Primatel Fibcom LTD. vs. Railtel Corporation Of INDIA Limited

Facts

The petitioner, Primatel Fibcom Ltd., filed a petition under Section 11 of the Arbitration and Conciliation Act, 1996, seeking the appointment of a Sole Arbitrator. The disputes arose from a contract with Railtel Corporation of India Limited (Respondent) for the supply, installation, and maintenance of RF Links and Wi-Fi Access Points under the Raj Net Wi-Fi Project. The petitioner supplied equipment and completed installation for approximately 90% of the sites. However, the respondent failed to issue Go-live certificates for all commissioned sites and delayed commencing Facility Management Services (FMS). The petitioner raised invoices totaling Rs. 67,29,83,221, against which it received Rs. 42,12,52,435, leaving a substantial principal amount unpaid. The petitioner also paid GST of Rs. 10,26,58,457, the credit for which was availed by the respondent. Despite amicable settlement efforts and a notice invoking arbitration, the respondent failed to resolve the outstanding issues and payments.

Held

The Court held that the panel of arbitrators proposed by the respondent was restrictive and not broad-based, lacking "counter-balancing" and consisting solely of senior retired officers without legal background. This situation necessitates the Court's intervention to constitute an independent Arbitral Tribunal, as per the principles laid down in Voestalpine Schienen GmBH, TRF, and Perkins. The Court found no reason to differ from the settled preposition of law on this matter. Consequently, the Court appointed Hon'ble Dr. Justice Satish Chandra, former Judge of Allahabad High Court, as the Sole Arbitrator to adjudicate the disputes between the parties under the aegis of the Delhi International Arbitration Centre (DIAC). All rights and contentions of the parties, including arbitrability and preliminary objections, were left open for adjudication by the arbitrator. The parties were directed to approach the arbitrator within two weeks.

Key Issues

1. Whether the Court has jurisdiction to appoint an Arbitral Tribunal under Section 11 of the Arbitration and Conciliation Act, 1996, when the respondent's proposed panel of arbitrators is restrictive and not broad-based, potentially leading to an apprehension of bias? Petitioner's contention: The petitioner argued that the respondent's proposed panel of arbitrators is restrictive and not broad-based, which impinges upon the validity of the appointment procedure. They relied on judgments like Voestalpine Schienen GmBH, TRF, and Perkins, asserting that in such circumstances, the Court must constitute an independent and impartial Arbitral Tribunal. Respondent's contention: The judgment does not record any specific arguments from the respondent regarding the restrictive nature of the panel. However, the parties had consented to the reference to an arbitral tribunal.