Summary
In these railway-contract arbitrations commenced before the 2015 amendment, the Supreme Court set aside appointments of independent arbitrators made without first respecting the agreed appointment procedure. The amended ineligibility provision did not govern merely because appointment applications were decided later. No-claim certificates did not extinguish the disputes on the prima facie circumstances of financial compulsion shown, and the remaining objections were left for arbitration.
Issues
- Whether the 2015 amendment governed the earlier arbitration requests.
- Whether the no-claim certificates established accord and satisfaction.
- Whether the High Court could bypass the agreed appointment mechanism on these facts.
Provisions considered
- Section 21, Arbitration and Conciliation Act, 1996Arbitral commencement followed receipt of the reference request, which occurred before the amendment took effect in these cases. (¶ 24–27)
- Section 26, Arbitration and Conciliation (Amendment) Act, 2015Absent contrary agreement, the amendment did not apply to these already commenced arbitrations; later consideration of appointment applications did not change that conclusion. (¶ 24–27)
- Section 11(6), as then applicable, Arbitration and Conciliation Act, 1996The agreed procedure was to receive precedence; reasoned departure remained possible for justified impartiality concerns or failure of the agreed tribunal, neither being established here. (¶ 37–44)
Held
- The requests had been received before 23 October 2015. Appointment, substitution or pending court applications did not independently attract the amended arbitration regime to those proceedings. (¶ 24–27)
- A genuine voluntary settlement can extinguish arbitrable disputes, but mere execution of a prescribed no-claim certificate does not conclusively do so. The allegations and circumstances here prima facie indicated financial compulsion accompanying unilateral deductions; the disputes survived, with contentions open before the tribunal. (¶ 28–36)
- Under the applicable earlier law, the agreed appointment procedure deserved effect as closely as possible. Courts retained power to make justified alternative appointments, but the record showed neither disputed impartiality nor a failed tribunal warranting bypass of the contractual mechanism. (¶ 38–44)
- The appointing authority was directed to make contractual appointments within one month, followed by contractors’ claims within four weeks and an expedited independent merits determination. (¶ 45–47)
Result
High Court appointment orders quashed. Railways directed to appoint under clause 64(3) within one month; contractors to submit claims within four weeks thereafter. Expedited arbitration directed without influence from the Court’s observations. Appeals disposed of without costs.