2018 Supreme(SC) 1212

SUPREME COURT OF INDIA
R. BANUMATHI, INDIRA BANERJEE, JJ.
SP SINGLA CONSTRUCTIONS PVT. LTD. – Appellant
VERSUS
STATE OF HIMACHAL PRADESH AND ANOTHER – Respondents
CIVIL APPEAL NOS. 11824-11825 OF 2018 (Arising out of SLP(C) Nos.1274-75 of 2015)
Decided On : 04-12-2018

IMPORTANT POINTS
Appointment of arbitrator by designation is permissible.
Arbitration clauses in government contracts providing that an employee of the department will be the sole arbitrator are neither void nor unenforceable.
Appointment of arbitrator has to be challenged before the arbitrator himself in the first instant.
Provisions of Act, 2015 cannot have retrospective operation in arbitral proceedings already commenced, unless the parties otherwise agree.
Once, the appointment of an arbitrator is made at the instance of the government, the arbitration agreement could not have been invoked for the second time.
When the contractor does not appear before arbitral tribunal and arbitration is terminated on this ground, contractor cannot invoke section 1196) for appointment of an independent arbitrator.

Headnote:(a) Arbitration and conciliation Act, 1996 – Section 11(6) r/w Cl. (65) of General conditions of contract – Cl. 65 providing for appointment of arbitrator by designation – Contention that arbitrator can be appointed only by name, rejected. (Para 10)

       (2014) 11 SCC 560; (2018) 6 SCC 287 – Relied upon

       (2017) SCC Online Del 7808 – Cited with approval

       (b) Arbitration and conciliation Act, 1996 – Section 12(5) r/w Cl. (65) of General conditions of contract – Objection on appointment of an officer of the department as arbitrator on ground of bias – Rejected – Well settled that arbitration clauses in government contracts providing that an employee of the department will be the sole arbitrator are neither void nor unenforceable. (Para 11, 12)

       (2009) 8 SCC 520; (2007) 5 SCC 304; (2004) 10 SCC 504; (2015) 2 SCC 52 – Relied upon

       (c) Arbitration of Conciliation Act, 1996 – Section 11(6) and 12(5) – Appellant challenging appointment of arbitrator u/s 11(6) – Well settled that appointment of arbitrator has to be challenged before the arbitrator himself in the first instant. (Para 13) 21

       (d) Arbitration and Conciliation (Amendment) Act, 2015 – Section 26 – Provisions of Act, 2015 – Cannot have retrospective operation in arbitral proceedings already commenced, unless the parties otherwise agree. (Para 16)

       (2014) 11 SCC 560; (2018) 6 SCC 287 – Relied upon

       (2017) SCC Online Del 7808 – Referred

       (e) Arbitration – Appointment of arbitrator at the instance of the government – Arbitration agreement cannot be invoked for the second time. (Para 19)

       (f) Arbitration and Conciliation Act, 1996 – Section 11 and 25 – Contractor not appearing before arbitral tribunal – Not filing any statement of claim – Instead, filing application u/s 11 – Arbitrator terminating arbitration u/s 25 – Application u/s 11 held impermissible. (Para 21)

       Facts of the case:

       The appellant was awarded construction work contract for a sum of Rs.14,29,81,500/-. An agreement was also entered into between the parties and clause (65) of the General Conditions of Contract contains arbitration clause. The period allowed for completion of work was on or before 04.01.2009. However, extension was granted to the appellant up to 30.06.2010. The work was completed by the appellant on 04.06.2011 and payment for the execution of work was made. The appellant raised a dispute and requested for the appointment of arbitrator. Pursuant to the request of the appellant, the Chief Engineer, HPPWD appointed the “Superintendent Engineer, Arbitration Circle, HPPWD, Solan” as the arbitrator in terms of clause (65) of the agreement. The arbitrator entered upon reference on 11.11.2013. The appellant after requesting for the appointment of arbitrator either remained absent from the proceedings or sought adjournments stating that he intends to challenge the appointment of arbitrator before the Chief Justice as per the provisions of Arbitration and Conciliation Act, 1996. Even after hearing, no statement of claim was filed by the appellant. Arbitration proceedings were terminated under Section 25(a) of the Arbitration and Conciliation Act, 1996.

       The High Court held that the appointment of “Superintendent Engineer” as arbitrator being in terms of clause (65) of the agreement, Section 11(6) of the Act cannot be invoked. The appointment of arbitrator could not be challenged by way of an application under Section 11(6) of the 1996 Act.

       Finding of the Court:

       Application u/s 11 was impermissible.

       Result: Appeals disposed of.