Accel Frontline Limited v. Kerala Medical Services Corporation Ltd

1 A.R.No.48/18 & WP(C).No.25647/14-E ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE SMT. JUSTICE P.V.ASHA** **TUESDAY ,THE 08TH DAY OF JANUARY 2019 / 18TH POUSHA, 1940** **AR.No. 48 of 2018** ## **APPLICANT:** **M/S. ACCEL FRONTLINE LIMITED** **(REGISTERED OFFICE : 75, NELSON MANICKAM ROAD, CHENNAI-600029), REGIONAL OFFICE, 1ST FLOOR, 64/2401, VITHAYATHIL BUILDING, VEEKSHANAM ROAD, KOCHI-682018, REPRESENTED BY G.RAMASWAMY, REGIONAL MANAGER.** **BY ADV. SMT.C.K.SHERIN** ## **RESPONDENT:** **M/S. KERALA MEDICAL SERVICES CORPORATION LTD. (A GOVERNMENT OF KERALA UNDERTAKING),THYCAUD P.O., THIRUVANANTHAPURAM-695014,REPRESENTED BY ITS MANAGING DIRECTOR.** **BY ADVS.** **SRI.M.AJAY,SC,KERALA MEDICAL SERV.CORPN** **THIS ARBITRATION REQUEST HAVING BEEN FINALLY HEARD ON 19.12.2018, ALONG WITH WP(C).25647/2014, THE COURT ON 08.01.2019 PASSED THE FOLLOWING:** 2 A.R.No.48/18 & WP(C).No.25647/14-E ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE SMT. JUSTICE P.V.ASHA** **TUESDAY ,THE 08TH DAY OF JANUARY 2019 / 18TH POUSHA, 1940** **WP(C).No. 25647 of 2014** ## **PETITIONER:** **M/S. ACCEL FRONT LINE LTD (REGISTERED OFFICE 75, NELSON MANICKAM ROAD, CHENNAI-600029) REGIONAL OFFICE 1ST FLOOR, 64/2401, VITHAYATHIL BUILDING, VEEKSHNAM ROAD, KOCHI-682018, REPRESENTED BY G. RAMASWAMY, REGIONAL MANAGER.** **BY ADVS. SRI.T.M.SREEDHARAN (SR.) SMT.DIVYA RAVINDRAN SRI.V.P.NARAYANAN** ## **RESPONDENTS:** |**1**|**M/S. KERALA MEDICAL SERVICES CORPORATION LTD**| |---|---| ||**(A GOVERNMENT OF KERALA UNDERTAKING) THYCAUD.P.O.,**| ||**THIRUVANANTHAPURAM-695014. REPRESENTED BY ITS**| ||**MANAGING DIRECTOR.**| |**2**|**STATE OF KERALA**| ||**REPRESENTED BY CHIEF SECRETARY, GOVERNMENT**| ||**SECRETARIAT, THIRUVANANTHAPURAM.-695001**| |**3**|**THE MANAGER**| ||**STATE BANK OF INDIA, INDUSTRIAL FINANCE BRANCH, NO.**| ||**155, ANNA SALAI, CHENNAI-600002.**| ||**BY ADVS.**| ||**R1 BY SRI.M.AJAY,SC,KERALA MEDICAL SERV.CORPN**| ||**R3 BY SRI.N.RAJAGOPALAN NAIR**| ||**SRI.RON BASTIAN, GP**| **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 19.12.18, ALONG WITH AR.48/2018, THE COURT ON 08.01.2019 DELIVERED THE FOLLOWING:** 3 A.R.No.48/18 & WP(C).No.25647/14-E ## **P.V.ASHA, J.** **Arbitration Request No.48 of 2018 & WP(C) No.25647 of 2014-E Dated this the 8[th] day of January, 2019** ## **ORDER/JUDGMENT** Applicant was awarded the work of developing web based Total Software solution by the respondent pursuant to Annexure 1 tender document, as per Annexure 2 work order dated 27.07.2011 on the terms and conditions fixed in Annexure 3. Applicant claims that it completed the work as scheduled as evident from Annexures 4 to 6 circulars, but payments were not made as per the schedule after the first 50% was paid, though it is entitled to 75% of the payment as against the work completed as on 28.03.2014. But, while correspondence was going on for the balance payment due, the respondent issued Annexure 8 letter of termination of contract on various allegations; the security deposit was also proposed to be forfeited. Annexure 8 order of termination was challenged in W.P. (C).No.19665 of 2014 which was disposed of as per A.R.No.48/18 & WP(C).No.25647/14-E 4 Annexure 9 judgment directing to treat the termination order as a show cause notice. Thereafter, as per Annexure 11 order dated 3.09.2014, the claims raised by the applicant in Annexure 10 was rejected and the applicant was required to refund a sum of Rs. 75,89,355/- paid for software development and hosting services. Simultaneously, steps were taken to invoke the bank guarantee of Rs. 7,68,300/-. Applicant challenged those orders in W.P.(C) No. 25647 of 2014. While so Annexure 14 letter proposing blacklisting of applicant, was issued on 11.01.2018, which was also challenged filing I.A in that Writ Petition. The Arbitration Request was filed at that stage. 