w w w . L a w y e r S e r v i c e s . i n

Gemini Communication Limited, rep. by its Managing Director, Chennai v/s Bharat Sanchar Nigam Limited, rep. by its DGM, STP, Chennai & Another

Company & Directors' Information:- BHARAT SANCHAR NIGAM LIMITED [Active] CIN = U74899DL2000GOI107739

Company & Directors' Information:- GEMINI COMMUNICATION LIMITED [Under Liquidation] CIN = L32301TN1995PLC030087

Company & Directors' Information:- GEMINI (INDIA) LTD [Active] CIN = L51909WB1983PLC036721

Company & Directors' Information:- A B AND U COMMUNICATION PRIVATE LIMITED [Strike Off] CIN = U74300MH1997PTC107160

Company & Directors' Information:- GEMINI PVT LTD [Strike Off] CIN = U29299OR1981PTC001007

    O.P. No. 364 of 2017 & A. Nos. 2967 & 4223 of 2017

    Decided On, 15 December 2017

    At, High Court of Judicature at Madras


    For the Petitioner: J. Sivanandaraaj, K. Sankaranarayanan, Advocates. For the Respondents: R1, S. Goapinathan, Advocate.

Judgment Text

(Prayer: Petition filed under Section 14(2) read with Sections 15 and 11 of the Arbitration & Conciliation Act, 1996 to terminate the mandate of the second respondent to act as Arbitrator and consequently to appoint a new Arbitrator for the dispute between the parties in the arbitration bearing Number NIL between Gemini Communication Limited and BSNL Limited with regard to Rural WIMAX Project Phase II.)

1. This petition seeks a termination of the mandate of the Arbitrator arrayed as second respondent and the appointment of a new Arbitrator to adjudicate upon disputes that have been arisen between the applicant and BSNL Limited, the first respondent with regard to Rural WIMAX Project Phase II.

2. Heard Mr. V. Sankaranarayanan, learned counsel for the petitioner and Mr. S. Gopinathan, learned counsel for the first respondent.

3. The petitioner/Gemini Communication Limited (hereinafter referred to as ‘Gemini’) bid for a project floated by the Government of India through Bharat Sanchar Nigam Limited, the first respondent herein (hereinafter referred to as ‘BSNL’) to implement the Rural Wimax Project Phase II to provide connectivity to its E-Service Centres in rural areas. It was awarded the contract by a Purchase Order dated 28.06.2010. Clause 22.1 of the Purchase Order provides for resolution of disputes by way of Alternate Dispute Mechanism by a sole Arbitrator to be appointed by the Managing Director of BSNL.

4. Suffice it to say that disputes arose between the parties, Gemini filed a Civil Suit and Interlocutory Applications that travelled to the Supreme Court in appeal. The Supreme Court, noticing that the issues between the parties were substantial had indicated reference of the matter to two independent Arbitrators in its order dated 25.10.2013. However, on 17.04.2014 the Court directed that in the event of a request for appointment of Arbitrator by Gemini, BSNL shall examine the same and pass appropriate orders in accordance with law. Pursuant thereto in June 2014, the second respondent was appointed by BSNL as a sole Arbitrator. The letter of nomination stated that R2 was formerly engaged with the Telecom Regulatory Authority of India. There was no objection raised by Gemini to the appointment of R2 as Arbitrator on the expectation, as Mr. V. Sankaranarayanan would say, that R2 was a person of repute and credibility.

5. The first communication from R2 was in June 2014 putting the parties to notice about his appointment and calling upon Gemini to file its claim within one month. The claim was filed on 24.07.2014. BSNL was directed to file its reply within one month therefrom but eventually filed the same belatedly in October 2014. Gemini filed the rejoinder to the reply on 27.11.2014, BSNL then sought to file a separate counter claim on 06.02.2015 which was objected to by Gemini on the ground that it ought to have been filed along with the reply and thus was not maintainable. Despite protests, the counter claim was taken on file and Gemini directed to file a reply. In its reply on 02.03.2015 Gemini denied the counter claim both on merits as well as on the maintainability of the claim itself. Proceedings were on-going when certain incidents occurred that have led to the filing of the present petition under sections 14 and 15 read with section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘Act’).

