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2005 Supreme(SC) 1407

R. C. LAHOTI, B. N. AGARWAL, ARUN KUMAR, G. P. MATHUR, A. K. MATHUR, P. K. BALASUBRAMANYAN, C. K. THAKKER
S. B. P. & Co. – Appellant
Versus
Patel Engineering LTD. – Respondent


Judgement Key Points

Key Points: - The judgment holds that the power under Section 11(6) is administrative in nature, not judicial or quasi-judicial (majority view) (!) (!) (!) . - The power under Section 11(6) can be delegated only to another judge of the respective court (High Court or Supreme Court) and cannot be delegated to a district judge or non-judicial body (!) (!) . - The designated person acts as the Chief Justice’s authority to appoint an arbitrator, with the final appointment order issued by the Chief Justice or the designated judge; Section 11(7) finality applies to the Chief Justice’s decisions on specified matters (!) (!) (!) . - The arbitral tribunal has Kompetenz-Competenz to rule on its own jurisdiction, but Section 16 is a self-contained code guiding challenges to jurisdiction and continuation of arbitration after ruling (!) (!) (!) . - Appeals and judicial review pathways differ: appeals against Chief Justice’s order under Article 136 are available only in certain circumstances; other avenues include Section 34 and 37 for arbitral awards, with High Courts’ writs and special appeals being constrained by the established finality and scheme (!) (!) (!) . - Notice and opportunity to affected parties: the majority view in Konkan Railway II held that notice is optional; the present judgment acknowledges that there is a duty to act fairly and that notice to affected persons is required, making the scheme consistent with natural justice principles prospectively (!) (!) (!) . - Konkan Railway decisions are refined with prospective effect: the Constitution Bench overruled certain interpretations and clarified that the Chief Justice’s function is administrative; but subsequent issues on notice must be applied in future appointments (!) (!) (!) . - The decision provides for prospective operation: appointments made without notice remain valid but future appointments must follow notice requirements (!) . - The Act’s objective is to minimize judicial intervention and expedite arbitration, balancing finality with available remedies in the Act (!) (!) . - The majority and minority views converge on some aspects but differ on whether Section 11(6) is strictly administrative or partly judicial; this judgment clarifies the administrative nature while preserving certain procedural safeguards (!) (!) .

What is the nature of the function performed by the Chief Justice or his designate under Section 11(6) of the Arbitration and Conciliation Act, 1996?

What is the scope of finality and judicial review in relation to orders under Section 11(6) and subsequent arbitral proceedings?

What are the permissible boundaries and requirements regarding notice and fair procedure when appointing an arbitrator under Section 11(6)?


Majority Judgment

P.K. Balasubramanyan, J.—Leave granted in SLP (C) Nos. 3205/2004, 14033-14034/2004, 21272-273/2002.

1. What is the nature of the function of the Chief Justice or his designate under Section 11 of the Arbitration and Conciliation Act, 1996 is the question that is posed before us. The three judges bench decision in Konkan Rly. Corpn. Ltd. Vs. Mehul Construction Co. [(2000) 7 SCC 201] as approved by the Constitution Bench in Konkan Railway Corpn. Ltd. & Anr. Vs. Rani Construction Pvt. Ltd. [(2002) 2 SCC 388] has taken the view that it is purely an administrative function, that it is neither judicial nor quasi-judicial and the Chief Justice or his nominee performing the function under Section 11(6) of the Act, cannot decide any contentious issue between the parties. The correctness of the said view is questioned in these appeals.

2. Arbitration in India was earlier governed by the Indian Arbitration Act, 1859 with limited application and the Second Schedule to the Code of Civil Procedure, 1908. Then came the Arbitration Act, 1940. Section 8 of that Act conferred power on the Court to appoint an arbitrator on an application made in that behalf. Section 20 conferred a wid
































































































































































































































































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