Summary
The Supreme Court upheld the contractual appointment of a departmental arbitrator in proceedings commenced in 2013 and declined a second appointment through Section 11(6). The 2015 amendment did not govern those proceedings on these facts. It nevertheless set aside termination for failure to file the claim, since no final warning against further adjournment had been given, and directed appointment under the contractual clause with a fresh opportunity to present the claim.
Issues
- Whether appointment by designation complied with the arbitration clause.
- Whether the 2015 amendment invalidated the departmental appointment in proceedings commenced in 2013.
- Whether the contractor should receive another opportunity after termination for failure to file its claim.
Provisions considered
- Sections 11(6) and 13, Arbitration and Conciliation Act, 1996Once an arbitrator was appointed under the agreed procedure, a second Section 11(6) proceeding was not the means to replace him; the appointment challenge belonged initially before the arbitrator under the statutory challenge procedure. (¶¶ 13, 18, 19)
- Section 26, Arbitration and Conciliation (Amendment) Act, 2015The amendment did not apply to these arbitral proceedings commenced in 2013. The general contractual reference to statutory modification did not, on these facts, constitute agreement to apply the amendment. (¶¶ 15, 16, 22)
- Section 25(a), Arbitration and Conciliation Act, 1996Failure to communicate the statement of claim permitted termination, but the termination was set aside in the particular circumstances to afford an opportunity after no final warning had been issued. (¶¶ 20, 21, 22, 23)
Held
- Clause 65 permitted appointment by designation and contemplated replacement upon transfer or vacation of office. Appointment of the Superintendent Engineer from the arbitration circle complied with the agreement. (¶¶ 9, 10, 12)
- The 2015 amendment could not be invoked for these 2013 proceedings. The Court did not examine the correctness of the Delhi High Court’s broader view in Ratna Infrastructure. (¶¶ 15, 16)
- The contractor could not seek a second appointment under Section 11(6) after contractual appointment; objections to the arbitrator were to be raised through the prescribed challenge procedure. (¶¶ 13, 18, 19)
- Although the contractor failed to file its claim while pursuing appointment proceedings, it repeatedly sought adjournments and received no final warning. In the interests of justice the termination was set aside. (¶¶ 20, 21, 22)
- The Chief Engineer must appoint an arbitrator under Clause 65. The contractor must file its claim and both sides must receive sufficient opportunity; no opinion was expressed on the claim’s merits. (¶ 23)
Result
Appeals disposed of. Termination dated 6 August 2014 set aside; contractual appointment and further arbitral proceedings directed, with merits left open.