Ace Pipeline Contracts Private Limited vs Bharat Petroleum Corporation Limited

Clause 91 provides that any dispute arising between the parties shall be settled through arbitration and the appointing authority i.e. the Director (Marketing) himself or he may nominate any other person of the Corporation to act as an Arbitrator to resolve the disputes and the vendor will not be entitled to raise any objection to such arbitrator on the ground that the Arbitrator is an officer of the Corporation or that he has dealt with the matters to which the contract relates or that in the course of his duties as an Officer of the Corporation he had expressed views on all or any other matters in dispute or difference. Since some differences arose between the parties with regard to the claim of the appellant, a letter dated 21.7.2005 was written to the Director (Marketing) invoking clause 91 of the agreement and requesting him to refer the matter to arbitration for resolving the differences. It was also requested that the Director (Marketing) may accede to the request of the appellant for adjudication of the dispute by a former Judge of the Supreme Court of India so as to remove any justifiable doubts to the independence or impartiality of the said Arbitrator. It was further submitted that on receiving the communication, the appellant would suggest the name of the retired Judge of the Supreme Court of India for the purpose of appointment as Arbitrator. It was alleged that no one was appointed as Arbitrator, therefore, on 22.8.2005 the appellant filed the present application before the High Court for appointment of Arbitrator under Section 11(5) & (6) of the Act. It was also pointed out that after presentation of the application on 22.8.2005, the appellant received a letter of the Director (Marketing) nominating Shri P.S. Bhargava, Executive Director (Quality Control Cell) of the respondent- BPCL to act as sole arbitrator. It was contended that the letter appointing Shri P.S.Bhargava as sole Arbitrator was received by the appellant subsequent to the filing of the petition before the High Court on 26.8.2005. It was also pointed out that Shri P.S.Bhargava was appointed as Arbitrator on 22.8.2005 and the same was communicated and received by the appellant through courier on 26.8.2005. Therefore, it was submitted before the High Court that since the appointment of Arbitrator has been made after the filing of the petition by the appellant before the High Court, the Director (Marketing) ceased to have any right to appoint any Arbitrator after expiry of thirty days. Therefore, a request was made that any retired Judge of the Supreme Court may be appointed as Arbitrator. This was contested by the respondent by filing a reply. It was pointed out that the notice dated 21.7.2005 was received by the Director (Marketing) on 26.7.2005 and a request was made to the appellant to supply copy of the arbitration agreement and other corresponding documents as he was not aware of the procedure for appointment of the Arbitrator. The Director (Marketing) received reply to the communication dated 12.8.2005 on 16.8.2005 which was received in the Office on 17.8.2005. After receiving the communication and all the materials on 17.8.2005, the appointing authority appointed Shri P.S.Bhargava as Arbitrator on 22.8.2005 and a communication was sent to the appellant through courier which was received by him on 26.8.2005. It was also pointed out after receipt of the reply to the communication dated 12.8.2005 on 16.8.2005, 19th, 20th & 21st August, 2005 Office remained closed on account of Rakshya Bandhan and weekly holidays. The Director (Marketing) sent reply on 22.8.2005 appointing Shri P.S.Bhargava as Arbitrator. It was also pointed out that the whole action was done with urgency and there was no delay on the part of the Administration.

In the present case, in fact the appellant's demand was to get some retired Judge of the Supreme Court to be appointed as arbitrator on the ground that if any person nominated in the arbitration clause is appointed, then it may suffer from bias or the arbitrator may not be impartial or independent in taking decision. Once a party has entered into an agreement with eyes wide open it cannot wriggle out of the situation that if any person of the respondent-BPCL is appointed as arbitrator he will not be impartial or objective. However, if the appellant feels that the arbitrator has not acted independently or impartially, or he has suffered from any bias, it will always be open to the party to make an application under Section 34 of the Act to set aside the award on the ground that arbitrator acted with bias or malice in law or fact.

In view of our above discussion, we find no reason to interfere with the order passed by the learned Single Judge of the High Court of Delhi in Arbitration Petition No.181 of 2005. The arbitrator has already been appointed. He should proceed in the matter and decide the dispute expeditiously. Consequently, the appeal is dismissed with no order as to costs.