Arbitration and Conciliation Act, 1996 – s.11 – Northern Railways awarded two contracts for misc. civil engineering works to the respondent – According to appellant, the respondent received full and final payments and acknowledged the same – However, respondent raised claims in both the contracts and invoked arbitration clause contained in the agreements and requested appointment of arbitrator – Appellant rejected the claim – Thereafter, respondent filed petition u/s.11 of the Act and sought appointment of the arbitrator – High Court appointed an independent arbitrator for adjudication of disputes between the parties, instead of directing appointment as per Cl.64 of the agreement – On appeal, held: In the instant case, considering the various matters of railway contracts and setting aside of the appointment of independent arbitrators, after referring to M.P. Gupta, V.S. Engineering, Parmar Construction Company and other Judgments, the appointment of the independent arbitrator was set aside – When the agreement specifically provides for appointment of named arbitrators, the appointment should be in terms of the agreement – The High Court was not right in appointing an independent arbitrator ignoring Cl.64 of the General conditions of contract – Therefore, the appellant directed to appoint arbitrator in terms of Cl.64(3) of the agreement.
Allowing the appeals, the Court
HELD: 1. In Union of India and another v. M.P. Gupta (2004) 10 SCC 504, Union of India and another v. V.S. Engineering (P) Ltd. (2006) 13 SCC 240, Union of India v. Singh Builders Syndicate (2009) 4 SCC 523 and in a catena of judgments, the court held that whenever the agreement specifically provides for appointment of named arbitrators, the appointment of arbitrator should be in terms of the contract. [Para 14] [72-D]
2. The court, in V.S. Engineering observed that in the case of public institutions which are slow in responding to the request made by the contractor for appointment of an arbitrator, the power of the High Court to appoint an arbitrator under Section
11 is not taken away. The failure of the authorities in appointing an arbitrator and when the contractor approached the court for appointment of an arbitrator under Section 11 of the Act, it will then be in the discretion of the Chief Justice/designated Judge to appoint a railway officer as per the contract or a High Court Judge. [Para 14] [73-D-E]
3. Considering the various matters of railway contracts and setting aside the appointment of independent arbitrators, after referring to M.P. Gupta and V.S. Engineering and other judgments, in Parmar Construction Company, this Court set aside the appointment of the independent arbitrator and directed the General Manager of the Railways to appoint arbitrator in terms of Clause 64(3) of the agreement. The ratio of the Parmar Construction Company squarely applies to the case in hand. When the agreement specifically provides for appointment of named arbitrators, the appointment should be in terms of the agreement. The High Court was not right in appointing an independent arbitrator ignoring Clause 64 of the General Conditions of Contract. [Para 15] [73-F-G; 74-C-D] SP Singla Pvt. Ltd. v. State of Himachal Pradesh and another (2019) 2 SCC 488 – referred to.
Union of India v. Parmar Construction Company (2019) 5 SCALE 453 ; Union of India and another v. M.P. Gupta (2004) 10 SCC 504 ; Union of India and another v. V.S. Engineering (P) Ltd. (2006) 13 SCC
240 : [2006] 9 Suppl. SCR 125 ; Union of India v. Singh Builders Syndicate (2009) 4 SCC
523 : [2009] 3 SCR 563 – relied on.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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