LALIT, J.]

of receipt of a notice from the first party. While the decision in A
Datar Switchgears Ltd.18 may have introduced some flexibility
in the time frame agreed upon by the parties by extending it till
a point of time anterior to the filing of the application under
Section 11(6) of the Arbitration Act, it cannot be lost sight of that
in the present case the appointment of Shri Justice A.D. Mane
is clearly contrary to the provisions of the Rules governing the B
appointment of arbitrators by ICADR, which the parties had
agreed to abide by in the matter of such appointment. The option
given to the respondent Corporation to go beyond the panel
submitted by ICADR and to appoint any person of its choice was
clearly not in the contemplation of the parties. If that be so, C
obviously, the appointment of Shri Justice A.D. Mane is non est
in law. Such an appointment, therefore, will not inhibit the exercise
of jurisdiction by this Court under Section 11(6) of the Arbitration
Act. It cannot, therefore, be held that the present proceeding is
not maintainable in law. The appointment of Shri Justice A.D.
Mane made beyond 30 days of the receipt of notice by the D
petitioner, though may appear to be in conformity with the law
laid down in Datar Switchgears Ltd18., is clearly contrary to the
agreed procedure which required the appointment made by the
respondent Corporation to be from the panel submitted by
ICADR. The said appointment, therefore, is clearly invalid in
law.” E

22. It may be noted here that the aforesaid view of the Designated
Judge in Walter Bau AG3 was pressed into service on behalf of the
appellant in TRF Limited4 and the opinion expressed by the Designated
Judge was found to be in consonance with the binding authorities of
this Court. It was observed:- F
“32. Mr Sundaram, learned Senior Counsel for the appellant has
also drawn inspiration from the judgment passed by the
Designated Judge of this Court in Walter Bau AG3, where the
learned Judge, after referring to Antrix Corpn. Ltd 16 . ,
distinguished the same and also distinguished the authority in G
Pricol Ltd. v. Johnson Controls Enterprise Ltd.17 and came
to hold that: (Walter Bau AG case3, SCC p. 806, para 10)
“10. Unless the appointment of the arbitrator is ex facie valid
and such appointment satisfies the Court exercising jurisdiction
18
(2000) 8 SCC 151 H
302 SUPREME COURT REPORTS [2019] 17 S.C.R.

A under Section 11(6) of the Arbitration Act, acceptance of such
appointment as a fait accompli to debar the jurisdiction under
Section 11(6) cannot be countenanced in law. …”
33. We may immediately state that the opinion expressed in the
aforesaid case is in consonance with the binding authorities we
B have referred to hereinbefore.”
23. In TRF Limited4, the Managing Director of the respondent
had nominated a former Judge of this Court as sole arbitrator in terms
of aforesaid Clause 33(d), after which the appellant had preferred an
application under Section 11(5) read with Section 11(6) of the Act. The
plea was rejected by the High Court and the appeal therefrom on the
C issue whether the Managing Director could nominate an arbitrator was
decided in favour of the appellant as stated hereinabove. As regards
the issue about fresh appointment, this Court remanded the matter to
the High Court for fresh consideration as is discernible from para 55
of the Judgment. In the light of these authorities there is no hindrance
D in entertaining the instant application preferred by the Applicants.
24. It is also clear from the Clause in the instant case that no
special qualifications such as expertise in any technical field are
required of an arbitrator. This was fairly accepted by the learned Senior
Counsel for the respondent.
E 25. In the aforesaid circumstances, in our view a case is made
out to entertain the instant application preferred by the Applicants. We,
therefore, accept the application, annul the effect of the letter dated
30.07.2019 issued by the respondent and of the appointment of the
arbitrator. In exercise of the power conferred by Section 11(6) of the
Act, we appoint Dr. Justice A.K. Sikri, former Judge of this Court as
F the sole arbitrator to decide all the disputes arising out of the Agreement
dated 22.05.2017, between the parties, subject to the mandatory
declaration made under the amended Section 12 of the Act with respect
to independence and impartiality and the ability to devote sufficient time
to complete the arbitration within the period as per Section 29A of the
Act. A copy of the Order be dispatched to Dr. Justice A. K. Sikri at
G 144, Sundar Nagar, New Delhi - 110003 (Tel. No.:- 011 - 41802321).
The arbitrator shall be entitled to charge fees in terms of the Fourth
Schedule to the Act. The fees and other expenses shall be shared by
the parties equally.
26. Before we part, we must say that the appointment of an
H arbitrator by this Court shall not be taken as any reflection on the
PERKINS EASTMAN ARCHITECTS DPC & ANR. v. 303
HSCC (INDIA) LTD. [UDAY UMESH LALIT, J.]