2. Clause 6.25 of Annexure 1 tender document provides for resolution of disputes through arbitration as per the Ararbitration and Conciliation Act, 1996 (hereinafter referred to as `the Act' for short). The case of the applicant is that by issuing Annexure 11 letter rejecting its claim for payment towards the work, and by fixing the liability on applicant unilaterally, and initiating further proceedings to blacklist the applicant, the respondent failed to A.R.No.48/18 & WP(C).No.25647/14-E 5 settle the disputes through arbitration, in terms of the provisions in the tender document. It is further contended that the sole arbitrator named in Annexure 1 is the Department head of the respondent, whereas he himself is the Managing Director who terminated the work as per Annexure 8 and proposed blacklisting. Alleging that the respondent was demanding huge amount, without resorting to the arbitration procedure provided in Annexure 1 and was making attempts to forfeit the deposit, the applicant sought for the appointment of an arbitrator under Section 11 (6) of the Act in order to consider the entitlement of the applicants for payment; correctness in fixing liability against the applicant. The Arbitration Request was filed on 01.06.2018. 3. The respondents filed a statement objecting to the maintainability of the Arbitration Request. Thereupon the applicant sent Annexure 17 notice on 25.09.2018 (produced along with I.A.No.1 of 2018) requesting to refer the dispute to arbitration under clause 6.25.2 by appointing a sole arbitrator. It was pointed out that the nominated arbitrator as per the arbitration clause is the officer who terminated the A.R.No.48/18 & WP(C).No.25647/14-E 6 work and was instrumental in blacklisting the applicant and hence disqualified to arbitrate the matter. The respondents issued Annexure 18 letter (produced along with I.A.No.2 of 2018) stating that Dr.Rajan Khobragade I.A.S, Commissioner of Commercial Taxes was appointed as Arbitrator. 4. The learned Standing Counsel for the respondent has filed a statement. It is admitted that an arbitration mechanism is provided for resolution of disputes, in accordance with the Act, and the Secretary to Health, Government of Kerala shall conduct the Arbitration. In paras.4, 5, 7 and 8 it was further stated as follows: _“4. Blacklisting a supplier is the harshest punishment provided under the tender condition. Therefore an additional avenue is provided for suppliers whose products or firm has been blacklisted by the Tender Inviting Authority. In case of blacklisting alone, Clause 6.40.1 provides for an appeal to the State Government. It is therefore clear that at the first instance every dispute is required to be discussed mutually and sought to be amicably resolved. If the dispute is not resolved amicably and the dispute is one about blacklisting the supplier or its products, a further avenue of appeal to the State Government is also provided. This appeal to the Government is provided only in cases of blacklisting. Appeals to the Government are not required to be heard by the Additional Chief Secretary. It is required to be and is most often heard and disposed of by officers of the rank of Deputy Secretary, Joint Secretary etc. The procedure adopted in disposing of appeals is also not a substitute for arbitral proceedings. Orders in appeal are issued after hearing both sides and have so far not involved any oral_ 7 A.R.No.48/18 & WP(C).No.25647/14-E _evidence being led or cross examination of witnesses being allowed._ _5. If disputes are not resolved amicably under Clause 37.1 and are not resolved even after appeal to the State Government where provided, the tender conditions provide for resolution of the disputes by arbitration. In all cases of disputes, except disputes on blacklisting, if the disputes are not resolved amicably under Clause 37.1, the tender conditions provide for resolution of the disputes by arbitration._ _Xxx xxx xxx xxx xxx xxxx xxxx xxxxxxxx_ _7. The KMSCL has as its Chairman, the Additional Chief Secretary to Government, Health Department. As such, he is prohibited under S. 12(5) for arbitrating any disputes regarding tender invited by the KMSCL where arbitrations are commenced on or after 23.10.15. As on today there are no other Secretaries to Government appointed in the Health and Family Welfare Department except the Additional Chief Secretary to Government who, as the Chairman of the KMSCL is prohibited from acting as an Arbitrator. However, if other Secretaries are appointed in the Health Department they will not suffer from the statutory prohibition and can and should be nominated as Arbitrators under the tender terms and conditions._ _8. If any party to a dispute desires to have its dispute referred for arbitration, it should invoke its rights as provided in the Arbitration and Conciliation Act and within the time prescribed. If