6. The basis of this petition is the allegation that the Arbitrator has been rendered defecto and de jure unable to conduct the proceedings. The following submissions are advanced to establish the allegations made. After commencement, the proceedings for Arbitration were being regulated by the Arbitrator by issue of written communications as well as by exchange of emails between himself and the parties. Gemini came to know of certain emails having been exchanged between R2 and BSNL that had not been marked to Gemini but that came to its knowledge on a later date as part of an email thread. Reference in this regard is made to emails dated 03.07.2015 and 09.07.2015 extracted below. The first mail dated 3.7.15 was sent by one Mr. Nagarajan of BSNL to R2 stating as follows:

'Dear Sir,

Good morning.

Thank you very much for your reply and time extension upto 10.07.2015 for submission of reply by BSNL. Earlier vide my mail dated May 11, 2015 it was requested.

'On what aspect the cross examination has been requested is not exhibited, the same may be spelt out by Claimant so that the officers concerned can come prepared accordingly'.

It would be very useful if GCL furnish the same so that the officers concerned can come prepared to reply.

We request you to issue orders to GCL for the same.

We have sent letters to MH/BSNL CO to help STP submit the reply by 10.07.2015.

We will send out reply as per your instructions.

Hope your stay there is pleasant and memorable one.

Welcome back to India.

With warm regards.


7. The above e-mail was addressed by BSNL direct to R2 without marking a copy thereof to Gemini. R2 however, when seeking the response of Gemini to the request made by BSNL had forwarded the aforesaid mail of BSNL as part of the e-mail thread and Gemini this came to be aware of the same. The communication from the Arbitrator is as follows:

‘--------Original Message---------

Subject: Fwd: Good morning

Sent: Jul 5, 2015 1:38 AM

From: Ravindra Nath Prabhakar To: Sreekrishna B Cc:

Dear Mr. Sreekrishna

I am forwarding the email of the respondent. I agree with the contention of the respondent. You are required to give the basic aspects on which you would like to cross question each officer of the respondent so that the meeting is useful. I would like to have your response on this quickly.


R.N. Prabhakar

Sole Arbitrator’.

On 9.7.15, BSNL appears to have written as follows to R2:

Dear Sir,

Good morning. How are you? How is your family?

Hope everything is fine there.

Regarding GCL Arbitration:

The final reply submitted by Ms. GCL along with Amendment Petition have been mailed to BSNL CO. Two things are required from MH & MP Circle: MH-Circle has been requested to comment on the status of delayed CD payment as claimed by M/s. GCL. MP Circle has been requested to clarify delivery of 233 BTS as claimed by GCL in their Final Reply under Para-32.

STP sent a request letter to both the Circles. BSNL CO also has sent a letter to both the Circles in this regard. Reply is yet to be received from them.

Without their reply, reply to GCL petition could not be completed. As of now, STP needs to reply by 15th of this month. In this situation some more time is required.

Can we ask another 15-20 days time in this regard? Kindly advise me so that I can make a request formally to you with copy to all others.

Kindly reply Sir. I am sorry to bather at this juncture.



8. An objection thus came to be raised by Gemini vide letter dated 30.07.2016 wherein at para 5, Gemini states as follows:

'5. I have also noted an e-mail of BSNL to the learned Arbitrator dated 3rd July 2015, which refers to a previous email dated 11th May 2015. It is significant that both these emails were not copied to GCL or to me at the first instance. There is another email dated 9th June 2015, which is not copied to GCL or to me, wherein BSNL has made an informal request to the learned Arbitrator and indicated that it would raise a 'formal request' thereafter. I humbly request the learned Arbitrator to direct BSNL not to address 'informal' emails when the arbitration proceedings are progressing. I earnestly request that all correspondence regarding the arbitration ought to be sent to all parties at the first instance.

9. The above incident appears to have been given rise to a certain amount of unease on the part of the respondent, and rightly so. The familiarity displayed by BSNL in directly addressing the Arbitrator to the conscious exclusion of Gemini is disturbing, to say the least.

