Jammu, Not Delhi, Is Seat Of CPWD Contract Arbitration; J&K HC Replaces Arbitrator After 12-Month Mandate Expires

The respondent raised a dispute under a construction contract and invoked Clause 25 of the CPWD General Conditions of Contract, 2014. The Additional Director General (Jammu), CPWD, appointed Sh. Atul Kumar Garg as sole arbitrator on 9 June 2023; he entered upon the reference on 30 June 2023.

The Union of India objected that the arbitrator’s mandate had expired under Section 29A, while the respondent sought a ruling on the arbitration venue. The arbitrator determined that the venue/place was New Delhi and that the Act as applicable there governed the proceedings; he later stated that his mandate continued until 25 March 2025.

The Union petitioned under Sections 14(2), 11(6) and 15(2) of the Arbitration and Conciliation Act, 1996, seeking termination of the mandate and appointment of a substitute arbitrator.

The contract was awarded and performed in Jammu, the arbitration request was made there, and the arbitrator was appointed there.

Section 29A(1) of the Act, as applied in the Union Territory of Jammu and Kashmir, required the award to be made within twelve months from the date the arbitral tribunal entered upon the reference; the Court distinguished this from the provision applicable in the rest of India, which measures the period from completion of pleadings.

Under Section 14(1)(a), an arbitrator’s mandate terminates if the arbitrator becomes de jure or de facto unable to perform the functions or otherwise fails to act without undue delay; Section 14(2) permits a party to apply to the Court to decide a continuing controversy over such termination.

Under Section 15(2), once an arbitrator’s mandate terminates, a substitute must be appointed according to the rules applicable to the appointment of the arbitrator being replaced.

The Court also relied on the arbitration clause in GCC-2014, which provided for arbitration under the Act and its applicable statutory modifications or enactments.

The Court treated the applicable version of Section 29A(1) as the Jammu and Kashmir provision because the arbitrator was appointed under the Act applicable there and the contract required application of the law in force for the arbitration.

As the arbitrator entered upon the reference on 30 June 2023, the twelve-month period expired on 29 June 2024. The Court held that the arbitrator’s later orders were made after that period and that he had failed to make the award within the statutory time, so his mandate had terminated.

It further concluded that Jammu was the seat, having regard to the place of contract award and performance, the location where the arbitration was initiated and the appointment was made, and the applicable law.

The substitute arbitrator was directed to proceed under the Act, make the award within the statutory period, and charge the prescribed fee and incidental expenses, to be shared by the parties.