any Arbitrator is required to be appointed to resolve the disputes, when no Secretary is available in the Health Department who does not suffer from the prohibition under S. 12(5) of the Arbitration and Conciliation Act, then the party concerned has to invoke its remedy under S.ll of the Arbitration and Conciliation Act. However, in this case, the petitioner has not written to the KMSCL to refer the dispute for arbitration in accordance with the tender terms and conditions. The KMSCL has to refer the dispute for arbitration to the named arbitrator within the time limit prescribed. If within the period permitted after receiving a request to refer the dispute to arbitration, a named arbitrator is appointed by the Government who is not prohibited from acting as arbitrator under the Act, then the KMSCL has to refer the dispute to such officer. It is only on the failure of the KMSCL to discharge its duty under the Act that the petitioner gets a right to approach this Hon. Court under S. 11 of the Act. Instead, the petitioner has directly approached this Hon. Court which is premature and impermissible.”_ A.R.No.48/18 & WP(C).No.25647/14-E 8 5. At the time of hearing, the learned Counsel for the respondent, on instructions submitted that Sri. Rajan Khobragade, IAS, has since been appointed as the Secretary to the Department of Health and his nomination has since been in tune with the arbitration clause. 6. The contention of the applicant is that appointment of any Secretary to Government, Health and Family Welfare Department or even of other Departments is prohibited under Section 12 (5) of the Act read with schedule 7 thereto; the named Arbitrator under Annxure 1 tender document, as well as the Commissioner of Commercial Taxes, who was nominated as Arbitrator in Annxure 18 letter are also disqualified, as they are affiliates of the respondent; as the respondent company is owned by the Government, any official under the Government of Kerala is precluded from arbitrating the issue. Relying on the judgment of the Apex Court in ## _**Voestalpine Schienen GmbH v. Delhi Metro Rail Corpn.**_ _**Ltd.** :(2017) 4 SCC 665,_ the learned Senior Counsel for the applicant argued that an independent arbitrator unconnected with the respondent or the Government is A.R.No.48/18 & WP(C).No.25647/14-E 9 necessary, in order to have independence in the arbitration proceedings. The learned Senior Counsel relied on the judgments of the Apex Court in _**Aravali Power Co. (P) Ltd. v. Era Infra Engg. Ltd.** :(2017) 15 SCC 32,_ _**TRF Ltd. v. Energo Engg. Projects Ltd.** : (2017) 8 SCC 377, etc._ and argued that any Secretary to Government or Officer under Government suffer from the disqualification, by operation of the amended provisions in Section 12(5) of the Act and the 7[th] schedule thereof and it is necessary to have an independent Arbitrator who does not have any involvement in matters relating to the respondent or the Government. 7 **.** At the same time, the learned Standing Counsel for the respondent points out that the applicant filed this Arbitration Request without complying with the conditions in the arbitration clause in Annexure 1 and even under Section 11 of the Act. Therefore, the application is not maintainable. It is also pointed out that the disputes between the parties to a period much before the amendment and the applicant had challenged the action of the respondents filing several A.R.No.48/18 & WP(C).No.25647/14-E 10 Writ Petitions since 2014 against the termination of the contract, black listing invoking of bank guarantee, etc. It was pointed out that the applicant approached this Court directly filing the AR, without fulfilling the conditions for filing an application under Section 11(6) and hence the request is liable to be rejected. Relying on the judgment in _**Aravali Power Co. (P) Ltd. v. Era Infra Engg. Ltd.** : (2017) 15 SCC 32,_ _**Indian Oil Corpn. Ltd.**_ **v.** _**Raja Transport (P) Ltd.