1. Challenge to the appointment of an arbitrator and the subsequent award, focusing on compliance with legal precedents regarding arbitrator nomination. (Para 1 , 4 )
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2022 Supreme(SC) 1582
SUPREME COURT OF INDIA
Uday Umesh Lalit, S. Ravindra Bhat, Sudhanshu Dhulia, JJ.
Jsw Steel Limited – Appellant
Versus
South Western Railway & Anr. – Respondents
SLP (C) No.9462 of 2022
Decided On : 16-08-2022
Important Points
Doubts regarding the correctness of legal precedents can lead to the matter being referred to a larger Bench for resolution.
Subject
Arbitration Law - Arbitrator Appointment and Legal Precedents
Headnote
Arbitrator Appointment - Conformity with Legal Precedents - The court directed the matter to be placed before the Chief Justice of India for constituting a larger Bench to resolve the doubts regarding the correctness of the decision in Central Organisation For Railway Electrification and the appointment of the Arbitrator.
Fact of the Case:
The Arbitrator appointed by the respondent made an award in the absence of participation from the petitioner. Doubts were raised regarding the correctness of the decision in Central Organisation For Railway Electrification, based on which the appointment of the Arbitrator was made.
Finding of the Court:
The court directed the matter to be placed before the Chief Justice of India for constituting a larger Bench to resolve the doubts regarding the correctness of the decision in Central Organisation For Railway Electrification and the appointment of the Arbitrator. The operation of the Award dated 30.03.2022 was stayed pending such consideration.
Issues: Appointment of Arbitrator, Correctness of Decision in Central Organisation For Railway Electrification
Ratio Decidendi: Doubts regarding the correctness of the decision in Central Organisation For Railway Electrification led the court to direct the matter to be placed before the Chief Justice of India for constituting a larger Bench.
Final Decision: The operation of the Award dated 30.03.2022 was stayed pending consideration by a larger Bench.
Legal Category Hierarchy
Advocates appeared:
Mr. K.V. Viswanathan, Sr. Advocate, Ms. Anushka Sharda, Advocate, Mr. Rohit Ghosh, Advocate, Mr. Madhav Khosla, Advocate, M/s. Khaitan & Co., Advocate, For the Appellant / Mr. K.M. Nataraj, ASG, Mr. Shailesh Madiyal, Advocate, Mr. Kanu Agrawal, Advocate, Mr. Amit Sharma, Advocate, Mr. Amrish Kumar, Advocate, For the Respondent.
Mr. K.V. Viswanathan, Sr. Advocate, Ms. Anushka Sharda, Advocate, Mr. Rohit Ghosh, Advocate, Mr. Madhav Khosla, Advocate, M/s. Khaitan & Co., Advocate, For the Appellant / Mr. K.M. Nataraj, ASG, Mr. Shailesh Madiyal, Advocate, Mr. Kanu Agrawal, Advocate, Mr. Amit Sharma, Advocate, Mr. Amrish Kumar, Advocate, For the Respondent.
Table of Contents
2. Whether the appointment of the arbitrator was in conformity with the law laid down in TRF Ltd. and Perkins Eastman Architects. (Para 1 )
3. The validity of the arbitrator's appointment, based on a decision later doubted by a subsequent three-judge bench, requires resolution by a larger bench. (Para 2 , 3 , 6 )
4. When a subsequent bench of equal strength doubts the correctness of a previous decision upon which an appointment is based, the matter should be referred to a larger bench. (Para 3 , 6 , 7 )
5. Matter referred to the Chief Justice of India for constituting a larger bench and the operation of the arbitral award stayed. (Para 7 , 9 )
6. What is the core legal issue regarding the appointment of the arbitrator in this case?
The issue is whether the appointment of the arbitrator complied with the legal standards established in TRF Ltd. v. Energo Engineering Projects Ltd. and Perkins Eastman Architects DPC v. HSCC (India) Ltd. (Para 1 )
7. Why did the court refer the matter to a larger bench?
The High Court relied on Central Organisation For Railway Electrification, but a subsequent three-judge bench in Union of India v. M/s. Tantia Constructions Ltd. expressed prima facie disagreement with that view, creating a conflict that requires resolution by a larger bench. (Para 2 , 3 , 6 )
8. What is the status of the arbitral award pending the larger bench's decision?
The effect and operation of the arbitral award remain stayed pending the consideration of the issue by the larger bench. (Para 9 )
ORDER
1. The basic issue involved in the instant matter is whether the appointment of the Arbitrator was in conformity with the law laid down by this Court in TRF Ltd. v. Energo Engineering Projects Ltd, (2017) 8 SCC 377; and Perkins Eastman Architects DPC v. HSCC (India) Ltd., (2020) 20 SCC 760.
2. The High Court has gone by the decision rendered by a Bench of three-Judges of this Court in Central Organisation For Railway Electrification v. ECL-SPIC-SMO-MCML (JV), A Joint Venture Company, (2020) 14 SCC 712, which decision had distinguished the applicability of TRF Ltd. (supra) and Perkins Eastman Architects DPC (supra) to the fact situation involved therein.
3. It has been brought to our notice that subsequently, a Bench of three-Judges of this Court in Union of India v. M/s. Tantia Constructions Ltd. , [SLP (Civil) No. 12670 of 2020], vide its order dated 11.01.2021, prima facie expressed its disagreement with the view taken in Central Organisation For Railway Electrification (supra) and requested the Hon'ble the Chief Justice of India to constitute a larger Bench to look into the correctness of the decision in Central Organisation For Railway Electrification (supra).
4. In the present case, after the appointment of the Arbitrator nominated by the respondent herein, the proceedings took place before the Arbitrator and award was passed on 30.03.2022.
5. The copy of the Award shows that there was no participation on part of the present petitioner. Further, none had stepped into the box on behalf of the respondents in support of its case.
6. We need not, at this stage, go into the correctness of such Award, as those questions are not presently arising for our consideration. It is however, quite clear that the correctness of the decision in Central Organisation For Railway Electrification (supra), based on which the appointment of the Arbitrator was made and the matter had proceeded before the Arbitrator, was doubted by a subsequent Bench of three Judges.
7. In the circumstances, we direct that the papers of the present matter be placed before the Hon'ble the Chief Justice of India for constituting a larger Bench.
8. Since the issue has been re-occurring, we may observe that it would be in the fitness of things that the question is resolved at an early date.
9. Pending such consideration, the effect and operation of the Award dated 30.03.2022 shall remain stayed.
