ELLORA PAPER MILLS LIMITED Vs. STATE OF MADHYA PRADESH

JUDGEMENT

(1.) Feeling aggrieved and dissatisfied with the impugned judgment and order dated 27.08.2021 passed by the High Court of Madhya Pradesh in A.C. No. 100/2019, by which the application preferred by the appellant under Section 14 read with Sections 11 and 15 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the 'Arbitration Act, 1996') seeking termination of the mandate of originally constituted Arbitral Tribunal and to appoint a new arbitrator has been dismissed, the original applicant before the High Court has preferred the present appeal.

(2.) That the respondent herein issued a tender for supply of the cream wove paper and duplicating paper for the year 1993-94. The appellant herein participated in the said tender process and was awarded the contract vide supply order dated 22.09.1993. A dispute arose between the appellant and the respondent. According to the appellant herein, though it supplied 420 MT of cream wove paper and 238 MT of duplicating paper to the respondent, the latter not only did not make the payment of 90% of the amount as per the terms of the contract, but also rejected some consignments without any justification, causing loss to it. The respondent herein vide letter dated 15.11.1993 informed the appellant that the paper supplied by it did not conform to the specification and therefore could not be utilized.

(3.) Shri Sandeep Bajaj, learned Advocate appearing on behalf of the appellant has vehemently submitted that the impugned judgment and order passed by the High Court rejecting the application submitted by the appellant under Section 14 read with Sections 11 & 15 of the Arbitration Act, 1996 is just contrary to the recent decision of this Court in the case of Jaipur Zila Dugdh Utpadak Sahkari Sangh Limited v. Ajay Sales & Suppliers, 2021 SCC OnLine SC 730. It is submitted that as held by this Court in the aforesaid decision, in view of the mandate under sub-section (5) of Section 12 read with Seventh Schedule, the Arbitral Tribunal constituted in the present case - Stationery Purchase Committee consisting of the officers of the respondent has lost its mandate. It is submitted that continuation of such Arbitral Tribunal would be frustrating the object and purpose of the Amendment Act, 2015, by which sub-section (5) to Section 12 read with Seventh Schedule was inserted. It is submitted that as held by this Court, Section 12 has been amended by Amendment Act, 2015 to provide for 'neutrality of arbitrators' and in order to achieve this, sub-section (5) to Section 12 provides that 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, he shall be ineligible to be appointed as an arbitrator.