**_ , (2009) 8 SCC 520, _**S. Rajan v. State of Kerala** : (1992) 3 SCC 608, etc.,_ it was argued that the arbitrator appointed by the respondent did not have any disqualification. Moreover, on his appointment as the Secretary to Government, Department of Health and Family Welfare, his appointment as Arbitrator would be perfectly in accordance with the relevant clause in the Annexure 1 document. According to the learned Counsel, except the Additional Chief Secretary of the Department of Health and Family welfare, no other Secretaries of that Department or any other Department has any control or role in the affairs of the respondent Corporation or even in respect of the contract in question. Therefore, A.R.No.48/18 & WP(C).No.25647/14-E 11 it is argued that there is no illegality in the appointment of Sri. Rajan Khobragade IAS, who was the Commissioner of Commercial Taxes at the time of his appointment, when he has taken charge as Secretary to Government in the Department of Health. Therefore the Arbitration request is liable to be rejected on that ground also. It was argued that there cannot be a presumption of bias or partiality or lack of independence on his part, only on the ground that he is a Secretary to Government. 8. Having heard the contentions on both sides, it is is seen that though the AR was filed without making a formal request and without fulfilling the conditions for invoking Section 11(6), the respondent has since appointed an Arbitrator as per Annexure 18 letter. Moreover, the sole arbitrator provided in clause 6.25.3 of Annexure 1 is the Secretary to Government, Health Department, who is supposed to be the Ex-Officio Chairman of the respondent, who has become disabled for apointment, under the amended Section 12(5) of the Act. Therefore, I find that the objection as against the maintainability of this AR is only to be repelled in 12 A.R.No.48/18 & WP(C).No.25647/14-E view of the subsequent events. 9. Therefore, the question to be examined is whether the Arbitrator appointed in Annexure 18 letter, even on his taking charge as Secretary to the Department of Health is not disqualified, though he is not the Ex-Officio Chairman. The amendment was effected to Section 12(5) of the Arbitration and Conciliation Act, 1996, in order to ensure that there is complete independence and impartiality for the Arbitrators. The agreements providing for arbitration would not have any force in the eye of law in case the arbitrator to be appointed under it is having relationship, with the parties or the subject matter of the dispute, comes under any of the categories specified in the seventh schedule. In other words, such an arbitrator is disabled from being appointed as an Arbitrator. The non obstante clause in subsection 5 of Section 12, introduced by way of the 2015 Amendment Act, makes the agreements executed by the parties in respect of appointment of arbitrators who are included in any of the categories in the 7[th] schedule. VII[th] schedule to the Act includes employee, consultant adviser or any A.R.No.48/18 & WP(C).No.25647/14-E 13 person having past or present business relationship with a party to one who currently represents one of the parties or an affiliate to one of the parties. Under serial no.5 if he is a manager, director or part of the management, or has a similar controlling influence, is affiliate of one of the parties and if the affiliate is directly involved in the matter in dispute in the arbitration, he is disqualified. 10. In this context it is necessary to examine the relevant provision in the agreement providing for arbitration and the relevant provisions in the Act. Clause 6.25 of Annexure 1 read as follows: _“ 6.25. Resolution of disputes._ _6.25.1. If dispute or difference of any kind shall arise between the Corporation and the successful tenderer in connection with or relating to the contract, the parties shall make every effort to resolve the same amicably by mutual consultations._ _6.25.2. If the parties fail to resolve their dispute or difference by such mutual consultation within twenty-one days of its occurrence, then, unless otherwise provided in the tender document, either the Corporation or the successful tenderer may give notice to the other party of its intention to commence arbitration, as provided the applicable arbitration procedure will be as per the Arbitration and Conciliation Act, 1996 of India._ _6.25.3. In the case of a dispute or difference arising between the Corporation and a domestic Successful tenderer relating to any matter arising out of or connected with the contract, such dispute or difference Shall be referred to the sole arbitration of Secretary to Health, Govt, of Kerala whose decision shall be final._ _6.25.4. Venue of Arbitration: The venue of arbitration shall be the place from where the contract has been issued, i.e., Trivandrum, India.”