competence and standing of the arbitrator appointed by the respondent. A
We must place on record that not even a suggestion in that respect
was made by the learned counsel for the Applicants. The matter was
argued and has been considered purely from the legal perspective as
discussed hereinabove.
27. This application is allowed in aforesaid terms. B
ARBITRATION APPLICATION NO.34 OF 2019
Perkins Eastman Architects DPC & Anr. …Applicants
VERSUS
HSCC (India) Ltd. …Respondent
C
28. The basic facts in this application are more or less identical
except that the request for proposal in this case pertains to
“comprehensive planning and designing, including preparation and
development of concepts, master plan for the campus, preparation of
all preliminary and working drawings for various buildings/structures,
including preparation of specifications and schedule of quantities’ for D
the proposed All India Institute of Medical Sciences at Kalyani, West
Bengal.”. Clause No.24 titled as “Dispute Resolution” in this case and
the communication addressed by the Applicants are also identical and
the response by the respondent was also similar. In this case also,
appointment of a sole arbitrator was made by the respondent vide
communication dated 30.07.2019. E

Since the facts are identical and the submissions are common,
this application is disposed of in terms similar to the main matter.
29.In the aforesaid circumstances, we accept the application,
annul the effect of the letter dated 30.07.2019 issued by the respondent
and of the appointment of the arbitrator. In exercise of the power F
conferred by Section 11(6) of the Act, we appoint Dr. Justice A.K. Sikri,
former Judge of this Court as the sole arbitrator to decide all the disputes
arising out of the Agreement dated 22.05.2017, between the parties,
subject to the mandatory declaration made under the amended Section
12 of the Act with respect to independence and impartiality and the G
ability to devote sufficient time to complete the arbitration within the
period as per Section 29A of the Act. A copy of the Order be dispatched
to Dr. Justice A. K. Sikri at 144, Sundar Nagar, New Delhi - 110003
(Tel. No.:- 011 - 41802321). The arbitrator shall be entitled to charge
fees in terms of the Fourth Schedule to the Act. The fees and other
expenses shall be shared by the parties equally. H
304 SUPREME COURT REPORTS [2019] 17 S.C.R.

A ARBITRATION APPLICATION NO. 35 OF 2019
Perkins Eastman Architects DPC & Anr. …Applicants
VERSUS
HSCC (India) Ltd. …Respondent
B 30. The basic facts in this application are more or less identical
except that the request for proposal in this case pertains to
“comprehensive planning and designing, including preparation and
development of concepts, master plan for the campus, preparation of
all preliminary and working drawings for various buildings/structures,
including preparation of specifications and schedule of quantities’ for
C the proposed All India Institute of Medical Sciences at Nagpur,
Maharashtra.” Clause No.24 titled as “Dispute Resolution” in this case
and the communication addressed by the Applicants are also identical
and the response by the respondent was also similar. In this case also,
appointment of a sole arbitrator was made by the respondent vide
communication dated 30.07.2019.
D
Since the facts are identical and the submissions are common,
this application is disposed of in terms similar to the main matter.
31. In the aforesaid circumstances, we accept the application,
annul the effect of the letter dated 30.07.2019 issued by the respondent
and of the appointment of the arbitrator. In exercise of the power
E
conferred by Section 11(6) of the Act, we appoint Dr. Justice A.K. Sikri,
former Judge of this Court as the sole arbitrator to decide all the disputes
arising out of the Agreement dated 22.05.2017, between the parties,
subject to the mandatory declaration made under the amended Section
12 of the Act with respect to independence and impartiality and the
F ability to devote sufficient time to complete the arbitration within the
period as per Section 29A of the Act. A copy of the Order be dispatched
to Dr. Justice A. K. Sikri at 144, Sundar Nagar, New Delhi - 110003
(Tel. No.:- 011 - 41802321). The arbitrator shall be entitled to charge
fees in terms of the Fourth Schedule to the Act. The fees and other
expenses shall be shared by the parties equally.
G

Kalpana K. Tripathy Arbitration applications allowed.

H