10. That apart, the clarifications sought by BSNL and the fact that the Arbitrator considered and put the same to Gemini is also cause for concern. The clarifications sought by BSNL relate to the specifics of the cross-examination to be conducted, particularly the questions that Gemini proposes to put to its witness, in order that the witness might prepare himself for the same. Surprisingly, the Arbitrator instructs Gemini to indicate to BSNL the line of questioning to be adopted which militates against the very concept of examination of witnesses where the effort is to maintain the element of surprise. The objections of Gemini were communicated to the Arbitrator on 30.07.2015 and formed part of the agenda for the meeting on 29.09.2015 as circulated by the Arbitrator. However the meeting dated 29.09.2015 did not address the specific issues raised in relation to the exchange of e-mails and the Arbitrator did not take any effective action or rather any action at all to caution BSNL or instruct it with regard to the propriety and procedure to be followed. Thus, the apprehensions of Gemini in this regard were not allayed.

11. The matter did not end there. Learned counsel for Gemini would point out that the cross-examination of the petitioner by BSNL again revealed the questionable procedure followed by the Arbitrator. The cross-examination of BSNL’s witness commenced on 18.7.2016 and continued on 19.7.2016. It was deferred to 6.1.17 and then to 17.1.17. In the course of the examination on that day, the following question and response was recorded:

‘Q.70 I put it to you that you are misleading this arbitration and you do not know the facts of this case and you do not know the material on record.

Ans. All the records submitted are factual in nature and are self explanatory. In question No.56 it has been mentioned by the Ld. Counsel of GCL that 'you have created documents after sow cause notice and produced the same in the court and before the learned arbitrator, none of the documents are true and can be relied upon as per law'. Since the advocate has concluded that the documents submitted are fabricated it is my sincere opinion that the Ld. Arbitrator may take a decision based on the facts submitted. Hence it is submitted I will not answer any more questions. Thank you.'

12. In view of the abrupt refusal of BSNL’s witness to answer any further questions the proceedings were closed for the day. This led to a piquant situation and Gemini made a request to examine the resultant position of law and advance submissions in this regard. It was permitted to do so and file an application on or before 30.1.17 with a copy provided to BSNL which was to file its response thereto by 3.2.17. The hearing was adjourned to 9.2.17. An extension of time for filing of the application was sought by Gemini on 30.01.17 in the following terms:

'As you are aware, at the last hearing dated 17.01.2017 of this above case, the respondents witness had refused to be subjected to further cross examination. Hence the Claimant was given time until today to decide on the next course of action after examining the position in law applicable to such situation.

We are in the process of studying the applicable law in this regard and request you to kindly grant us one week more to revert on this issue. As you are aware this is a critical stage of the case. The claims raised by both parties are huge. There are vital differences in the narration of facts by the two parties and hence it is essential that we are given adequate opportunity to cross examine witnesses to ensure that the true facts are exposed. We also had the additional difficulty or our office being closed the last week for 2 days in view of security arrangements on Barakhamba Road, for Republic day.

Hence we request this Learned Tribunal to grant us one week more to revert on this issue’.

13. The Arbitrator grants time till 3.2.17, specifically confirming the hearing on 9.2.17 and responding vide e-mail dated 31.1.2017 as follows:

'The claimant, through email of 30.01.2017, has requested for additional time for filing the legal position in regard to further examination of the respondent witness. The date of filing on 30th January, 2017 was decided after taking into consideration the closure of offices around Connaught place area in the afternoon of 25th January, 2017 as National holiday. I don’t think offices around Connaught place remain closed for two and half days. Therefore, I don’t find any justification for extension of time. However, as an exception, the claimant is allowed to file its legal position for cross examination of respondent witness latest by 3rd of February, 2017 with the copy of the same to be given to respondent on the same day. No further extension will be given. The respondent to file its response by 7th of February, 2017. The scheduled meeting for 9th February, 2017 will continue.’

