Annual Arbitration Review 2018

SP Singla Constructions Pvt. Ltd. v State of Himachal Pradesh & Anr

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Judgment: SP Singla Constructions Pvt. Ltd. v State of Himachal Pradesh & Anr

 

Citation: 2018 SCC Online SC 2673

 

Court: Supreme Court

 

Coram: R Banumathi, Indira Banerjee

 

Date: December 4, 2018

 

Overview: The Supreme Court held that once an arbitrator is appointed and has assumed his role, parties cannot approach the court to appoint another arbitrator u/s 11(6) of the Act.

 

Issue: Can parties approach the court u/s 11(6) of the Act to appoint another arbitrator when one arbitrator has been appointed and has assumed his role?

 

Factual Background:

The arbitrator was appointed on the basis of an arbitral clause in the contract entered into between SP Singla Constructions Pvt. Ltd (“Appellant”) and the Government of Himachal Pradesh (“Respondent”)

 

As per the said arbitral clause, in the event of disputes, the arbitrator to settle the same would be appointed by the Chief Engineer of the Himachal Pradesh Public Works Department (“HPPWD”). Accordingly, in this case, the Chief Engineer appointed the Superintendent Engineer, Arbitration Circle, HPPWD to settle disputes that emerged in October 2010.

 

However, due to non-appearance of the Appellant before the arbitrator, the arbitrator terminated the proceedings under Section 25 of the Act on August 6, 2014.

The appellant moved the Himachal Pradesh High Court challenging the appointment of the arbitrator and seeking the appointment of an independent arbitrator by the court u/s 11(6) of the Act. The Himachal Pradesh High Court dismissed the petitions filed by the Appellant, declining to appoint arbitrator because the court held that as per the terms of the agreement, an arbitrator had already been appointed. An appeal was preferred by the Appellant from this order of the High Court.

 

 

Analysis:

The Himachal Pradesh High Court dismissed the appellant’s case, placing reliance upon the judgment of this Court in Antrix Corporation Limited v. Devas Multimedia Private Limited[1] wherein it was held that “in case, if any party is dissatisfied or aggrieved by the appointment of arbitrator in terms of the agreement by other party/parties, his remedy would be by way of petition under Section 13 of the 1996 Act, and, thereafter while challenging the award under Section 34 of the 1996 Act.”

 

Thus the Himachal Pradesh 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 u/s 11(6) of the Act.

 

In the appeal before the Supreme Court, this view of the High Court was affirmed once more, with the Bench noting that, “It is fairly well settled that any challenge to the arbitrator appointed ought to have been raised before the arbitrator himself in the first instance…In the present case, the Arbitrator has been appointed as per clause (65) of the agreement and as per the provisions of law. 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.

In the case, the appellant raised a contention that the arbitrator had been appointed by designation, and not by name. Further, the arbitrator was an employee of the HPPWD. This, it was argued, was barred by section 12(5) of the Arbitration (Amendment) Act, 2015.

 

However, the Bench rejected the contention that the 2015 Amendment would apply to the case at hand, given that it involved arbitral proceedings which commenced in 2013 on the basis of a contract that had been entered into in 2006. As held in Board of Control for Cricket in India v. Kochi Cricket Private Limited and others[2], the 2015 Amendment cannot be retrospectively applied unless the parties agree for the same.

 

Conclusion:

The Court dismissed the appeal directing that the termination order passed by the arbitrator to be set aside, on the ground that no notice or warning for the same was given to the appellant before it was passed. The HPPWD Chief Engineer was directed to appoint an arbitrator in terms of the arbitration clause and restart the arbitration process.

[1]https://indiankanoon.org/doc/90500854/

[2]https://indiankanoon.org/doc/64244161/

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