_ 11. As per Clause 6.25 of Annexure 1 tender document agreement, if the parties fail to resolve the disputes amicably by mutual consultation, either of the 14 A.R.No.48/18 & WP(C).No.25647/14-E parties have to give notice to the other, within 21 days of its occurrence, of its intention to commence arbitration in accordance with the procedure provided in the Act. As per clause 6.25.3, the dispute shall be referred to the sole arbitration of Secretary to Health, Govt. of Kerala, whose decision shall be final. Though Annexure 1 tender document was of the year 2011 and disputes arose since 2014, and the amended Section 12(5) of the Act came into force on 23.10.2015, the parties have not resorted to arbitration before the amendment and the letter appointing the Arbitrator is issued only in 2018 after Section 12(5) was amended. Section 12(5) of the Act, as amended, reads as follows: “ _**Section 12. Grounds for challenge**_ xxxxx (5) Notwithstanding any prior agreement to the contrary, any person whose relationship, with the parties or counsel or the subject matter of the dispute, falls under any of the categories specified in the Seventh Schedule shall be ineligible to be appointed as an arbitrator: Provided that parties may, subsequent to disputes having arisen between them, waive the applicability of this sub-section by an express agreement in writing.” Therefore, if the Arbitrator mentioned in clause 6.25.3 would come within any of the categories specified in 7[th] schedule, he is ineligible to become an arbitrator. The arbitration clause provided for appointment of A.R.No.48/18 & WP(C).No.25647/14-E 15 Secretary to Government, Health Department as Arbitrator, when that Secretary is the Ex-officio Chairman of the Corporation. In the statement, the respondent Corporation has stated that the Additional Chief Secretary to that Department has become disabled to be an arbitrator, as he is the Ex-Officio Chairman of the Corporation. When the relevant clause in Annexure 1 provides for arbitration and the named arbitrator therein is disqualified by operation of law, the respondent cannot have any right to nominate the Arbitrator unless the petitioner agrees to it. Therefore, even if the person who was appointed has since become the Secretary to the Health Department, it cannot be said that he is to be appointed as Arbitrator. 12. As the arbitrator appointed by the respondent has now become the Secretary to Government of Health Department, who is not the Ex-Officio Chairman of the Corporation, it would be apposite to examine whether the appointment of any Secretary to the Department of Health, who is junior to the Additional Chief Secretary who is the Ex-Officio Chairman of the respondent A.R.No.48/18 & WP(C).No.25647/14-E 16 Corporation and belonging to the very same department, is barred by Section 12(5) or Seventh Schedule. 13. In _**Aravalli Power Co. (P) Ltd.**_ ( _supra_ ), relied on by the learned Counsel for the respondent, the Apex Court was considering a case where the arbitrator was appointed and he commenced his proceedings prior to the amendment. Moreover, the petitioner therein participated in the proceedings without raising any objection over the appointment. Even then, in respect of appointment of arbitrators subsequent to the amendment of the Act, i.e after 23.10.2015, it was held by the Apex Court in para. 22.2. of the judgment, that even if the appointment of the arbitrator is apparently in conformity with the arbitration clause in the agreement, it would be illegal if it is contrary to the amended provisions and in such cases the court would be within its powers to appoint arbitrators. 14. In _**TRF Ltd** 's case (supra)_ the question which arose for consideration was whether the Managing Director who was disabled could nominate anybody as arbitrator. It was held that once the arbitrator has A.R.No.48/18 & WP(C).No.25647/14-E 17 become ineligible by operation of amended subsection 5 of Section 12 of the Act, he would not have any authority to nominate another as an arbitrator. Once the identity of the Managing Director as the sole arbitrator is lost, the power to nominate someone else as an arbitrator is also obliterated. The relevant arbitration clause considered therein provided for referring the disputes to sole Arbitrator or Managing Director or his nominee. Taking note of Section 12(5) and schedule 7, it was held that if the relationship between parties or the subject matter of dispute falls under the category specified, he shall be ineligible for appointment as Arbitrator. 