14. On 3.2.17, Gemini confirms its participation at the hearing scheduled on 9.2.17 in the following terms:

'Respected Sir,

This is in respect of what transpired at the previous arbitral hearing wherein the respondents witness refused to undergo cross examination by claimants. We had requested for some time to revert on the legal position in such situations. Though we had requested for a weeks time in my previous email, we were granted only 3 days. The Learned Tribunal also has indicated that out request for further time was 'unjustified'. In this regard, I earnestly request the Learned Tribunal to accommodate such requests for time, especially when there is no opposition for such request. Further, the record of this arbitration would disclose that till date we have never sought any unjustified adjournments.

As regards, the legal position, my respectful submission is that in situations where the witness refuses to undergo cross examination, the entire evidence produced by the witness cannot be relied upon by the Learned Tribunal. Further, the reply statement and all other statements filed by the said witness cannot be relied upon in the arbitration proceedings. This is for your information and records. We will be ready to participate in the hearing fixed on 9.02.2017 and substantiate this legal position.’

15. Interestingly the next throw of the dice was by Mr. Nagarajan of BSNL, wo by letter dated 6.2.17 sought to clarify his stand in the cross-examination conducted on 17.1.16. He concludes his explanations stating that if the Arbitrator is of the opinion that further cross examination was necessary, he would be willing to depose on any date as convenient to the Arbitrator. A copy of this letter was marked to Gemini as well.

16. Gemini thus, on 08.02.2017 sought a specific date for continuation of cross-examination as indicated by the witness of BSNL. It also appear to have filed an application (undated) on 6.2.17 requesting the Arbitrator to fix a date for continuation of cross-examination of BSNL’s witness. The meeting scheduled for 9.2.17 took place and the Arbitrator records the events thus far as follows:

'1. The thirteenth meeting was attended by Mr. Randhir Beri, Advocate. Mr. Lalit Bhardwaj, advocate from the respondent side and by Mr. Chaman Lal, Advocate, from the claimant side.

2. Arbitrator welcomed all the participants and meeting started. The Arbitrator informed the claimant that the claimant requested for additional time for filing the appropriate application about the legal position of issue came up in the meeting on 17.01.2017 through email on 30.01.2017 but he has not received the original signed letter so far. The Arbitrator also informed that the claimant filed the application through email on 03.02.2017 and it was unsigned. The Arbitrator has not received the signed copy of the application so far. The claimant was requested to file the original documents duly signed immediately.

3. The claimant in the application filed on 03.02.2017 has stated 'In situations where the witness refuses to undergo cross examination, the entire evidence produced by the witness cannot be relied upon by the Learned Tribunal. Further, the reply statement and all other statements filed by the said witness cannot be relied upon in the arbitration and records. We will be ready to participate in the hearing fixed on 09.02.2017 and substantiate this legal position'. The claimant was asked to proceed. The claimant did not provide any written document or any verbal argument to substantiate its claim. The claimant filed undated petition for fixing a date for cross examination of respondent witness on the basis of reply of the respondent filed on 06.02.2017.

4. The respondent filed the reply on 06.02.2017. The respondent’s advocate in the meeting argued that the claimant should substantiate its stand stated in its application dated 03.02.2017. The respondent advocate argued that the witness has stated 'Since the advocate has concluded that the documents submitted are fabricated it is my sincere opinion that the Ld. Arbitrator may take a decision based on the facts submitted. hence it is submitted I will not answer any more questions, Thank you'. Already the witness has answered in total 70 questions spanned over four days. The witness took the stand because the claimant declared all the documents as fabricated.

5. The Arbitration heard both the parties and closed the meeting. Further line of action in this case will be communicated to both the parties by the Arbitrator.'

17. As the above extracted minutes did not, according to Gemini, accurately reflect the factual position that had transpired, Gemini wrote to the Arbitrator on 11.2.17 pointing out the various discrepancies that the minutes contained such as incorrect reference to letter dated 3.2.17 as a petition, omission of reference to letter dated 6.2.2017 from BSNL agreeing to continue the cross examinant and the request from Gemini seeking fixation of date for continuing of cross examination. Discrepancies in the observations relating to cross-examination were also pointed out. In conclusion, Gemini requests the Arbitrator to fix a date for the continuation of cross examination in the light of the above. The Arbitrator appears to have refused to receive the aforesaid letter as a result that Gemini forwarded the same under confirmation of letter dated 13.2.17 also expressing its apprehensions about the impartiality of the Arbitrator, in the light of the recent sequence of effects.

