LOMBARDI ENGINEERING LIMITED versus UTTARAKHAND JAL VIDYUT NIGAM LIMITED

Citation: [2023] 13 S.C.R. 943 · Decided: 06-11-2023 · Supreme Court of India · Bench: D.Y. CHANDRACHUD · Disposal: Appeal(s) allowed

Cited by 2 judgment(s) · cites 19 · see the full citation network in Lexace

Judgment (excerpt)

[2023] 13 S.C.R. 943 : 2023 INSC 976
943
CASE DETAILS
LOMBARDI ENGINEERING LIMITED 
v.
 UTTARAKHAND JAL VIDYUT NIGAM LIMITED
(Arbitration Petition No. 43 of 2022)
NOVEMBER 6, 2023
[DR. DHANANJAYA Y. CHANDRACHUD, CJI,
J.B. PARDIWALA AND MANOJ MISRA, JJ.]
HEADNOTES
Issue for consideration: Whether the dictum as laid down in ICOMM 
Tele Limited’s case can be made applicable to the instant case, when Clause 
55 of the General Conditions of Contract provides for a pre-deposit of 7% 
of the total claim for the purpose of invoking the arbitration clause; whether 
there is any direct confl ict between the decisions of this Court in S.K. Jain’s 
case and ICOMM Tele Limited ’s case; whether this Court while deciding 
a petition fi led u/s. 11(6) of the Arbitration and Conciliation Act, 1996 for 
appointment of a sole arbitrator can hold that the condition of pre-deposit 
stipulated in the arbitration clause as provided in the Contract is violative of 
the Article 14 of the Constitution; and whether the arbitration Clause No. 55 
of the Contract empowering the Principal Secretary/Secretary (Irrigation) 
to appoint an arbitrator of his choice is in confl ict with the decision of this 
Court in Perkins Eastman’s case.
Arbitration and Conciliation Act, 1996 – Arbitration agreement 
– Arbitration clause – Invocation of – Clause 55 of the General 
Conditions of Contract providing for a pre-deposit of 7% of the total 
claim – Validity of:
Held: As regards 7% pre-deposit condition, nothing has been provided 
as to how this amount of 7% is to be ultimately adjusted at the end of the 
arbitral proceedings – Clauses 3 and 4 respectively relating to security 
deposit for performance and refund of the same, has no nexus at all with 
the pre-deposit amount of 7% as stipulated in Clause 55 of the GCC – Such 
944 
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
vague and ambiguous condition of 7% pre-deposit of the total claim makes 
the same more vulnerable to arbitrariness thereby violating Article 14 of the 
Constitution – Thus, the Conditions contained in Clause 55 of the GCC, 
relating to 7% deposit of the total amount claimed should be ignored. 
[Para 66, 68]
Arbitration and  Conciliation Act, 1996 – Arbitration agreement – 
Pre-deposit clause – S.K. Jain’s case and ICOMM Tele Limited ’s case 
where substantive challenges made to the pre-deposit clause , if any 
direct confl ict between the said decisions of this Court:
Held: There is no confl ict between S.K. Jain’s case and ICOMM 
Tele Limited’s case, as the relevant arbitration clauses that fell for the 
consideration of this Court in both the cases stood completely on a diff erent 
footing. [Para 61] 
Arbitration and    Conciliation Act, 1996 – s. 11(6) – Petition under, 
for appointment of arbitrator – Validity of the pre-deposit condition 
as contained in the arbitration clause – If it could be looked into and 
decided on the anvil of Article 14 of the C onstitution in the petition:
Held: It cannot be said that this Court while considering an application 
u/s. 11(6) for the appointment of arbitrator should not test the validity or 
reasonableness of the conditions stipulated in the arbitration clause on the 
touchstone or anvil of Article 14 of the Constitution – It would be too much 
to say that it is only the writ court in a petition u/Art. 226 that can consider 
whether a particular condition in the arbitration clause is arbitrary – Concept 
of “party autonomy” cannot be stretched to an extent where it violates the 
fundamental rights under the Constitution – For an arbitration clause to be 
legally binding it has to be in consonance with the “operation of law” which 
includes the Grundnorm-the Constitution – There can be no consent against 
the law and there can be no waiver of fundamental rights. [Para 70, 71, 84, 85]
Arbitration and Conciliation Act, 1996 – s. 11(6) – Appointment 
of an arbitrator – Arbitration Clause of the Contract empowering the 
Principal Secretary/Secretary (Irrigation) to appoint an arbitrator of his 
choice, if covered by the decision of this Court in Perkins Eastman’s case:
Held: If circumstances exist giving rise to justifi able doubts as 
to the independence and impartiality of the person nominated or if other 
945
circumstances warrant appointment of an independent arbitrator by ignoring 
the procedure prescribed, the Chief Justice or his designate may, for reasons 
to be recorded ignore the designated arbitrator and appoint someone else 
– On facts, the conditi

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