15. It is relevant to note that the Law Commission had in paragraph 53 to 60 of its report, after discussing a series of judgments including those in _**Rajan**_ 's case and _**Indian Oil Corporation**_ 's case (etc), (relied on by the respondents herein) found the necessity to maintain minimum levels of independence and impartiality in the matter of appointment of arbitrators. The cases where appointment was to be made by Government or was arising out of agreements A.R.No.48/18 & WP(C).No.25647/14-E 18 executed with Government, were also considered by the Law Commission and in paragraph 57 of its report, it was found as follows: _“57. xxxxx 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 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.”_ The amendment to subsection 5 of Section 12 of the Act was carried out in the light of the aforesaid recommendations of the Law Commission. ## 16. In _**Voestalpine Schienen GmbH's**_ case (supra), the Apex Court has considered all the cases relied on by the learned Counsel for the respondents. It is relevant to note the observations of the Apex Court, referring to the report of the Law Commission. Even after seeing that the panel of Arbitrators contained both serving and retired employees of various Government and Public Sector Undertakings, the respondents were directed to provide a more extensive list. It was found that the nomination of arbitrator by the petitioner was from a list which contained only 5 A.R.No.48/18 & WP(C).No.25647/14-E 19 names, given by the respondent and the choice of the petitioner was restricted. Similar defect was found in the matter of appointment of the 3[rd] arbitrator from the list furnished by the respondent. After referring to the terms of the agreement providing for arbitration, it was found necessary to delete certain portions and thereafter in para.29 of the judgement it was observed as follows: _**“29.** Some comments are also needed on Clause 9.2(a) of GCC/SCC, as per which DMRC prepares the panel of “serving or retired engineers of government departments or public sector undertakings”. It is not understood as to why the panel has to be limited to the aforesaid category of persons. Keeping in view the spirit of the amended provision and in order to instil confidence in the mind of the other party, it is imperative that panel should be broadbased. Apart from serving or retired engineers of government departments and public sector undertakings, engineers of prominence and high repute from private sector should also be included. Likewise panel should comprise of persons with legal background like Judges and lawyers of repute as it is not necessary that all disputes that arise, would be of technical nature. There can be disputes involving purely or substantially legal issues, that too, complicated in nature. Likewise, some disputes may have the dimension of accountancy, etc. Therefore, it would also be appropriate to include persons from this field as well._ _**30.** xxx Further, as highlighted by the Law Commission also in its report, duty becomes more onerous in government contracts, where one 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 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.”_ 17. The person appointed in Annexure 18 was the A.R.No.48/18 & WP(C).No.25647/14-E 20 Commissioner of Commercial Taxes at the relevant time. As per claue 6.25.3, the sole arbitrator was fixed as Secretary to Government, Health Department. There is no provision authorising the respondent to appoint any arbitrator of their choice in its place. Therefore, the remedy available to the applicant was to invoke remedies under Section 11 of the Act. 18. In view of the observations of the Law Commission which led to the amendment of Section 12(5) of the Act and the insertion of 7[th] schedule and the observations in paras.28 to 30 of the judgment of the Apex Court in _**Voestalpine Schienen GmbH'**_ s case ( _supra_ ) the contention raised on behalf of the respondent, at the time of hearing that the person appointed has since become the Secretary to Government and therefore his appointment as Arbitrator would be in accordance with the agreement and he does not