18. By order dated 13.2.17, the Arbitrator passes the following order:

'1. In the meeting held on 09.02.2017, the claimant did not substantiate the legal position in regard to the application filed by the claimant on 03.02.2017.

2. Both the parties are now requested to file the final written arguments, if any, by 7th June, 2017. In the written arguments, they should cover the following aspects also:

a) The issues identified in this arbitration case. In case of any violation, it may be clearly indicated the clause which has been violated.

b) The details of equipment commissioned at Punjab and Haryana Circles including acceptance testing, number of CPEs provided, the payment received so far and the payment due. Any other information the parties may like to submit in this regard.

c) The claimant in the fifth arbitration meeting has stated that the preliminary award for Rs.31,75,57,822.88 toward outstanding cost of CPEs’ may be excluded in view of BSNL letter No.BSNLC/WIMax/2014-15/Rural, Ph-II/Gemini dated 16.07.2015 filed by the claimant on 29.09.2015). The claimant to confirm this in the final submissions and also confirm whether the payment of the CPEs supplied to be also excluded from the prayer of the claimant filed with the statement of claim.

3. The claimant is also requested to submit non-judicial stamp paper of Rs.500.00 by 7th June, 2017.

4. Please confirm the receipt of this letter through email.’

19. Gemini forward a petition (undated) lodging its protest to the above order by post. The petition was however returned unserved as R2 was out of the country. The same has been forwarded thereafter by mail dated 1.3.2017 to which no response was received.

20. The aforesaid events prompted Gemini to make enquiries about the background of R2 and it was found that R2 was earlier an independent Director on the Board of BSNL, New Delhi. This constitutes a bar and in all fairness and in the light of the provisions of section 12 of the Act ought to have been disclosed by the Arbitrator prior to taking one assignment up. Such disclosure was however never made. The information came to the attention of Gemini only subsequent to the aforesaid events when an online search was specifically made to ascertain the profile of the Arbitrator. It is in the aforesaid background that Gemini seeks a termination of the mandate of the Arbitrator and appointment of an alternate Arbitrator in his place.

21. The following decisions are relied upon by Gemini:

1. State of Arunachal Pradesh vs. Subhash Projects and Marketing Ltd. and another (2006) 3 GAUHATI LAW REPORTS 939

2. K.C. Planisamy and another vs. Kasturi and Sons Limited and others (O.P. No. 445 of 2008 dated 25.11.2008)

22. A detailed counter has been filed wherein every allegation raised has been denied and the procedure adopted by R2 supported as proper and fair. It is relevant to note that only BSNL has filed a counter. The Arbitrator is neither represented before the Court nor has a counter filed to rebut the allegations made inspite of notice from this Court. Reliance is placed by BSNL on a decision of the Chief Justice of this Court in the case of Offshore Infrastructure Limited vs. Bharat Heavy Electricals Limited Power Section, Southern Region and Another (CDJ 2016 MHC 6540). As far as emails dated 03.07.2015 and 09.07.2015 are concerned, the allegation that the mails are not marked to Gemini are merely brushed off stating that it was inadvertent. This statement is set at naught by the e-mail from BSNL dated 9.6.2015 extracted earlier wherein Mr. Nagarajan clearly states ‘In this situation some more time is required/Can we ask 15-20 days time in this regard?/Kindly advise me so that I can make a request formally to you with copy to all others.’ The decision to exclude Gemini was thus not inadvertent but conscious.

23. In any event, BSNL as a respondent is only entitled to defend its role in the proceedings and it is left for the Arbitrator to have filed a counter or at circulate least para-wise remarks I response to the allegations made in order that the fact from his perspective might have been on record. This has not been done.

