Arising out of SLP (C) No. 49 of 2006
Dr. Arijit Pasayat, J.
- Leave granted
Controversy lies within a very
The factual background as projected by the appellant is as follows:
On 22.12.2003 work order was issued by the respondent to the appellant.
There was a clause for arbitration in the agreement which was to the
B&R confidently feel that there shall not arise any disputes or
differences during execution and completion of this order by the
However, in the event of any
disputes or differences arise between Company (B&R) and Contractor
(hereinafter called the said parties) touching or concerning the
interpretation of the terms and conditions as performance of the order
or in connection therewith or the rights and liabilities of either of
the said parties hereto, the said parties shall endeavour to settle the
same amicably through mutual agreement between them, but if the mutual
settlement is not possible between the Company and the Contractor, the
provisions of the Indian Arbitration & Conciliation Act, 1996 and all
statutory re-enactment and modifications thereof and the rules made
thereunder shall apply to such arbitrations.
4. On 27.11.2004 a notice of demand
was sent to the site of the respondent and it was returned with the
postal endorsement refused . On 30.6.2005 the request was reiterated. On
9.8.2005 an order was passed by the High Court on the application filed
by the respondent. The matter was directed to be placed before the Chief
Justice of the High Court for naming an arbitrator. On 19.9.2005 the
High Court refused to recall its order dated 9.8.2005 on the appellant s
petition. On 26.10.2005, this Court in SBP & Co. v. Patel Engineering
Ltd. & Anr. [2005 (8) SCC 618] has dealt with the nature of power
exercised by the Chief Justice of High Court or Chief Justice of India,
as the case may be, under the Arbitration and Conciliation Act, 1996 (in
short the Arbitration Act ) and held that same is a judicial power and
not an administrative power. The decision in Konkan Rly. Corpn. Ltd. v.
Rani Construction (P) Ltd. (2002 (2) SCC 388) was overruled in SBP & Co.
(supra). The conclusions per majority were as follows:
47. We, therefore, sum up our
conclusions as follows:
(i) The power exercised by the Chief Justice of the High Court or the
Chief Justice of India under Section 11(6) of the Act is not an
administrative power. It is a judicial power.
(ii) The power under Section 11(6)
of the Act, in its entirety, could be delegated, by the Chief Justice of
the High Court only to another Judge of that Court and by the Chief
Justice of India to another Judge of the Supreme Court.
(iii) In case of designation of a
Judge of the High Court or of the Supreme Court, the power that is
exercised by the designated Judge would be that of the Chief Justice as
conferred by the statute.
(iv) The Chief Justice or the
designated Judge will have the right to decide the preliminary aspects
as indicated in the earlier part of this judgment. These will be his own
jurisdiction to entertain the request, the existence of a valid
arbitration agreement, the existence or otherwise of a live claim, the
existence of the condition for the exercise of his power and on the
qualifications of the arbitrator or arbitrators. The Chief Justice or
the designated Judge would be entitled to seek the opinion of an
institution in the matter of nominating an arbitrator qualified in terms
of Section 11(8) of the Act if the need arises but the order appointing
the arbitrator could only be that of the Chief Justice or the designated
(v) Designation of a District Judge
as the authority under Section 11(6) of the Act by the Chief Justice of
the High Court is not warranted on the scheme of the Act.
(vi) Once the matter reaches the
Arbitral Tribunal or the sole arbitrator, the High Court would not
interfere with the orders passed by the arbitrator or the Arbitral
Tribunal during the course of the arbitration proceedings and the
parties could approach the Court only in terms of Section 37 of the Act
or in terms of Section 34 of the Act.
(vii) Since an order passed by the
Chief Justice of the High Court or by the designated Judge of that Court
is a judicial order, an appeal will lie against that order only under
Article 136 of the Constitution to the Supreme Court.
(viii) There can be no appeal
against an order of the Chief Justice of India or a Judge of the Supreme
Court designated by him while entertaining an application under Section
11(6) of the Act.
(ix) In a case where an Arbitral
Tribunal has been constituted by the parties without having recourse to
Section 11(6) of the Act, the Arbitral Tribunal will have the
jurisdiction to decide all matters as contemplated by Section 16 of the
(x) Since all were guided by the
decision of this Court in Konkan Rly. Corpn. Ltd. v. Rani Construction
(P) Ltd. and orders under Section 11(6) of the Act have been made based
on the position adopted in that decision, we clarify that appointments
of arbitrators or Arbitral Tribunals thus far made, are to be treated as
valid, all objections being left to be decided under Section 16 of the
Act. As and from this date, the position as adopted in this judgment
will govern even pending applications under Section 11(6) of the Act.
(xi) Where District Judges had been
designated by the Chief Justice of the High Court under Section 11(6) of
the Act, the appointment orders thus far made by them will be treated as
valid; but applications if any pending before them as on this date will
stand transferred, to be dealt with by the Chief Justice of the High
Court concerned or a Judge of that Court designated by the Chief
(xii) The decision in Konkan Rly.
Corpn. Ltd. v. Rani construction (P) Ltd. is overruled .
5. Though arguments were advanced in
support of the respective stand about the legality of the impugned
order, it was agreed to by learned counsel for the parties that
following arrangement can be made.
The appellant has nominated one Sri
J. Chawla to be its arbitrator. Within a period of 30 days the
respondent shall nominate its arbitrator. Thereafter the Chief Justice
of the High Court shall nominate the Presiding Arbitrator who shall be a
retired Judge of any High Court.
7. Appeal is accordingly disposed of
with no order as to costs.
Print This Judgment