have disability, cannot be accepted. Even assuming that the Secretary to Government, Health Department, is not having any control over the respondent Corporation, when the Additional Chief Secretary of the Department is the ex- officio Chairman, it would not be proper to appoint 21 A.R.No.48/18 & WP(C).No.25647/14-E another Secretary of the very same Department or even another Department as Arbitrator. Though the learned Counsel for the respondent vehemently argued that the Apex Court has upheld action of Chief Engineer who appointed the Superintending Engineer under him as Arbitrator and in another case the appointment of an employee under one of the parties, it is seen that all those judgments relied on by the learned Counsel relate to appointments made prior to the amendment in 2015, which are not applicable in the present case, as held in _**Aravally Power Company**_ 's case ( _supra_ ) itself. It is relevant to note that the respondent has in paragraph 4 of the statement (see para.5 of this judgment) stated that an appeal is provided before Government against black listing and such appeals are heard by Deputy Secretary, Joint Secretary, etc. However, appeal is provided to Government. Therefore, it cannot be said that the Secretary to Government is not disabled from being appointed as Arbitrator. 19. The judgments relied on by the learned Counsel for the respondent are all related to pre-amendment arbitrations, which are not applicable in the present A.R.No.48/18 & WP(C).No.25647/14-E 22 case, as held in _**Aravally Power Company**_ 's case (supra) itself. In these circumstances, it cannot be said that appointment of Secretary to Government in Health Department can be allowed, in tune with the arbitration agreement. 20. Hence the Arbitration Request is allowed. Sri.Anil Xavier, Advocate, G-254, IIAM, 11[th] Cross, Panampilly Nagar, Cochin – 682 036, is appointed as Arbitrator to resolve the disputes between the parties. The petitioner shall obtain a disclosure statement from the Arbitrator as provided in Section 11(8) of the Arbitration and Conciliation Act, 1996, original of which shall be retained by the Registry. Certified copy of this order need be issued only on production of the disclosure statement. A copy of the same shall be appended to the certified copy of this order. ## _**WP(C).No.25647 of 2014**_ In the light of the order in the Arbitration Request – A.R.No.48/2018, the Writ Petition is closed. **Sd/-** **==> picture [220 x 12] intentionally omitted <==** rtr/ 23 A.R.No.48/18 & WP(C).No.25647/14-E ## **APPENDIX** ## **AR NO.48/18** ## **PETITIONER'S EXHIBITS** **ANNX.1- TRUE COPY OF THE RELEVANT PAGES OF TENDER DOCUEMNT TENDER NO.KMSCL/IT/TENDER/FY 10-11/01 DT.18.1.11** **ANNX.2- TRUE COPY OF WORK ORDER NO.5622/ITKMSCL/2010 DT.27.7.11 (WITHOUT ANNEXURES)** **ANNX.3- TRUE COPY OF ANNEXURES APPENDED TO ANNX.2** **ANNX.4- TRUE COPY OF REPORT DT.13.12.11 ISSUED BY THE RESPONDENT** **ANNX.5- TRUE COPY OF CIRCULAR NO.001/FIN/KMSCL/2012 DT.7.11.12 ISSUED BY THE RESPONDENT** **ANNX.6- CIRCULAR NO.KMSCL/IT/003/2013 DT.5.3.13 ISSUED BY THE RESPONDENT** **ANNX.7- TRUE COPY OF THE LETTER NO.KMSCL/IT/003/2012 DT.28.3.14 ISSUED BY THE RESPONDENT** **ANNX.8- TRUE COPY OF ORDER NO.KMSCL/IT/003/2012 DT.16.7.14 PASSED BY THE RESPONDENT** **ANNX.9- TRUE COPY OF JUDGMENT DT.31.7.14 IN WPC NO.19665/14 PASSED BY THIS HON'BLE COURT** **ANNX.10- TRUE COPY OF LETTER NO.AFL/KMSCL/CHN/01-08/14 DT.19.8.14 GIVEN BY THE APPLICANT TO THE RESPONDENT** **ANNX.11- TRUE COPY OF THE ORDER NO.KMSCL/IT/003/2012 DT.3.9.14 ISSUED BY THE RESPONDENT CORPORATION** **ANNX.12- TRUE COPY OF THE LETTER DT.28.9.14 ADDRESSED TO THE MANAGER, STATE BANK OF INDIA, ANNA SALAI BRANCH, CHENNAI** **ANNX.13- TRUE COPY OF THE INTERIM ORDER IN WPC NO.25647/14 DT.1.10.14 PASSED BY THIS HON'BLE COURT** **ANNX.14- TRUE COPY OF THE NOTICE NO.KMSCL/IT/003/2012 DT.11.1.18 OF THE RESPONDENT** **ANNX.15- TRUE COPY OF THE AFFIDAVIT IA NO.4451/18 IN WPC NO.25647/14** 24 A.R.No.48/18 & WP(C).No.25647/14-E **ANNX.16- TRUE COPY OF INTERIM ORDER DT.8.3.18 IN IA NO.4451/18 IN WPC NO.25647/14 PASSED BY THIS HON'BLE COURT** **ANNX.17- TRUE COPY OF NOTICE DT.25.9.18 ISSUED BY THE APPLICANT TO THE RESPONDENT** **ANNX.18- TRUE COPY OF LETTER DT.19.11.18 ISSUED BY THE RESPONDENT TO THE PETITIONER** 25 A.R.No.48/18 & WP(C).No.25647/14-E **==> picture [467 x 747] intentionally omitted <==**