Allahabad High Court Rules Default Clause Cannot Override Three-Member Tribunal in S H Infratech

The Allahabad High Court has firmly upheld the principle of party autonomy in arbitration, ruling that Section 11(6) of the Arbitration and Conciliation Act, 1996 is a default provision that cannot be used to supplant a contractually agreed three-member arbitral tribunal with a sole arbitrator. Justice Jaspreet Singh dismissed a petition by M/s S. H. Infratech Pvt. Ltd., which had sought the court's intervention to appoint a sole arbitrator, holding that the remedy lay elsewhere.

Background of the Dispute

The dispute arose from a road construction contract awarded to S. H. Infratech by the Government of Uttar Pradesh in 2014. The contract contained an arbitration clause providing for a three-member tribunal: each party would nominate one arbitrator, and the two nominees would appoint the presiding arbitrator. Disputes emerged, and the tribunal was duly constituted in 2020 with Sri V.K. Shrotia as the petitioner's nominee, Sri Arvind Kumar Gupta as the respondent's nominee, and Sri Vijay Singh Verma as the presiding arbitrator. Pleadings were exchanged the same year.

However, on 30 May 2021, the respondent's nominee, Sri Gupta, passed away. The presiding arbitrator informed both parties of the death on 2 June 2021. For over three years—until November 2024—no significant steps were taken by either side to fill the vacancy or advance the proceedings. The petitioner did not follow up, nor did it invoke the court's default appointment mechanism under Section 11(4) of the Act.

Petitioner's Contentions

It was only on 25 November 2024 that the respondents appointed Sri Dilip Kumar Mahapatra as their new nominee. The petitioner promptly objected, arguing that the tribunal's mandate had already expired under Section 29-A of the Act for failing to complete proceedings within the prescribed time. Additionally, the petitioner contended that the vacancy had not been filled within a reasonable period and that Sri Mahapatra, being a retired employee of the respondents, was ineligible under Sections 12(1) and 12(5) of the Act. By a notice dated 13 December 2024, the petitioner requested the respondents to consent to the appointment of a sole arbitrator, suggesting four names. When the respondents declined on 19 April 2025, the petitioner approached the High Court under Section 11(6).

Respondent's Stand

The respondents, though not filing a counter affidavit, argued that the petition was misconceived. They submitted that Sections 14, 15, and 29-A of the Act operate in different spheres and that the petitioner had improperly merged separate causes of action. The proper remedy, they maintained, was not under Section 11(6).

Court's Analysis

Justice Jaspreet Singh began by noting that the arbitration agreement clearly envisaged a three-member tribunal. After the death of the respondent's nominee, the petitioner could have invoked Section 11(4) to seek the court's assistance in filling the vacancy, but it did not. Instead, it waited until the respondent itself filled the vacancy and then raised objections.

The court rejected the argument that Section 11(6) could be used to override the agreed mechanism. It observed:

“Section 11(6) is a default clause and only when the parties are unable to get an Arbitrator appointed in terms of the settled and agreed rules, can the default clause come into picture. It does not give any independent right to the court in terms of Section 11 to override the terms of the contract to appoint an Arbitrator.”

On the issue of the tribunal's mandate expiry under Section 29-A, the court held that after the vacancy was filled, the first step should have been to complete the constitution of the tribunal and then seek an extension of time from the appropriate court. The court noted that an application for extension under Section 29-A lies before the "Court" as defined in Section 2(e) of the Act—i.e., the District Court. Relying on the Supreme Court's decision in Jagdeep Chowgule v. Sheela Chowgule & Others , the court clarified that the District Court, while extending time, also has the power to substitute or appoint arbitrators under Sections 29-A(6) and (7). The petitioner could have sought both the extension and the substitution of the respondent's nominee in that forum, but it did not.

As for the challenge to Sri Mahapatra's appointment on grounds of ineligibility, the court held that such a challenge must be raised under Sections 12 and 13 of the Act. The petitioner had not followed that procedure. Moreover, in a multi-member tribunal, each party is entitled to choose its nominee, and the other party cannot unilaterally object unless the challenge is properly raised.

Key Observations

The court made several pivotal observations:

“There is no consensus between the parties regarding a Sole Arbitrator, hence, filing a petition before this Court in terms of 11(6) of the Act of 1996 with a prayer to appoint a sole independent Arbitrator would be against the spirit of the consensus reflected in the agreement arrived at between the parties and would be against the core principles of Arbitration i.e. party-autonomy.”

The court also emphasized that the procedure under Section 29-A is self-contained and must be exhausted before seeking extraordinary remedies. It noted that the petitioner's attempt to blend the provisions of Sections 12, 15, and 29-A to secure a sole arbitrator was "misconceived and misplaced."

Verdict

In light of the above, the court dismissed the petition, leaving it open to the petitioner to pursue such remedy as may be available in law. No order as to costs was made. The judgment reinforces the sanctity of contractual arbitration clauses and clarifies the limited scope of Section 11(6), ensuring that default powers do not become tools to subvert party autonomy.