New Delhi, Jan 9 (PTI) The Supreme Court on Monday refused to interfere with a Delhi High Court order that dismissed the Centre’s plea relating to the appointment of two of the three judges on an arbitration panel looking into a cost-recovery dispute in Reliance Industries Limited’s (RIL) KG-D6 gas block.
A bench of Chief Justice DY Chandrachud and Justice PS Narasimha said, “Sorry, we would not like to interfere with the high court verdict.” The Centre had moved the top court against the high court’s December 9 verdict.
The Union government had moved the high court seeking a declaration that the two judges should be discharged from their functions due to alleged bias.
The high court had upheld the preliminary objection raised by the RIL’s counsel and said the petition of the Union Ministry of Petroleum and Natural Gas was dismissed as being not maintainable.
The court, however, clarified that it had neither considered nor ruled upon the allegations levelled by the government against the members of the arbitral tribunal and that all contentions were kept open.
RIL had, in November 2011, initiated arbitration, disputing the disallowance of more than USD 2.3 billion of the KG-D6 cost by the government on the ground of gas output lagging in meeting targets.
In 2014, it named former UK judge Sir Bernard Rix as its arbitrator in the three-member tribunal in place of its original choice, SP Bharucha, a former chief justice of India.
Justice Bharucha had recused himself from the tribunal where the government had named former CJI V N Khare as its arbitrator.
Michael Kirby, a former judge of an Australian high court, was appointed by the Supreme Court as the neutral arbitrator and chairman on the panel in September 2014.
The Centre approached the high court seeking a declaration that Kirby and Rix are “de jure/de facto” unable to discharge their functions and consequently, their mandate stands terminated in terms of section 14 (failure or impossibility to act) of the Arbitration and Conciliation Act, 1996.
The government had, in November 2011, issued a notice disallowing certain costs RIL and its partners had incurred on the KG-D6 blocks, saying the gas output had lagged in meeting targets.
RIL has challenged the notice, saying the contract for KG-D6 does not provide for output targets and there was no provision for disallowing any part of the cost because of production not being in line with output guidance.
The government initially did not join the arbitration within the stipulated 30 days as provided under the production sharing contract (PSC) but relented after RIL moved the apex court for the appointment of a second arbitrator.
However, Justice (retired) Bharucha and Justice (retired) Khare failed to agree on the name of the third presiding arbitrator for 13 months and RIL again moved the Supreme Court on August 8, 2013.
The apex court appointed Kirby as the chairman of the arbitral tribunal in September 2014.
In the high court, the RIL’s counsel had raised a preliminary objection with respect to the maintainability of the government’s petition and said since the challenge to the arbitral tribunal in the present case is raised on the ground of bias and a justifiable doubt with respect to the independence and impartiality of the arbitrators, it is the procedure specified in section 13 alone that could have been pursued.
The high court, in its order, said it failed to find any merit in the submission of the Centre’s counsel that the members of the arbitral tribunal have already prejudged the entire issue and that relegating the petitioner to pursue the pending application would be an empty formality.
“Accordingly, and for all the aforesaid reasons, the preliminary objection is upheld. The petition shall consequently stand dismissed as being not maintainable. The present order, however, shall not preclude the petitioner from pursuing its application dated November 28, 2022 preferred before the arbitral tribunal.
“While that application is titled as having been preferred under section 14 of the Act since an application under the aforenoted provision can only be presented before a court as defined, it would be open for the petitioner to amend the nomenclature of the said application, if so chosen and advised,” it said. PTI MNL RC
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