In Brief
Ellora Paper Mills dispute with Madhya Pradesh over a supply contract led to a decades-long arbitration involving a state arbitral tribunal comprising government employees. The Supreme Court held that serving state employees are ineligible arbitrators under Section 12(5) of the Arbitration Act, which mandates arbitrator neutrality and independence irrespective of prior agreements. The Court rejected the High Court's view that the 2015 amendment could not apply retrospectively, holding that the statutory mandate overrides all prior appointments. Mere participation in proceedings does not waive the ineligibility requirement. The Court appointed a retired Supreme Court Judge as fresh arbitrator and directed parties to resume proceedings within four weeks.
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