K’taka HC replaces arbitrator in dispute between contractor & CPWD

The Karnataka High Court has replaced the sole arbitrator in a dispute between a private contractor and the Central Public Works Department (CPWD). The CPWD had allegedly appointed one of its former chief engineers as an arbitrator which the contractor claimed posed a situation of conflict of interest. Accepting the contention, Justice Suraj Govindaraj appointed a retired District Judge, H M Nanjundaswamy, as the sole arbitrator.

The contractor, J M Swamy, had participated in a tender in 2017 for the works related to ”combined effluent treatment plant in STC, BSF campus, Yelahanka, Bengaluru, construction of sewage treatment plant of movable bed bioreactor of 350 KLD capacity including electromechanical components,” issued by the CPWD.

The agreement had a clause for arbitration in case of disputes. When a dispute arose in 2020, Swamy sought settlement of his claim. But, the CPWD rejected this. Swamy approached the Superintending Engineer but there was no reply from him. He then approached the Chief Engineer, CPWD, who also rejected his claim. Swamy then approached the Dispute Redressal Committee, which also rejected his claim in 2021. Finally an arbitrator was appointed. Swamy approached the high court with the contention that the “arbitrator appointed is a former chief engineer of CPWD and as such there is a conflict of interest.”

The judgement by the HC said, “In the facts and circumstances I’m of the opinion that the doubts on part of the petitioner are justifiable. Statutory authorities and/or governmental bodies cannot seek to appoint an Arbitrator whose independence is doubted justifiably by the contractor.”

“I am of the considered opinion that the above petition would be required to be allowed and an independent and impartial third party Arbitrator be appointed in the place of the Arbitrator already appointed by respondent,” the court said and appointed Nanjundaswamy in place of the former chief engineer of CPWD as the sole arbitrator.