2019 Supreme(SC) 56

SUPREME COURT OF INDIA
R. BANUMATHI, INDIRA BANERJEE, JJ.
Rajasthan Small Industries Corporation Limited - Appellant
Versus
M/s Ganesh Containers Movers Syndicate - Respondent
Civil Appeal No. 1039 of 2019 (Arising out of SLP (C) No. 22809 of 2016)
Decided On : 23-01-2019

IMPORATNT POINTS
A party participating in the proceedings before arbitral tribunal for quite some time and also expressing faith in the sole arbitrator cannot challenge appointment of the sole arbitrator.
A provision enacted after commencement of proceedings cannot be invoked in the proceeding.
Mere neglect of an arbitrator to act or delay in passing the award by itself cannot be the ground to appoint another arbitrator in deviation from the terms agreed to by the parties.
Word ‘complete justice’ occurring in Article 142 is of width with elasticity to meet myriad situations created by human ingenuity or cause or result of operation of Statute law or law declared under Articles 32, 136 and 141 of the Constitution.

Headnote:(a) Arbitration and Conciliation Act, 1996 – Section 11 and 15 – Respondent participating in the proceedings before arbitral tribunal for quite some time and also expressing faith in the sole arbitrator – Held, respondent not justified in challenging such appointment of the sole arbitrator and approaching High court u/s 11 and 15. (Para 21, 22)

       (2009) 8 SCC 520 – Relied upon

       (b) Arbitration and Conciliation Act, 1996 – Section 12(5) – Prohibiting employee of one of the parties from being an arbitrator – Inserted in 2015 – Instantly, agreement between parties entered into in 2000 and arbitration commenced in 2009 – Held, respondent cold not invoke section 12. (Para 23)

       (2018) 6 SCC 287; (2017) 15 SCC 32 – Relied upon

       (2017) 8 SCC 377 – Distinguished

       (c) Arbitration and Conciliation Act, 1996 – Section 11(6) and Section 15 – Arbitration continued till 2011 – Award finally passed in 2013 – Respondent not filing any application for expediting arbitration or application u/s 14 for termination of the mandate of the arbitrator – approaching High court for appointment of arbitrator – Mere neglect of an arbitrator to act or delay in passing the award by itself cannot be the ground to appoint another arbitrator in deviation from the terms agreed to by the parties – In terms of section 15(2), after termination of arbitrator’s mandate, substitute arbitrator can be appointed in accordance with the rules applicable to the appointment of an arbitrator who is being replaced – Appointment of arbitrator by High Court held, not sustainable. (Para 30, 31, 32, 34)

       (2009) 10 SCC 293; (2006) 6 SCC 204 – Relied upon

       (2015) 2 SCC 52 – Distinguished

       (d) Constitution of India – Article 142 – “Complete justice” – Word of width with elasticity to meet myriad situations created by human ingenuity or cause or result of operation of Statute law or law declared under Articles 32, 136 and 141 of the Constitution. (Para 38)

       (2006) 1 SCC 737; (1997) 5 SCC 201 – Relied upon

       Facts of the case:

       The appellant-Rajasthan Small Industries Corporation Limited and Respondent-Contractor entered into a contract. Dispute arose between the parties regarding imposition of transit penalty by the appellant upon the respondent for delay in transportation of containers, non-payment of handling charges of containers for various period of time and several other disputes. The terms of the contract Clause 4.20.1 of Schedule-4 (General Conditions) provided for arbitration by the Managing Director himself or his or her nominee for the sole arbitration. The respondent-Contractor requested for appointment of the arbitrator in terms of Clause 4.20.1 of Schedule-4 (General Conditions). One I.C. Shrivastava, IAS (Retd.) was appointed as the sole arbitrator on 21.02.2005. Since the progress of the sole arbitrator was not satisfactory in disposing the matter, the said sole arbitrator was removed on 26.03.2009 and in his place, Chairman-cum-Managing Director of the appellant-Corporation was appointed to act as the sole arbitrator by the consent of both the parties.

       The arbitration proceedings could not be concluded.

       On 07.02.2013, the respondent-Contractor sent a legal notice to the appellant stating that even after so many requests, the sole arbitrator has not passed the award and called upon the appellant to pay the amount of Rs.3,90,81,602/- said to have been settled, along with the statutory interest within one month. The appellant sent a reply dated 19.03.2013 stating that since the Chairman-cum-Managing Director has been transferred, award could not be passed and there is no question of payment to the respondent-Contractor.

       On 13.05.2015, the respondent-Contractor filed an application under Section 11(6) and Section 15 of the Arbitration and Conciliation Act, 1996 before the High Court seeking for appointment of an independent arbitrator for adjudication of dispute between the appellant and the respondent in respect of agreement dated 28.01.2000. On 18.12.2015, it was brought to the notice of the arbitrator that an arbitration application has been filed before the High Court. On 13.01.2016, the arbitrator rejected the application of the respondent-Contractor and his request to adjourn the matter till hearing and final disposal of the arbitration application pending before the High Court. The sole arbitrator passed an ex-parte award on 21.01.2016.

       The High Court allowed the arbitration application thereby appointing Mr. J.P. Bansal (Retd.), District Judge as the sole arbitrator.

       Finding of the Court:

       Impugned judgment is not sustainable.

       Result: Appeal allowed.