24. The commencement of proceedings as per Section 21 of the Act is in June 2014, prior to the 20515 amendment to the Act. Section 12 as it stood prior to amendment reads thus:

’12. Ground for challenge – (1) When a person is approached in connect with his possible appointment as an Arbitrator, he shall disclose in writing any circumstances,

(a) such as the existence either direct or indirect, of any past or present relationship with or interest in any of the parties or in relation to the subject matter in dispute, whether financial, business, professional or other kind, which is likely to give rise to justifiable doubts as to his independence or impartiality; and


25. In my view, the Directorship of R2 in BSNL is, in terms of section 12(1)(a) above, a circumstance that ought to have been revealed by the Arbitrator at the time of appointment as it is likely to give rise to an apprehension of his independence or impartiality. It would have been quite another matter had R2 made the disclosure and Gemini proceeded with the Arbitration despite the same. BSNL’s letter dated 25.06.2014 appointing R2 as Arbitrator merely states that he was a retired TRAI member and makes no reference to his earlier directorship in BSNL. BSNL does not dispute the position that disclosure in this regard has not been made by it or by the Arbitrator. This fact does, as does the sequence of a events as presented, lead to an apprehension about the impartiality of R2. The Arbitrator, in the minutes dated 13.2.17 does not advert to the letter of BSNL agreeing to participate in the cross examination. This is certainly a substantive omission. Particularly seen in the context of the witness’s conclusion in letter dated 6.2.17 to the effect that he is willing to submit to cross-examination if directed by the Arbitrator, the inaction or rather the failure of the Arbitrator to even refer to this statement of BSNL gives the appearance and impression of the Arbitrator shielding the witness from further exposure.

26. Article 20 of the Agreement dealing with reference of the dispute to Arbitration provides for the appointment of Arbitrator in the following terms:

‘The agreement to appoint an Arbitrator will be in accordance with the Arbitration and Conciliation Act, 1996. There will be no objection to any such appointment on the ground that the arbitrator is a Government Service or that he has to deal with t

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he matter to which the agreement relates or that in the course of his duties as a Government Servant he has expressed his views on all or any of the matters in dispute. The award of the arbitrator shall be final and binding on both the parties to the agreement.’ Thus, the reservation made is only to the extent that the objection should not be on the ground that the arbitrator was a government servant. The part was entitled to be aware of all other factors that might have a bearing on impartiality of the Arbitrator, directorships being one such factor. 27. The provisions of section 14 provide for the termination of the mandate of an Arbitrator if he becomes de jure or de facto unable to perform his functions or for other reasons fails to act without undue delay. In the present case, the narration of facts are clear to the fact that the conduct of proceedings by R2 was irregular. The operation of the bar under section 12 is also uncontroverted as the former directorship of R2 in BSNL is undisputed. The premise of proceedings for alternate dispute resolution are trust in the Arbitrator and there is little point in proceeding when such trust has been broken. Of course, an allegation to such effect must be tested to ensure it is not put forth by a disgruntled party or one that apprehends an adverse order. In the present case, Gemini displays enthusiasm at the commencement of the proceedings when coming to be aware of the appointment of the proceedings when coming to be aware of the appointment of R2 as Arbitrator. Vide letter dated 14.7.14, it states that it is very glad that an arbitrator of the stature of R2 has been appointed and looks forward to a quick resolution of the disputes. The apprehensions of Gemini commenced with the receipt of the e-mail thread where BSNL displays familiarity with the Arbitrator, the conscious exclusion of Gemini from the correspondence with the Arbitrator, the directions of the Arbitrator to Gemini to reveal its strategy for cross-examination, failure to/inaction in directing BSNL’s witness to submit to examination even when the deponent expressed willingness to do so and finally the fact of directorship in BSNL. These events, in my view, attract the provisions of section 14 of the Act. As far as the decision relied on by the respondent is concerned, it is in the context of Section 12 post amendment to the Act with effect from 23.10.2015 and would not impact my decision. In the aforesaid conclusion that I have reached I also proceed to appoint an arbitrator in terms of section 11(6) of the Act in place of the present Arbitrator. 28. I thus appoint Mr. Justice, Doraisamy Raju, Former Judge of the Supreme Court as Arbitrator to hear and adjudicate upon the disputes inter se the parties. 29. This petition is order in the aforesaid terms.